On March 16, a panel of the United States Court of Appeals for the D.C. Circuit issued a long-anticipated decision that vacated in part, and affirmed in part, portions of the Federal Communication Commission’s (FCC’s) July 10, 2015, Omnibus Declaratory Ruling and Order (the Order) that gave controversial interpretations of key provisions of the Telephone Consumer Protection Act of 1991, as amended (TCPA). In ACA International v. Federal Communications Commission, the court reviewed four main aspects of the FCC’s Order, upholding two provisions and setting aside two.

I – The Court Struck Down the FCC’s Definition of Autodialer

The FCC’s Order gave an expansive definition of the statutory term “automatic telephone dialing system” (ATDS), commonly referred to as an “autodialer,” to include any device that has the potential “capacity” to dial numbers randomly or sequentially without human input. By defining autodialers as devices that have the theoretical capacity to place autodialed calls, the court found that this definition “would appear to subject ordinary calls from any conventional smartphone to the Act’s coverage,” and that this was “an unreasonably expansive interpretation of the statute.” The court stated that “[i]f every smartphone qualifies as an ATDS, the statute’s restrictions on autodialer calls assume an eye-popping sweep” and that “[t]he TCPA cannot reasonably be read to render every smartphone an [autodialer] 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.”

II – The Court Struck Down the FCC’s Strict Conditions on Calling Reassigned Phone Numbers

The FCC’s Order dictated that no more than one phone call can be made to a phone number previously assigned to a person who had formerly given consent to phone calls. In other words, if an intended recipient’s phone number was reassigned to a new subscriber, the Order allowed the caller a one-call “safe harbor,” but would impose liability for subsequent calls even if the caller had no notice of the reassignment. The court struck down the FCC’s approach, finding that penalizing a caller for calling reassigned numbers “regardless of whether the caller has any awareness of the reassignment” was arbitrary and capricious. The court noted that the FCC “gave no explanation of why reasonable-reliance considerations would support limiting the safe harbor to just one call or message.”

III – The Court Upheld Giving Consumers Broad Leeway to Revoke Consent

The FCC had issued a broad reasonableness standard for revocation of consent, allowing consumers to revoke consent both orally and in writing. This broad standard has been criticized by a number of industry participants. However, the court upheld the commission’s determination that a called party who gave prior express consent to receive calls may revoke that consent using “any reasonable manner that clearly expresses his or her desire not to receive further calls.”

IV – The Court Upheld the FCC’s Interpretation of What Qualifies under the Healthcare Exception to the Ban on Calling Cellphones with an Autodialer

The FCC Order clarified a TCPA exemption from the consent requirement for time-sensitive healthcare calls, which petitioners argued was too narrowly fashioned. The court upheld the FCC’s allowance for calls to wireless numbers “for which there is exigency and that have a health care treatment purpose.” The court refused to disturb the FCC’s determination that the healthcare exemption does not cover calls “that include telemarketing, solicitation, or advertising content, or which include accounting, billing, debt-collection, or other financial content.”

Some Implications of the Decision

  • The court did not define what an autodialer is, but rather clarified what it could not be – meaning the FCC will still need to outline the definition.
  • The court did not propose a replacement to the FCC’s liability scheme for calling reassigned numbers, so there are still unanswered questions as to whether and to what extent there is liability for calling reassigned telephone numbers more than once in cases in which the caller is not immediately made aware that the number has been reassigned. Since the ruling, the FCC voted to adopt a Further Notice of Proposed Rulemaking on March 22, moving forward with efforts to create a reassigned numbers database and offer liability protections for companies that use it.
  • Callers still cannot designate an exclusive means by which recipients may revoke their consent to receive calls. The court found that while dictating certain standardized opt-out procedures is not necessary, callers aren’t likely to be held liable in cases when a consumer sidesteps clearly defined and easy-to-use opt-out methods. In other words, the court pointed out that the “reasonable” standard of revocation applies to both the caller and the consumer.

Some of the unanswered questions will likely be addressed by courts and the FCC, which is now led by the Republican commissioners who, as previous minority members, dissented to the FCC’s 2015 Order. Read the decision here.