On October 19, 2016, Judges Srinivasan, Pillard, and Edwards of the U.S. Court of Appeals for the D.C. Circuit heard oral arguments in ACA International, et al. v. FCC, No. 15-1211, a consolidated appeal filed by various telemarketing industry members challenging a number of aspects of the FCC’s July 2015 Telephone Consumer Protection Act (TCPA) Declaratory Ruling and Order. We previously summarized that Order here.

Over the course of the two and a half hour hearing, petitioners and respondents fielded questions by the three-judge panel regarding (1) the definition of an automatic telephone dialing system (ATDS) and specifically the Order’s treatment of the term “capacity”; (2) the meaning of “called party” and the problem of reassigned numbers; (3) the manner in which consent may be revoked by the called party; and (4) whether healthcare-related calls should be excluded from TCPA liability because they purportedly are covered by the Health Insurance Portability and Accountability Act (HIPAA). A recording of the oral argument is available on the D.C. Circuit website.

ATDS Definition and the Term “Capacity”

The petitioners’ main argument during the hearing concerned the expanded definition of ATDS. The FCC’s July 2015 Order found that equipment that can dial a stored list of numbers is an ATDS regardless of whether the dialing occurs randomly or sequentially. Moreover, the term “capacity” in the TCPA was expanded to include not only the equipment’s current functionality but also any of its future, non-theoretical, potential functionalities. The petitioners specifically argued that such broad definition undoubtedly would sweep within the TCPA’s purview of even smartphones because they have the capability to install and use certain applications. The panel focused on this issue as they understood the challenges presented surrounding the definition.

The FCC argued that the agency would not normally target smartphones but that, if the petitioners are concerned with any potential liability on the matter, they are welcome to request a declaratory ruling affirming that smartphones won’t be considered to be prohibited TCPA autodialers. Indeed, the FCC went so far as to fault the petitioners for not seeking such declaratory ruling during the pendency of this legal challenge, although Judge Edwards retorted, “well, I’m asking you [to address the issue].” Judge Pillard did not seem convinced of this argument as she stated that smartphones “should and would” be targeted by the FCC’s Order. She further stated that the language is “impermissibly broad” and challenged the FCC to draw a line on the matter.

To note, the dissenting FCC Commissioners in the July 2015 Order found it difficult to imagine a current device that would not fall under this definition of ATDS. The three-judge panel appeared to agree with this reading of the Order and that the new definition would include smartphones.

The Meaning of Called Party and the Problem of Reassigned Numbers

The TCPA requires “the prior express consent of the called party” before making certain calls. The FCC’s position is that the term “called party” in the TCPA refers to the current subscriber. Consequently, the issue that commonly arises in litigation is whether the TCPA is violated when a marketer has placed a call to a customer who has consented to receive such calls but, because the number has been reassigned, the call is received by a different person who has not consented to such calls – i.e., an “unintended recipient.” In the Order, the FCC further stated that a marketer may be held liable if it has “actual” or “constructive” knowledge that the number has been reassigned. Nonetheless, the FCC allows “one call” to the wrong number without incurring liability.

During the oral argument, the petitioners characterized the imposition of such liability when no one answers the “one call” or text message as “completely irrational” because it does not necessarily provide the requisite actual or constructive knowledge. For example, a caller may receive a busy signal or reach an answering message that does not disclose the recipient’s identity. Or, a caller may reach a consumer – perhaps a serial TCPA litigant – who, when confirmation of the intended recipient’s identity is requested by the caller, simply lies. Each call after that theoretically would be a TCPA violation. The FCC countered that there is a period of time between number reassignments where the number called emits a tone that should provide knowledge to the caller. The Commission also argued that, in the Order, it listed a number of practices that callers can use to attempt to learn about number reassignments. Judge Edwards stated that the list of practices was “silly” and that they are not as easy to put in place as the FCC claims.

Revocation of Consent

As noted above, telemarketers are required to obtain express consent by the called party before placing marketing calls. The July 2015 Order determined that consumers may revoke such consent by “any reasonable means whether oral or in writing,” and prohibits callers from “designating an exclusive means to revoke.” The petitioners argued that allowing consent to be revoked at any time and by any means does not reasonably inform companies of such revocation. They further argued that the FCC has failed to establish a standard and workable method to revoke consent for consumers. This argument seemed to resonate with Judge Srinivasan who commented that large companies may have trouble compiling individualized consent revocations.

Health-Care Calls Should be Covered by HIPAA

The last argument centered on whether health care calls should be excluded from the TCPA because they fall under HIPAA. The judges did not spend much time questioning the parties on this issue, although Judge Pillard mentioned that there is no reason why such calls cannot be covered under both statutes.

What Happens Next

The three-judge panel was difficult to read and there is no timetable as to when a decision may be reached. Ultimately, however, the ambiguity and uncertainty in the language may continue to trouble businesses, marketers, and attorneys alike.