In a decision certain to have significant impact on Telephone Consumer Protection Act (TCPA) class action litigation, today the U.S. Supreme Court concluded narrowly that to qualify as an “automatic telephone dialing system”, a device must be able to either “store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator”.  The underlying decision of the Ninth Circuit is reversed and remanding.

Back in July of 2020, the Supreme Court accepted writ of certiorari to review a Ninth Circuit ruling regarding the TCPA addressing the issue of whether the definition of ATDS in the statute encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.” The Ninth Circuit had taken a broad approach to this issue, concluding that “an ATDS need not be able to use a random or sequential generator to store numbers[.]”  The Ninth Circuit court explained that “it suffices to merely have the capacity to ‘store numbers to be called’ and ‘to dial such numbers automatically.’”

ATDS Circuit Split

When the TCPA was enacted in 1991, most American consumers were using landline phones, and Congress could not begin to contemplate the evolution of the mobile phone. The TCPA defines “Automatic Telephone Dialing System” (ATDS) as “equipment which 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.” 47 U.S.C § 227(a)(1). In 2015, the Federal Communications Commission (FCC) issued its 2015 Declaratory Ruling & Order (2015 Order), concerning clarifications on the TCPA for the mobile era, including the definition of ATDS and what devices qualify. The 2015 Order only complicated matters further, providing an expansive interpretation for what constitutes an ATDS, and sparking a surge of TCPA lawsuits in recent years.

Consequently, several FCC-regulated entities appealed the 2015 FCC Order to the D.C. Circuit Court of Appeals, in ACA International v. FCC, No. 15-1211, Doc. No. 1722606 (D.C. Cir. Mar. 16, 2018). The D.C. Court concluded the FCC’s opinion that all equipment that has the potential capacity for autodialing is subject to the TCPA, is too broad. Although the FCC did say in its 2015 Order “there must be more than a theoretical potential that the equipment could be modified to satisfy the ‘autodialer’ definition”, the Court held that this “ostensible limitation affords no ground for distinguishing between a smartphone and a Firefox browser”. The Court determined that the FCC’s interpretation of ATDS was “an unreasonably expansive interpretation of the statute”.

Since the decision in ACA Int’l, courts have weighed in on the D.C. Circuit Court ruling and the status of the 2015 Order, sparking a circuit split over what constitutes an ATDS. The Second and Ninth Circuit have both broadly interpreted the definition of an ATDS, while the Third, Seventh and Eleventh have taken a much narrower reading. For example, earlier this year the Eleventh and Seventh Circuit Courts reached similar conclusions, back-to-back, narrowly holding that the TCPA’s definition of Automatic Telephone Dialing System (ATDS) only includes equipment that is capable of storing or producing numbers using a “random or sequential” number generator, excluding most “smartphone age” dialers.

Supreme Court Decision 

The Supreme Court unanimously concluded, in a decision written by Justice Sotomayor, that to qualify as an “automatic telephone dialing system” under the TCPA, a device must have the capacity either to store, or to produce, a telephone number using a random or sequential number generator.

“Expanding the definition of an autodialer to encompass any equipment that merely stores and dials telephone numbers would take a chainsaw to these nuanced problems when Congress meant to use a scalpel,” Justice Sotomayor pointed out in rejecting the Ninth Circuit’s broad interpretation of the law.

Moreover, Sotomayor noted that, “[t]he statutory context confirms that the autodialer definition excludes equipment that does not “us[e] a random or sequential number generator.””  The TCPA’s restrictions on the use of autodialers include, using an autodialer to call certain “emergency telephone lines” and lines “for which the called party is charged for the call”. The TCPA also prohibits the use of an autodialer “in such a way that two or more telephone lines of a multiline business are engaged simultaneously.” The Court narrowly concluded that “these prohibitions target a unique type of telemarketing equipment that risks dialing emergency lines randomly or tying up all the sequentially numbered lines at a single entity.”

Take Away

The Supreme Court’s decision should help resolve the ATDS circuit split and provide greater clarity and certainty for parties facing TCPA class action litigation. And while this decision is considered a win for defendants facing TCPA litigation, organizations are advised to review and update their telemarketing and/or automatic dialing practices to ensure TCPA compliance.

 

 

In late September, the United States District Court for the Eastern District of Louisiana issued a first of its kind  ruling regarding the Telephone Consumer Privacy Act (“TCPA”). The court held that TCPA provision,  47 U.S.C. § 227(b)(1)(A)(iii) – which prohibits calls (and messages) made using an Automatic Telephone Dialing Systems (“ATDS”)to any cellular telephone number – is unenforceable retroactively for the 5-year period between November 2015, when Congress amended the TCPA to include an exemption for government-debt, until July 2020 when the U.S. Supreme Court ruled the government-debt exception was unconstitutional.

