Consumer lawsuits under the Telephone Consumer Protection Act ("TCPA") have surged following a 2015 declaratory order from the Federal Communications Commission ("FCC"), which included an expansive interpretation from the FCC of what constitutes an "automatic telephone dialing system" ("ATDS"). The D.C. Circuit's much-awaited decision in ACA International v. Federal Communications Commission, 885 F.3d 687 (D.C. Cir. 2018) earlier this year set aside much of the FCC's prior interpretation of what qualifies as an ATDS. ACA International was widely seen as a win for businesses and advertisers, but the decision has done little thus far to stem the tide of TCPA lawsuits, especially as the scope of the decision continues to play out.
As we previously reported, Congress passed the TCPA in 1991 after years of consumer complaints about unwanted, automated robocalls. Under the TCPA, it is generally unlawful to place a call or send a text message to a person's cell phone using an ATDS without that person's prior consent. Each violation of the TCPA can result in $500 in statutory damages, with willful violations subject to treble damages. 47 U.S.C. § 227(b)(3)(B)-(C). The statutory language of the TCPA defines an ATDS as equipment which "has the capacity to (A) store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers." 47 U.S.C. § 227(a)(1).
In 2015, the FCC issued a declaratory order attempting to clarify which calling devices have the "capacity" to store and dial telephone numbers using a random or sequential generator. Rather than limit "capacity" to what a device can do in its present state, the FCC included in its interpretation the potential functionalities of what a device can do in its future state, arguably sweeping in all smartphones under the TCPA's definition of an ATDS. In ACA International, the D.C. Circuit held, among other things, that this interpretation was unreasonable and impermissibly expansive. After the court's decision, the plaintiff trade group representing collection agencies and creditors declared victory, as did much of the business community.
Despite the triumph, however, companies are still answering the call of TCPA complaints. On August 2, 2018, the customer of a large retailer filed a proposed class action, alleging that the retailer violated the TCPA by sending her unsolicited text messages. The customer claims she sent the retailer a text to receive a 15 percent off coupon, but received additional marketing text messages to which she did not consent. Freedom Mortgage Corp. also lost two separate attempts to dismiss proposed class actions under the TCPA. Just last month, a New Jersey federal judge preliminarily approved a $1.4 million dollar settlement between Bloomingdale's and members of the retailer's "Loyallist Program," who alleged they received text messages from Bloomingdale's without their consent (although the complaint in that case was filed pre-ACA). The success of new lawsuits will hinge upon the reach of ACA International.
Importantly, ACA International did not alter the statutory definition of an ATDS, it merely invalidated the FCC's 2015 order interpreting "capacity," as well as rejected the FCC's treatment of which functions a device must perform to be an ATDS. Predictive dialers, for example—which use computer algorithms to automatically dial consumers' phone numbers when the consumer is predicted to answer, and when a telemarketer will be able to take the call—likely still fall within the TCPA's definition of an ATDS. Further, the ACA International decision strongly suggests that dialing numbers from a set list does not qualify as "using a random or sequential number generator," although even this has had mixed results, as one federal judge noted, "a calling system is no less random if the machine's universe is hundreds of thousands of customers, or the residents of a state, or the residents of a nation."
The ACA International decision also did not affect the statutory requirement that consumers must give prior consent before they may be called or texted using an ATDS. Indeed, the court agreed with the FCC's argument that a consumer can revoke her consent to be called or texted at any time, and through any reasonable means. In sum, the full effect of ACA International is still in flux, and the FCC was seeking public comment over the summer in an effort to interpret the statutory language once more.
Businesses that utilize telemarketing or text messages for advertising and promotions should pay close attention to the level of human intervention used in making these communications, as this continues to be an important consideration in determining whether a device is an ATDS. Businesses should also ensure that any consumer receiving these communications has given prior express consent, and anyone who has given prior consent is also given reasonable means to revoke.
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