Companies in consumer-facing industries face a continued barrage of lawsuits under the Telephone Consumer Protection Act (TCPA). In 2019, TCPA lawsuits remained one of the most commonly filed type of class action in federal courts across the country. Congress and the Federal Communications Commission (FCC) continue to update TCPA rules and regulations in the areas of compliance and consumer protection. Looking to 2020, courts, including the United States Supreme Court, and the FCC will continue to grapple with, among other issues, the definition of autodialer, standards for revocation of consent, standing questions, and the constitutionality of the TCPA government-debt exception. We also await the anticipated launch of the reassigned cellular number database for scrubbing call lists and implementation of the recently passed Pallone-Thune TRACED Act to protect consumers from spoofing.
Here are six top issues for companies to keep an eye on in 2020.
- What is an autodialer? Still seeking clarity (because no one knows)
- The standards for revocation of consent
- Implementation of the reassigned cellular number database and safe harbor
- The impact of new federal law: The Pallone-Thune TRACED Act
- When does a plaintiff have standing to file a TCPA claim?
- The United States Supreme Court Weighs In on TCPA Issues
1. What is an autodialer? Still seeking clarity (because no one knows)
Both courts and businesses continue to struggle with the foundational TCPA question of what constitutes an automatic telephone dialing system (ATDS or autodialer). In a 2015 Order, the FCC expanded the definition of an ATDS to encompass any equipment that has the capacity or potential capacity to dial numbers randomly or sequentially, even if the company does not use the device in that capacity or the device requires an upgrade to have those features. In early 2018, however, the FCC’s definition was struck down by the D.C. Circuit Court of Appeals as arbitrary and capricious, and the FCC solicited comment so it could develop a new rule.
In 2018, the Ninth Circuit moved partly back toward the FCC’s 2015 definition in finding that an ATDS can be a device with the capacity “to store numbers to be called” or “to produce numbers to be called, using a random or sequential number generator and to dial such numbers automatically” (even if the system must be turned on or triggered by a person).1 Other courts have held that an ATDS must have the capacity to generate numbers, as required by the plain language of the statute.2 Recently, the Eleventh Circuit took a different approach in its interpretation of Section 227(a)(1) in finding that an ATDS must: (1) use a random or sequential number generator either to store or produce telephone numbers; and (2) dial the numbers.3 In other words, in the Eleventh Circuit, a device that simply stores and dials telephone numbers is not an ATDS.
The United States Supreme Court may weigh in on the issue in 2020 if it grants certiorari in Facebook, Inc. v. Noah Duguid, Case No. 19-511. One of the questions on appeal is whether the definition of an ATDS encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not use a random or sequential number generator. In Facebook, the Ninth Circuit applied an expansive definition of an ATDS, which includes any device that can “store” and “automatically dial” telephone numbers, even if the device does not use a random or sequential number generator. The Ninth Circuit’s holding arguably conflicts with the D.C. Circuit’s 2018 decision.
The search for a clear definition of an ATDS under the TCPA continues but has heretofore been elusive. In October 2018, the FCC requested further comment as part of an effort to update its guidance on the definition of an ATDS, but has yet to revise the previous definition. The business community remains hopeful that the FCC or the courts, including the United States Supreme Court, will finally provide long-awaited clarity in 2020 that callers can rely on to understand when the TCPA applies.
2. The standards for revocation of consent
Although consent to be called is generally revocable under the TCPA, a number of federal courts have held that a recipient of an autodialed phone call may not revoke consent where consent was included as a term in an underlying contract between the recipient and the caller. These courts have followed the reasoning in Reyes v. Lincoln Auto. Fin. Servs., 861 F.3d 51, 53 (2d Cir. 2017), in which the Second Circuit held that a consumer’s consent is irrevocable when contractually agreed-upon. As a matter of “black-letter” contract law, courts adopting Reyes have held that consumers cannot unilaterally revoke such consent without the permission of the other contracting party.