In July the Supreme Court held in Barr v. American Association of Political Consultants (“AAPC”) that Congress impermissibly favored government-debt collection speech over political and other speech, in violation of the First Amendment, and thus must invalidate the government-debt collection exception of the TCPA, and sever it from the remainder of the statute. Despite the potential that the Court would address the constitutionality of the TCPA in its entirety, the Court left untouched the TCPA’s general restriction on calls made with an “automatic telephone dialing system” (“ATDS”).

In response to the Supreme Court’s ruling, the federal court in Louisiana emphasized that,

Congress’s 2015 enactment of the government-debt exception rendered § 227(b)(1)(A)(iii) an unconstitutional content-based restriction on speech. In the years preceding Congress’s addition of the exception, § 227(b)(1)(A)(iii) did not discriminate on the content of robocalls, and was, as the Supreme Court has observed, a constitutional time-place-manner restriction on speech.  Likewise, now that [American Association of Political Consultants] has done away with the offending exception, § 227(b)(1)(A)(iii) figures to remain good law in the years to come.  However, in the years in which § 227(b)(1)(A)(iii) permitted robocalls of one category of content (government-debt collection) while prohibiting robocalls of all other categories of content, the entirety of the provision was, indeed, unconstitutional.

This groundbreaking Louisiana decision has already started a trend in court analysis of the issue. Only weeks later, a federal district court in Ohio issued a similar ruling granting defendant’s motion to dismiss in Lindenbaum v. Realgy Inc., in light of the retroactive impact of AAPC.

The plaintiffs in AAPC sought the right to speak going forward on the grounds that the statute, as written, is an unconstitutional content-based restriction. The Supreme Court denied that relief, but offered a remedy in the form of eliminating the content based restriction. But, in our case, severance of the content-based restriction does not offer a “remedy” to correct past harm. Here, defendants do not seek the right to speak, having already done so. They seek the right to be free from punishment for speaking during a time when an unconstitutional content-based restriction existed. A forward-looking fix offers no remedy for this past wrong.

As many currently active TCPA cases involve calls/texts/faxes sent between November 2015 and July 2020, these rulings have the potential to have an immediate and significant impact on TCPA class action litigation.  The rulings’ impact is heightened by the fact the courts dismissed each plaintiff’s claims on grounds that the court lacked subject matter jurisdiction as “federal courts lack authority to enforce unconstitutional laws.”  A subject matter jurisdiction dismissal is available in all phases of litigation, and cannot be waived, increasing the number of cases that could potentially be impacted by the court’s ruling.

Notably, the Louisiana court acknowledged the likelihood of a circuit split arising from its ruling, but placed culpability for this on the Supreme Court’s decision in AAPC that lacked a “clear majority” – Justice Kavanaugh authored a plurality decision. “The court’s failure to unite behind a sufficiently agreeable rationale does a disservice to litigants and lower courts…Here, it has led the parties to wildly dissimilar understandings of AAPC’s legal effect — all in the utmost good faith and preparation. In the future, it may engender a circuit split which confronts the court anew.”

2020 has been an important year for TCPA developments, and 2021 is likely to be much of the same. Organizations are advised to review and update their telemarketing and/or automatic dialing practices to ensure TCPA compliance.

In case you missed it, here are several other TCPA updates of late worth reviewing:

The passing of U.S. Supreme Court Justice Ruth Bader Ginsburg will likely bring with it many shifts in the Court on key issues, among which are matters regarding the Telephone Consumer Protection Act (TCPA), most imminently –  what qualifies as an auto dialer. The TCPA has been ever evolving in recent years as courts and legislatures attempt to keep pace with changes in technology.

When the TCPA was enacted in 1991, most American consumers were using landline phones, and Congress could not begin to contemplate the evolution of the mobile phone. The TCPA defines “Automatic Telephone Dialing System” (ATDS) as “equipment which 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.” 47 U.S.C § 227(a)(1). In 2015, the Federal Communications Commission (FCC) issued its 2015 Declaratory Ruling & Order (2015 Order), concerning clarifications on the TCPA for the mobile era, including the definition of ATDS and what devices qualify. The 2015 Order only complicated matters further, providing an expansive interpretation for what constitutes an ATDS, and sparking a surge of TCPA lawsuits in recent years.

This past July the Supreme Court accepted petition for review of a Ninth Circuit ruling on the issue of whether the definition of “ATDS” in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.” The Supreme Court’s decision should help resolve the circuit split and provide greater clarity and certainty for parties facing TCPA class action litigation.

President Trump’s recent nomination of Seventh Circuit judge Amy Coney Barrett could be particularly impactful on the issue of defining ATDS under the TCPA.  In February of this year, Judge Barrett authored an opinion in which the Seventh Circuit narrowly held that the TCPA’s definition of Automatic Telephone Dialing System (ATDS) only includes equipment that is capable of storing or producing numbers using a “random or sequential” number generator, excluding most “smartphone age” dialers. The Seventh Circuit court expressly rejected the Ninth Circuit’s more expansive interpretation from a ruling in 2018 (currently under review by the Supreme Court), concluding that the TCPA covers any dialer that calls from a stored list of numbers “automatically”. These rulings are significant as most technologies in use today only dial numbers from predetermined lists of numbers.

