The Telephone Consumer Protection Act—which, thanks to its statutory damages of up to $1,500 per violation, has become a darling of the plaintiffs’ bar—is finally being subjected to serious scrutiny regarding both its applicability and constitutionality.
That will be welcome news to most businesses that interact with customers via phone call or text. But the question remains what will change under the glare of that increasing judicial scrutiny.
One threshold question that is still percolating in the appellate courts is what sort of dialing equipment qualifies as an “automatic telephone dialing system” such that a caller might need the “prior express consent” of the called party. See 47 U.S.C. §§ 227(a)(1), (b)(1).
That term is defined as equipment that “has the capacity–(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” That one sentence may have generated more litigation over the last decade than any other in the U.S. Code, with one of the last remaining disputes being which verbs in “to store or produce telephone numbers to be called” are modified by “using a random or sequential number generator.”
Plaintiffs have argued that it modifies “produce” but not “store,” and as a result any equipment that can dial stored numbers—which would include, among other things, every smartphone on Earth—would trigger the definition and require consent. Defendants by contrast have argued that it modifies both “produce” and “store,” which would mean that equipment that simply dials numbers from a stored list would not trigger the definition or require consent.
The Third and Ninth Circuits reached that question in 2018, with the former reading the definition narrowly and the latter reading it expansively—indeed, almost limitlessly. See Dominguez v. Yahoo Inc. (3d Cir. 2018) and Marks v. Crunch San Diego LLC (9th Cir. 2018).
That split grew in the last few weeks, with the Eleventh and Seventh Circuits both weighing in.
Although the former noted that “clarity … does not leap off this page of the U.S. Code” and the latter quipped that this statute “is enough to make a grammarian throw down her pen,” both issued careful, cogent opinions that dissect the statute and reject the Ninth Circuit’s construction. See Glasser v. Hilton Grand Vacations (11th Cir. Jan. 27, 2020) and Gadelhak v. AT&T Services Inc. (7th Cir. Feb. 19, 2020).
With this split likely to grow and these suits unlikely to slow, this issue may soon find itself being examined by the grammarians of last resort on the U.S. Supreme Court.
SCOTUS Grants Petition to Review
But an even more fundamental question—specifically, whether the statute’s consent requirement is constitutional—has already reached the Supreme Court. That issue was raised in three different petitions for review:
- Barr v. AAPC, No. 19-631;
- Facebook v. Duguid, 19-511: and
- Charter Communications v. Gallion, No. 19-575.
The court granted the Barr petition (which was filed by the attorney general and actually supported by the other parties) and to date has not acted on the Facebook and Charter petitions (which were filed by defendants and naturally opposed by the plaintiffs).
The parties in the Barr case seek review of the Fourth Circuit’s decision that one of the statute’s exemptions from the consent requirement—specifically the exemption for calls that are made solely to collect a debt that is owed to or guaranteed by the U.S., see 47 U.S.C. § 227(b)(1)(A)(iii)—is a content-based regulation that violates the First Amendment.
The Fourth Circuit further held that the proper remedy for that violation was to sever the exemption rather than scuttle the restrictions on automated telephone equipment. (The Facebook and Charter cases concern Ninth Circuit decisions that reached essentially the same result. Notably, Facebook’s petition also asks the Supreme Court to reject the Ninth Circuit’s interpretation of an “automatic telephone dialing system” as overly broad.)
The case will be argued in the court’s April sitting and decided before July. Briefing on the constitutionality and severability issues is already underway, with the government and its amici having recently filed briefs. The government’s brief argues principally that the government-debt exemption is not a content-based regulation.
Instead, the government contends, it is a facially neutral provision that merely regulates a particular class of economic activity—i.e., calls that collect debt held or guaranteed by the federal government. The government also argues that, if the government-debt exemption is deemed content-based, then so too will other statutes that regulate other classes of economic activity (e.g., the Fair Debt Collection Practices Act and the Fair Credit Reporting Act).
Steep Climb for Government
The government will face a steep climb in defending the metaphysical distinction between regulations based on “content” and “economic activity.” It also will struggle to map that distinction onto the text of the government-debt exemption, which makes the lawfulness of the call turn on the contents of the call—i.e., whether it is made “solely to collect a debt owed to or guaranteed by the United States.”
The government’s brief also appears to overlook the fact that numerous other provisions in the statute (in addition to the government-debt and emergency-purpose exemptions) also turn on the content of the call (e.g., whether a call concerns the security of financial information, the confirmation of a delivery, the healthcare of the recipient, or the goods or services of the caller).
The government also received support from several other stakeholders, including a group of states, numerous municipalities and other political subdivisions, and a handful of consumer groups. Of particular note, 15 current members of Congress submitted an amicus brief that argued in favor of the statute’s constitutionality and offered an atypical blend of legislative history and policy in support of that conclusion.
There is at least some possibility that such arguments could prove counterproductive, however, insofar as they show that Congress would have the political will to replace portions of the TCPA with new provisions that would not be burdened by the Swiss-cheese pattern of content-based exemptions that currently characterizes it.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Michael P. Daly is a partner at Faegre Drinker Biddle & Reath LLP in Philadelphia. He has spent nearly 20 years defending, counseling, and championing clients that interact with consumers. His practice focuses on defending class actions, handling critical motions and appeals, and maximizing the defensibility of marketing and the enforceability of contracts.
Mark D. Taticchi is a partner at Faegre Drinker Biddle & Reath LLP in Philadelphia. He represents and counsels clients in appellate litigation, complex civil disputes, and class action cases. He has prepared successful petitions to the Supreme Court of Pennsylvania, persuaded the U.S. Courts of Appeals on behalf of clients, and drafted numerous cert petitions and amicus briefs in cases before the U.S. Supreme Court.