The Third Circuit Court of Appeals and related lower courts4 have diverged from the Reyes rationale by finding that consumers retain the ability to revoke consent. One such decision, for example, declined to adopt Reyes and instead held that allowing consumers to revoke consent, even if consent was agreed to by contract, “is in keeping with the remedial, consumer-protection purposes of the TCPA.”5
Unsurprisingly, consumers’ ability to revoke contractually provided consent remains unsettled. Including consent provisions in consumer contracts may be a viable means of limiting exposure to the TCPA, but the extent to which such provisions reduce TCPA exposure has created a split among the circuits, which has created uncertainty for litigants and remains an area of continued legal development.
3. Implementation of the reassigned cellular number database and safe harbor
The FCC’s December 13, 2018, Second Report and Order unanimously adopted the creation of a reassigned cellular number database that will be a resource for callers to determine whether consumers reassigned a cellular telephone number. The rule also creates a potential safe harbor from TCPA liability. Until now, businesses have faced a potential liability trap based solely on routine, good-faith communications intended for their own customers who gave consent to be called where they placed calls to cell phone numbers no longer belonging to their customers, thus rendering the prior consent a nullity.
Companies that use the reassigned cellular number database will, theoretically, be able to determine if cellular numbers on their calling lists have been disconnected and made eligible for reassignment. Companies can then purge these numbers from their call lists, thereby decreasing the number of errant calls to consumers who are not the intended recipient. To further encourage the use of the database, the FCC is providing callers with a safe harbor from liability for calls made to reassigned cellular numbers due to a database error. Callers will have the burden to prove that they checked the most recent and up-to-date database.
The reassigned cellular number database was originally expected to be launched in late 2019, but the process has been delayed. On January 24, 2020, the FCC solicited comment on the North American Numbering Council (NANC)’s recommended Technical Requirements Document, which NANC submitted to the FCC for the commission’s review on January 13, 2020. Initial comments on the technical requirements analysis are due on or before February 24, 2020.
4. The impact of new federal law: The Pallone-Thune TRACED Act
On December 4, 2019, in a renewed effort to combat robocalls, the House passed the bipartisan Pallone-Thune TRACED Act (the TRACED Act) by a vote of 417-3. On December 30, 2019, President Trump signed the TRACED Act into law. A crucial element of the TRACED Act is assigning new responsibilities and obligations to phone-service providers to identify calls correctly and shield their customers from unwanted calls.
The TRACED Act will require phone-service providers to implement a new caller-ID authentication program, which will enable providers to block unauthenticated calls. Providers must implement the caller-ID authentication program at no additional cost and/or fees to the customer. The authentication program is aimed at cutting down on the practice of “spoofing,” where scammers trick consumers into thinking a call is coming from a specific area code or a legitimate place of business. The TRACED Act also gives the FCC new tools to increase its enforcement actions, including a longer statute of limitations and assessment of higher fines and penalties for offenders. Echoing Congress’s concern to combat robocalls, several states—including Arkansas, California, New York, North Carolina, and Texas—recently passed new state legislation in 2019 to protect their residents from robocalls and spoofed calls.
It is unclear just how effective the TRACED Act will be in combating the surge of robocalls nationwide.
5. When does a plaintiff have standing to file a TCPA claim?
Does receipt of a single call or text constitute an “injury” sufficient for a plaintiff to file a TCPA lawsuit in federal court? Federal circuit courts reached differing conclusions in 2019, setting this up as a key issue to watch in 2020.
In one 2019 case involving text messaging, the Eleventh Circuit held that receipt of a single unsolicited text message did not amount to an “injury in fact” sufficient to establish Article III standing to bring a TCPA lawsuit.6 In Salcedo v. Hanna, the Eleventh Circuit found that the plaintiff’s allegations, reflecting nothing more than a momentary annoyance, did not generate the harm necessary to bring a claim in federal court. As a result, district courts in the Eleventh Circuit must scrutinize plaintiffs’ allegations on an individual, case-by-case basis, and cases alleging one text (or a small number of texts) will have an uphill battle establishing Article III standing.
The Salcedo decision, however, is in tension with the Ninth Circuit’s 2017 decision in Van Patten v. Vertical Fitness, which held that the receipt of two unsolicited text messages constituted an injury in fact and thus established Article III standing.7 These cases touch on an area in TCPA law that warrants further clarification by the courts in 2020 i.e., delineating the types of harm and the degree of harm required to establish standing to bring a TCPA claim. The standing question is also potentially significant at the class certification stage if the alleged class contains individuals who may lack standing. In Cordoba v. DIRECTV, LLC,8 the Eleventh Circuit vacated class certification in a TCPA case where the class contained individuals that lacked standing.
