Late last week, the United States Court of Appeals for the D.C. Circuit issued its long-awaited decision on the challenge to the Federal Communications Commission’s (“FCC”) 2015 Order interpreting the Telephone Consumer Protect Act (“TCPA”). While the D.C. Circuit touched upon various aspects of the FCC’s 2015 Order, it was particularly pointed in its criticism of the FCC’s guidance regarding autodialers or automatic telephone dialing systems (“ATDS”).
What are the major takeaways from the D.C. Circuit’s decision?
The most contentious aspect of the FCC’s 2015 Order was its broad expansion of the ATDS definition. The FCC had adopted an interpretation of ATDS that included all dialing equipment that had both the present and potential future capacity to make autodialed calls. The D.C. Circuit agreed with the myriad challenges to this overly-expansive interpretation of the ATDS definition, which swept within the term virtually all telecommunications devices, including smartphones. The Court reasoned that the TCPA could not reasonably be interpreted to effectively prohibit the use of smartphones (to call and send text messages), the most ubiquitous form of modern communication equipment. As a result, the D.C. Circuit vacated as unreasonable that portion of the FCC’s order involving what devices qualify as autodialers within the meaning of the statute.
The D.C. Circuit also examined the FCC’s interpretation of what functions dialing equipment must be capable of performing in order to be considered an autodialer under the statute. Specifically, the Court found that the FCC was not clear in the 2015 Order as to whether dialing equipment must be able to generate random or sequential numbers in order to be considered an ATDS or whether dialing equipment can be an autodialer even if it lacks that capacity. By way of example, the Court took issue with the fact that some predictive dialers lack the capacity to generate random or sequential numbers while the FCC nevertheless has categorically deemed predictive dialers to be autodialers for TCPA purposes. Further, the Court determined that the 2015 Order was not clear with respect to the level of human intervention, or lack thereof, that is taken into consideration when making a determination as to whether a given device is an ATDS. The Court found that despite the fact that the 2015 Order explained that the basic function of an autodialer is to dial numbers without human intervention, the FCC’s interpretation of the ATDS definition meant that a device could still qualify as an ATDS even if it cannot dial numbers without human intervention. The Court found that this inconsistency failed to “satisfy the requirement of reasoned decision making” and was, therefore, arbitrary and capricious. As a result, the D.C. Circuit set aside and vacated that portion of the FCC’s 2015 Order involving the “capacity” issue.
The Implications of the D.C. Circuit’s Autodialer Decision
Just as the FCC’s 2015 Order proved seismic to the telemarketing industry at the time, helping pave the way for an explosion in TCPA lawsuits, the D.C. Circuit’s ruling is likely to be equally pivotal in providing a useful tool in defending against such lawsuits. Furthermore, given that the composition of the FCC has changed since the 2015 Order, it is likely that the next iteration of TCPA guidance that comes down from the FCC will be far less hostile to telemarketers. Against this backdrop of abrupt change in the TCPA regulatory environment, it is imperative to have telemarketing practices and procedures examined by experienced counsel.