The D.C. Circuit's opinion is a generally positive development for businesses as it rejects two of the most concerning aspects of the 2015 Federal Communication Commission's (FCC) Order—the broad definition of an autodialer and liability for calls to reassigned numbers. The decision will likely have significant implications for Telephone Consumer Protection Act (TCPA) litigation on these two issues.
We expect further clarification from the FCC about what constitutes an autodialer. The D.C. Circuit's opinion explains what is not an autodialer, but does little to define what is an autodialer. Until the FCC provides clarification, courts will be left to apply the D.C. Circuit's observations on a case-by-case basis to determine whether particular equipment qualifies as an autodialer.
The D.C. Circuit decision also leaves uncertainty about calls or texts to reassigned numbers. The court noted that the FCC is currently engaged in rulemaking on this issue. In the meantime, courts will also be left to determine on a case-by-case basis when TCPA liability attaches to calls or texts to reassigned numbers.
The decision provides helpful guidance for compliance with the TCPA's revocation-of-consent requirements. The court emphasized that reasonableness is the touchstone of the revocation analysis, and courts should be wary of unreasonable attempts to revoke consent in an effort to manufacture TCPA liability. Businesses will need to remain vigilant about honoring reasonable requests not to be called or texted. Companies should establish clearly-defined and easy opt-out methods, and require use of those methods in contracts whenever possible, to avoid TCPA liability.
Detailed Analysis of FCC's 2015 TCPA Order
On March 16, 2018, the U.S. Court of Appeals for the D.C. Circuit issued its long-awaited decision in ACA International v. FCC regarding the FCC's 2015 Order on the TCPA. After almost 18 months on appeal, the D.C. Circuit unanimously struck down several key provisions of the 2015 FCC Order, including the FCC's definition of an autodialer and its approach to consent for calls to reassigned numbers. The D.C. Circuit, however, upheld the FCC's treatment of revocation of consent and the exemption for time-sensitive healthcare treatment calls.
Proper Definition of Autodialer Still Unclear, But D.C. Circuit Rejected FCC's Definition
First, the D.C. Circuit overturned the FCC's definition of what types of telephone equipment constitute an "automatic telephone dialing system" (ATDS or autodialer). The TCPA generally prohibits unsolicited calls to cell phones using an ATDS, which is defined by statute as equipment that has the "capacity" to store or produce telephone numbers to be called, using a random or sequential number generator and to dial such numbers. The 2015 FCC Order held that the term "capacity" included any device with "potential functionalities" or the "future possibility" to function as an autodialer, rather than just the present capability to do so—essentially sweeping in any equipment that could potentially be modified in the future to become an autodialer.
The D.C. Circuit found the FCC's interpretation of an autodialer "untenable" as it would effectively render every smartphone an autodialer: "It cannot be the case that every uninvited communication from a smartphone infringes federal law, and that nearly every American is a TCPA-violator-in-waiting, if not a violator-in-fact." Accordingly, the Court found the FCC's interpretation was unreasonably and impermissibly expansive, noting that "[t]he TCPA cannot reasonably be read to render every smartphone an ATDS subject to the Act's restrictions, such that every smartphone user violates federal law whenever she makes a call or sends a text message without advance consent."
D.C. Circuit Revises Approach to Reassigned Numbers
The D.C. Circuit also set aside the FCC's approach to calls made to a cell phone number that had been reassigned from a consenting party to a non-consenting party without the caller's knowledge. The 2015 FCC Order determined that callers in those situations were allowed a one-call "safe harbor," but that any subsequent call would violate the TCPA regardless of whether the caller was aware of the reassignment. In concluding that the one-call safe harbor was arbitrary and capricious, the D.C. Circuit noted that the FCC's justification for this standard was to accommodate a caller's "reasonable reliance" on previously obtained consent, but found that exempting only the first call to a reassigned number was not, itself, reasonable because the one call "might give the caller no indication whatsoever of a possible reassignment."
FCC's Ruling on Revocation of Consent Upheld
The D.C. Circuit upheld the FCC's approach to revocation of consent, which allows a party to revoke consent at any time through any "reasonable means clearly expressing a desire to receive no further messages from the caller." The Court found this approach did not require callers to establish burdensome revocation procedures or a standardized opt-out mechanism. The court further noted that the FCC's ruling did not affect the ability of parties to agree on particular revocation procedures by contract. The Court observed that the "reasonable means" standard ought to give callers a strong incentive to avoid TCPA liability by implementing "clearly-defined and easy-to-use opt-out methods."
No Change to Exigent Healthcare Treatment Exemption
Finally, the D.C. Circuit upheld the 2015 FCC Order's narrow exemption to the prior express consent requirement for time-sensitive healthcare calls to cell phones. The court found that the exemption did not conflict with the Health Insurance Portability and Accountability Act (HIPAA) and that the FCC's decision to adopt a narrower exemption for healthcare calls to cell phones, as opposed to landlines, was not arbitrary and capricious. Under the exemption, some healthcare-related calls, such as calls related to billing and collections, are wholly exempted from the TCPA if made to landlines, but the exemption for calls to cell phones extends only to calls for which there is "exigency and that have a healthcare treatment purpose." The Court reasoned the exemption's disparate treatment of cell phones and landlines was not a sufficient basis to find the FCC's decision arbitrary because the statute itself treats cell phones and landlines differently.