Companies in consumer-facing industries face a continued wave of class action filings under the Telephone Consumer Protection Act (TCPA). In 2018, TCPA lawsuits remained one of the most filed types of class actions in courts across the country, and unsettled law continues to place a compliance burden on companies that communicate with consumers by phone, text or fax. Looking ahead in 2019, the Federal Communications Commission (FCC) is expected to issue revised rules that could significantly reshape the contours of the TCPA landscape, including redefining the standards for automated dialing and revocation of consent. Meanwhile, courts continue to grapple with issues such as agency deference and the standards for third-party liability.

Here are five issues to watch for in 2019.

1. The FCC is expected to redefine “automated telephone dialing system”

For years, the question of what constitutes an autodialer has confounded courts, the FCC and companies seeking to communicate with their customers by phone and text. The implications of this confusion cannot be overstated, because liability under the TCPA often depends on whether a company used an autodialer without the consent of the recipient of the call. In a 2015 Order, the FCC expanded the definition of autodialer to encompass any equipment that has the capacity or capability to produce, store and dial numbers randomly or sequentially without human intervention, even if it is not used in that capacity. In early 2018, this definition was struck down by the US Court of Appeals for the DC Circuit as arbitrary and capricious, and the FCC solicited comments on developing a new rule.

The FCC is expected to issue new guidance in 2019 and provide a revised and refined definition. The search for a clear definition has proved elusive thus far, but the business community is hopeful that the FCC will finally provide a standard that callers can rely on to understand when they must comply with TCPA restrictions on automated dialing.

2. The standards for revocation of consent

Several federal district courts have held that a recipient of an autodialed phone call may not revoke consent where consent was included as a term in the underlying contract between the recipient and the caller. These courts, such as the Middle District of Florida and the District of Connecticut, followed the reasoning of the Second Circuit 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 held that consumers cannot unilaterally revoke such consent without the permission of the other contracting party.

Some district courts, however, have diverged from the Reyes rationale by finding that consumers retain the ability to revoke prior consent despite having a contract with the caller. The Middle District of Tennessee, for example, declined to adopt Reyes and instead held that allowing consumers to revoke consent, even if contractually provided, “is in keeping with the remedial, consumer-protection purposes of the TCPA.”

The case law in this area is not unanimous and, as a result, the ability of consumers to revoke contractually provided consent remains unsettled. The standards for revocation of consent will continue to evolve until more circuit court precedent is established or the FCC adopts clear guidance on this issue.

3. Implementation of the reassigned number database and safe harbor

The FCC’s December 13, 2018, Second Report and Order unanimously adopted the creation of a reassigned number database that will be a resource for callers to determine whether telephone numbers have been reassigned. 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 directed to their own customer lists in situations where a cell phone number had been reassigned to a new user.

Companies that use the reassigned number database will be able to determine if telephone numbers on their calling lists have been disconnected and are eligible for reassignment. These numbers can then be purged from a company’s call lists, thereby decreasing the number of calls to consumers who did not provide consent to the caller. To further encourage use of the database, the FCC is providing callers with a safe harbor from liability for any calls made to reassigned numbers due to a database error. Callers will have the burden to prove that they checked the most recent and up-to-date database.

For 2019, key issues will include the timing and the specifics of the reassigned number database, and the steps that companies will need to implement to take advantage of the safe harbor from liability.

4. The Supreme Court’s review and consideration of the scope of agency deference

The United States Supreme Court has agreed to hear PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., Case No. 17-1705, from the Fourth Circuit to address whether federal district courts are bound by FCC guidance in TCPA cases. Specifically, the Supreme Court will address 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. At the center of the dispute is whether district courts in private litigation are required to defer to the FCC under the Hobbs Act, or whether they have authority to interpret and apply unambiguous statutory provisions that conflict with FCC rules.

The Supreme Court’s ruling could potentially limit or expand the weight of FCC guidance in TCPA private litigation, thus impacting the ability of litigants to maintain and defend TCPA claims. For example, should the Supreme Court find that district courts are not required to adhere to FCC guidance under the Hobbs Act, TCPA private litigants would be free to make arguments against FCC rulings and orders in private cases. This would upend the rules that currently apply to most TCPA litigation, where most courts strictly apply FCC guidance.

5. Third-party liability issues

Companies frequently use third-party vendors to assist with communications or market their products and services through semi-independent agents, brokers or contractors. As a result, companies may face vicarious liability risk based on the actions of these third parties. Court decisions have highlighted a tension between the legal standards for third-party liability under the TCPA. Under the TCPA, it is unlawful “to initiate” certain phone calls (including text messages) and “to send” unsolicited fax advertisements. This small difference in the language of the TCPA has led some courts to apply different legal standards for third-party liability for phone calls and faxes. For phone calls and texts, courts apply a vicarious liability standard based generally on common law agency principles, consistent with the FCC’s declaratory ruling in In re Dish Network, 28 FCC Rcd. 6574 (2012). For faxes, however, courts have disagreed about whether to apply a traditional agency standard or a different standard for third-party liability. It will be important to watch how these different approaches continue to unfold in 2019.

Conclusion

With the wave of TCPA litigation expected to continue in 2019, developments in these key areas, among others, will shape the TCPA landscape. Class action plaintiffs’ lawyers will continue to target many different industries, so a strong TCPA compliance program is essential to help businesses avoid TCPA lawsuits and potential exposure.