In the Cordoba decision, the court initially opined that receiving two unwanted phone calls is an injury in fact, and that the named plaintiff, who had asked not to be called, had alleged an injury traceable to the defendant’s alleged failure to maintain an internal do-not-call list. But for unnamed class members who had not requested to be added to a do-not-call list, the court held that these individuals had not sustained injuries “fairly traceable” to the defendant’s challenged conduct and thus lacked Article III standing. As a result, standing created an individualized issue, which the district court had not considered. Accordingly, the appellate court vacated the decision granting class certification and remanded for the district court to consider whether the individualized issue of standing would predominate over common issues and therefore preclude class certification.
It remains to be seen whether, on remand, the Cordoba plaintiff can revise the proposed class definition sufficiently to support class certification. However that case resolves, this will be an issue to watch in other TCPA class actions.
6. The United States Supreme Court weighs in on TCPA issues
Petitions for certiorari seeking the United States Supreme Court’s guidance on numerous TCPA issues continue to be filed. The Supreme Court’s recent and upcoming review of several key TCPA issues in 2020 could potentially affect TCPA enforcement and compliance and even call into question the constitutionality of the TCPA.
i. Is the TCPA government-debt exception unconstitutional?
One issue that the United States Supreme Court is already scheduled to review is determining if the TCPA government-debt exception, permitting an entity to use an ATDS to collect debts guaranteed by the US government, is constitutional.
On January 10, 2020, the Supreme Court granted certiorari in William P. Barr et al. v. American Association of Political Consultants et al., Case No. 19-631. In Barr, the Fourth Circuit held that the government-debt exception was unconstitutional because it was a content-based restriction on speech in violation of the First Amendment. To provide a remedy, the appellate court held that the government-debt exception should be severed from the remainder of the TCPA, leaving the TCPA’s basic automated-call restrictions in place. The question on appeal is whether the government-debt exception violates the First Amendment and whether the proper remedy for a constitutional violation is to sever the exception from the remainder of the TCPA.
If the Supreme Court rejects the Fourth Circuit’s reasoning that severing the government-debt exception from the statute is a proper remedy, the Supreme Court may consider invalidating the TCPA in its entirety or possibly eliminating the prohibition against the use of the ATDS as an alternative remedy.
ii. Are courts bound by FCC rules?
In a 2019 case, the United States Supreme Court was asked to determine whether federal district courts are bound by FCC guidance in TCPA cases. PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., 139 S. Ct. 2051 (2019). The question on appeal was whether the Hobbs Act—which grants exclusive jurisdiction to federal appellate courts to set aside, suspend, or rule on the validity of certain federal agency guidance—requires district courts to defer to FCC rulings and orders interpreting the TCPA.
On June 20, 2019, the Supreme Court vacated the Fourth Circuit’s decision and remanded. The Supreme Court held that two preliminary questions needed to be addressed before the Court could consider whether district courts are bound by FCC interpretations under the Hobbs Act: (1) whether the 2006 FCC order9 at issue is a legislative rule that has the force of law or whether it is an interpretive rule that advises on the agency’s construction of the law but does not have the effect of law; and (2) whether PDR Network had a prior and adequate opportunity to seek judicial review of the order under the Hobbs Act petition.
In remanding the issue to the Fourth Circuit, the Supreme Court punted on the core question presented i.e., whether district courts in private litigation are required to defer to the FCC under the Hobbs Act, or whether courts have authority to interpret and apply unambiguous statutory provisions that conflict with FCC rules. The Fourth Circuit’s ruling on remand in 2020 may set this up for further high court review, and the question is also expected to arise in other cases in 2020 and beyond.
We expect TCPA cases to continue working their way to the Supreme Court, and as discussed earlier, we are awaiting the Supreme Court’s decision on whether to take up the ATDS issue.
With the wave of TCPA litigation expected to continue in 2020, developments in these key areas will shape the TCPA landscape. Plaintiffs’ lawyers will continue to target many different industries, and a strong TCPA compliance program is essential to help businesses of all kinds avoid TCPA lawsuits and potential exposure.