Banking Law News

INSIGHT: TCPA So Far Shows Distinct Lack of Clarity

March 27, 2020, 8:00 AM

The Telephone Consumer Protection Act (TCPA) is perhaps the most significant consumer protection act of our era. Enacted in 1991, when calling technology and mobile phones were in their infancy, the TCPA restricts how companies may communicate with their customers and prospective customers.

For telemarketing purposes, the TCPA requires that cell phone call (or text) recipients provide prior written consent. For non-marketing calls, prior express consent is required.

In today’s technology-driven era, thousands, if not tens of thousands, of calls/texts may be transmitted over a very short period. With penalties for violating the TCPA at $500 per violation (trebled to $1,500 if the conduct is deemed willful), with no cap on liability, TCPA damages can easily climb into the millions.

Companies need to keep an eye on four TCPA issues in 2020:

  1. the definition of autodialer;
  2. implementation of the reassigned cellular number database;
  3. the impact of the Pallone-Thune TRACED Act; and
  4. whether the U.S. Supreme Court will continue to afford the FCC deference in TCPA cases.

What Is an Autodialer? Still Seeking Clarity

Courts and businesses continue to struggle with the foundational TCPA question of what constitutes an automatic telephone dialing system (ATDS). In late January 2020, the U.S. Court of Appeals for the Eleventh Circuit held that to be an ATDS, equipment must:

  1. use a random or sequential number generator to store or produce telephone numbers; and
  2. dial the numbers.

Thus, equipment used to make calls to a pre-selected list of recipients, whose numbers were not produced or stored using a random or sequential generator, is not an ATDS within the meaning of the statute (Glasser v. Hilton Grand Vacations Co. LLC). The court rejected the plaintiffs’ argument that the statutory phrase “using a random or sequential number generator” modifies only “produce,” and not “store,” such that equipment that simply stores and dials telephone numbers could be an ATDS.

More recently, the Seventh Circuit joined the Eleventh Circuit in holding that an ATDS within the meaning of the TCPA is equipment that uses a random or sequential number generator (Gadelhak v. AT&T Srvcs. Inc.).

Implementation of Reassigned Cellular Number Database

The FCC has authorized the creation of a reassigned cellular number database, the purpose of which will be to determine whether consumers have been reassigned a cellular telephone number. The FCC also created a potential safe harbor from TCPA liability.

Companies that use the reassigned cellular number database will, theoretically, be able to determine if cellular numbers on their calling lists have been disconnected and made eligible for reassignment. Companies can then purge these numbers from their call lists, thereby decreasing the number of errant calls to consumers who are not the intended recipient.

To further encourage the use of the database, the FCC is providing callers with a safe harbor from liability for calls made to reassigned cellular numbers due to a database error.

Impact of the Pallone-Thune TRACED Act

In a renewed effort to combat robocalls, Congress enacted the Pallone-Thune TRACED Act. A crucial element of the TRACED Act is assigning new responsibilities and obligations to phone-service providers to identify calls correctly and shield their customers from unwanted calls.

The act will require phone-service providers to implement a new caller-ID authentication program that will enable providers to block unwanted calls. Providers must implement the caller-ID authentication program at no additional cost to the customer. The authentication program is aimed at cutting down on the practice of “spoofing,” where scammers trick consumers into thinking a call is coming from a specific area code or a legitimate place of business.

The act also gives the FCC new tools to increase its enforcement actions, including a longer statute of limitations and assessment of higher fines and penalties for offenders.

The U.S. Supreme Court Weighs in on TCPA Issues

In 2019, the Supreme Court was asked to determine whether federal courts are bound by FCC guidancein TCPA cases. The question on appeal in PDR Network LLC v. Carlton & Harris Chiropractic Inc. was 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.

The Supreme Court vacated the Fourth Circuit’s decision and remanded. It held that two preliminary questions needed to be addressed before the court could consider whether district courts are bound by FCC interpretations under the Hobbs Act:

  1. whether the 2006 FCC order at issue is a legislative rule that has the force of law or whether it is an interpretive rule that advises on the agency’s construction of the law but does not have the effect of law; and
  2. whether PDR Network had a prior and adequate opportunity to seek judicial review of the order under the Hobbs Act petition.

In remanding the case, the Supreme Court punted on the core question presented; i.e., whether district courts in private litigation are required to defer to the FCC under the Hobbs Act, or whether courts have authority to interpret and apply unambiguous statutory provisions that conflict with FCC rules.

The Fourth Circuit’s ruling on remand in 2020 may set this up for further high court review, and the question is also expected to arise in other cases.

The Supreme Court may weigh in on the definition of ATDS if it grants certiorari in Duguid v. Facebook Inc. One of the questions on appeal is whether the definition of an ATDS encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not use a random or sequential number generator.

In Facebook, the Ninth Circuit defined ATDS broadly to include any device that can “store” and “automatically dial” telephone numbers, even if the device does not use a random or sequential number generator.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Lewis S. Wiener is a partner and co-chair of the Global Financial Services Disputes and Investigations practice at Eversheds Sutherland. He heads the U.S. TCPA group and represents an array of clients in the state, federal, and appellate courts.

Wilson G. Barmeyer and Francis X. Nolan IV are partners and members of the U.S. TCPA group at Eversheds Sutherland.

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