Part I – TCPA: Regulatory Update

FCC Evaluates Comments Received in Several TCPA Proceedings

The Federal Communications Commission (“FCC” or “Commission”) is busy evaluating scores of comments and reply comments it received in several ongoing TCPA proceedings in the past month. First is the Public Notice, covered in the June TCPA Digest, in which the FCC sought comment on several central TCPA elements in light of the DC Circuit’s decision in ACA International v. FCC. The Commission received over 100 substantive comments and reply comments. Industry stakeholders generally supported interpretations that would limit the TCPA’s reach, such as narrowing the definition of an “automatic telephone dialing system.” They hoped such reforms would reduce the number of class action lawsuits brought against companies attempting to make legitimate business calls. Commenters included stakeholders from the financial, retail, automotive, health care, restaurant, insurance, and news industries, reflecting the broad reach of the TCPA. Consumer advocates and individual commenters, on the other hand, urged the FCC not to relax TCPA protections, and said that doing so would leave consumers vulnerable to even more unwanted robocalls. The Commission also received more than 300,000 “express” comments, mostly in support of “the strongest possible consumer protections against unwanted robocalls.”

Second, the FCC is evaluating comments and reply comments on a Second Further Notice of Proposed Rulemaking seeking input on the adoption of a reassigned numbers database. Note that in ACA International v. FCC, the D.C. Circuit struck down the portion of the FCC’s 2015 Order that granted only a one-call safe harbor for calls to reassigned numbers, finding it arbitrary and capricious — however, the D.C. Circuit stated that the existence of a reassigned numbers database would bear on the reasonableness of calling reassigned numbers. Many industry commenters favored the creation of a reassigned numbers database accompanied by a safe harbor from liability for businesses that check their marketing lists against it. Some industry commenters, however, were less enthusiastic, expressing concerns about the costs to create and maintain such a database, and arguing that even an optional database could create a de facto standard for reassigned numbers liability. Commenters also suggested that the effort to create a reassigned numbers database should move forward in parallel with, and not to the exclusion of, the Commission’s broader TCPA reform efforts examined in the proceeding above.

Finally, the Commission is evaluating comments on a Public Notice regarding the Petition for Declaratory Ruling filed by Insights Association, Inc. and the American Association for Public Opinion Research last year. Petitioners asked the Commission to clarify several areas under the TCPA, including that “communications are not presumptively ‘advertisements’ or ‘telemarketing’ under the TCPA simply because they are sent by a for-profit company, or might be for an ultimate purpose of improving sales or customer relations.” The petition also sought clarification on dual-purpose communications and survey, opinion, and market research studies. Less than a dozen substantive comments and reply comments were filed on this petition.

Several comment periods are also currently open on Public Notices concerning various TCPA issues. On June 14, the Commission released a Public Notice seeking comment on a petition for retroactive waiver and request for expedited ruling filed by ViSalus, Inc. ViSalus asks the Commission to grant it a retroactive waiver of the Commission’s prior express written consent requirement for automated telemarketing calls similar to the waivers previously granted to the Direct Marketing Association and Coalition of Mobile Engagement Providers in the 2015 FCC Order. The comment and reply comment deadlines are July 16 and July 30 respectively. Lastly, on July 6, the Commission released a Public Notice seeking comment on a petition for clarification and declaratory ruling filed by the Life Insurance Direct Marketing Association et al. This petition seeks a ruling that “life insurance agents and brokers (collectively, ‘servicing agents’) are permitted to call their customers while the life insurance policies sold by servicing agents are in effect and for a period of 18 months after the policies expire based on an ‘established business relationship’ (‘EBR’) between life insurance servicing agents and their customers.” Comments are due on August 6, with reply comments due on August 21.

Part II – TCPA: Class Action Update

Post ACA International, the TCPA’s Autodialer Definition Is Restricted to a Device’s Current Functions

After the U.S. Court of Appeals for the District of Columbia released its highly anticipated decision in ACA International v. Federal Communications Commission, courts have been addressing issues raised in that case. We previously summarized the opinion — which raises four issues, one of which is what constitutes an Automatic Telephone Dialing System (“ATDS”) — here.

The statute defines an ATDS as “equipment which has the capacity — (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”[1] This can be a critical threshold question in TCPA class actions — did the company being sued use an ATDS? Importantly, the U.S. Court of Appeals for the Second Circuit recently narrowed the definition of what type of equipment constitutes an ATDS.

In King v. Time Warner Cable Inc.,[2] the Court of Appeals for the Second Circuit vacated and remanded the district court’s decision to grant partial summary judgment in favor of plaintiff Araceli King for her claim that Time Warner Cable violated the TCPA by using an ATDS to call her phone without her consent. The Second Circuit remanded the case for further proceedings since the district court’s analysis was based on an incorrect interpretation of the statutory text.[3] The district court previously held that the equipment used by Time Warner Cable (an “interactive voice response” calling system) qualified as an ATDS. The system works in the following way:

[It] automatically references Time Warner’s billing records to determine which customers are more than 30 days late on their payments, and then dials the number associated with those accounts. If a person answers the call, the system is programmed not to call that number again until the following day (and it will stop altogether if the customer’s account becomes current). If the call is not answered, the system is programmed to leave a voicemail and attempt to call back two more times that day.[4]

Significantly, while the equipment can store numbers, Time Warner asserted that it does not have the capacity to make random or sequentially generated calls.[5] After the district court granted partial summary judgment in favor of the plaintiff, ACA International was decided, which paved the way for the Second Circuit to consider the district court’s reliance on the FCC’s 2015 Order, which “broadly construed the term ‘capacity’ and thus extended the TCPA to reach any device that could be modified by software changes to perform the functions of an autodialer.”[6]

The Second Circuit analyzed the plain meaning of “capacity” and stated that “[c]ommon sense suggests that legislation, which typically targets present social problems, would be aimed at devices that have the “capacity,” in that narrower sense, to cause the problem that is the subject of legislative concern, rather than addressing itself to the hazily defined universe of things that have only a theoretical potential to do so.”[7] The Second Circuit added that it was inclined to adopt a narrower definition of capacity than that which the FCC endorsed in its 2015 Order.[8]

Following the D.C. Circuit’s reasoning, the Second Circuit concluded:

[w]e view the D.C. Circuit’s discussion as correctly drawing a distinction between a device that currently has features that enable it to perform the functions of an autodialer — whether or not those features are actually in use during the offending call — and a device that can perform those functions only if additional features are added. We find that distinction persuasive; accordingly, we would conclude that the former category of devices falls within the definition of an ATDS, and the latter does not.[9]

At least in the Second Circuit, the type of equipment that falls within the ambit of the TCPA’s definition of an ATDS has narrowed, and plaintiffs will have a more difficult time overcoming that first hurdle in TCPA litigation — showing that the company they are suing used an ATDS.