In the Seventh Circuit case’s fact-pattern, the plaintiffs alleged that they had received over a dozen unsolicited calls over a one-year period, from the defendant. While the defendants acknowledged that that they had indeed placed the calls, they argued that this was not a TCPA violation, as their calling system required too much “human intervention” to qualify as an ATDS. Judge Barrett highlighted in the Seventh Circuit ruling that accepting the plaintiffs’ arguments against the defendant’s dialing system would have “far-reaching consequences…it would create liability for every text message sent from an iPhone. That is a sweeping restriction on private consumer conduct that is inconsistent with the statute’s narrower focus”.

Given Justice Ginsburg’s history as a proponent of protecting a consumer’s right to bring a class action both within the TCPA context and beyond, she very well may have supported a broader reading of the definition of ATDS. Whether Judge Barrett ultimately becomes Justice Ginsburg’s replacement remains to be seen, but anyone interested in the Supreme Court’s review of an ATDS under the TCPA should be following this development.

Back in October of 2019, the U.S. Supreme Court was petitioned to review a Ninth Circuit ruling regarding the Telephone Consumer Privacy Act (“TCPA”) on the following issues: 1) whether the TCPA’s prohibition on calls made by an automatic telephone dialing system (“ATDS”) is an unconstitutional restriction of speech, and if so whether the proper remedy is to broaden the prohibition to abridge more speech, and 2) whether the definition of ATDS in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.” Now, the Court has finally accepted writ of certiorari, limited to review of Question 2, described above.

ATDS Circuit Split

When the TCPA was enacted in 1991, most American consumers were using landline phones, and Congress could not begin to contemplate the evolution of the mobile phone. The TCPA defines “Automatic Telephone Dialing System” (ATDS) as “equipment which 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.” 47 U.S.C § 227(a)(1). In 2015, the Federal Communications Commission (FCC) issued its 2015 Declaratory Ruling & Order (2015 Order), concerning clarifications on the TCPA for the mobile era, including the definition of ATDS and what devices qualify. The 2015 Order only complicated matters further, providing an expansive interpretation for what constitutes an ATDS, and sparking a surge of TCPA lawsuits in recent years.

Consequently, several FCC-regulated entities appealed the 2015 FCC Order to the D.C. Circuit Court of Appeals, in ACA International v. FCC, No. 15-1211, Doc. No. 1722606 (D.C. Cir. Mar. 16, 2018). The D.C. Court concluded the FCC’s opinion that all equipment that has the potential capacity for autodialing is subject to the TCPA, is too broad. Although the FCC did say in its 2015 Order “there must be more than a theoretical potential that the equipment could be modified to satisfy the ‘autodialer’ definition”, the Court held that this “ostensible limitation affords no ground for distinguishing between a smartphone and a Firefox browser”. The Court determined that the FCC’s interpretation of ATDS was “an unreasonably expansive interpretation of the statute”.

Since the decision in ACA Int’l, courts have weighed in on the D.C. Circuit Court ruling and the status of the 2015 Order, sparking a circuit split over what constitutes an ATDS. The Second and Ninth Circuit have both broadly interpreted the definition of an ATDS, while the Third, Seventh and Eleventh have taken a much narrower reading. For example, earlier this year the Eleventh and Seventh Circuit Courts reached similar conclusions, back-to-back, narrowly holding that the TCPA’s definition of Automatic Telephone Dialing System (ATDS) only includes equipment that is capable of storing or producing numbers using a “random or sequential” number generator, excluding most “smartphone age” dialers. By contrast, the Ninth Circuit has concluded that “an ATDS need not be able to use a random or sequential generator to store numbers[.]”  The court explained that “it suffices to merely have the capacity to ‘store numbers to be called’ and ‘to dial such numbers automatically.’”

Supreme Court Petition

The Supreme Court has accepted petition for review of the Ninth Circuit ruling on the issue of whether the definition of “ATDS” in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.” The Supreme Court’s decision should help resolve the circuit split and provide greater clarity and certainty for parties facing TCPA class action litigation. The Court is expected to hear oral arguments on this dispute at the start next term, in the fall, and issue a decision by the summer of 2021.

Take Away

2020 is shaping up to be an important year for the TCPA. We recently reported on a much-anticipated Supreme Court decision, Barr v. American Association of Political Consultants, in which the court weighed in on the constitutionality of the TCPA, holding that the government debt collection exception of the TCPA violated the First Amendment, and must be invalidated and severed from the remainder of the statute. While it appears that courts are generally leaning towards the narrowing of the TCPA in a myriad of aspects, organizations are still advised to err on the side of caution, during this period of uncertainty, when implementing and updating telemarketing and/or automatic dialing practices.

In a much-anticipated Supreme Court decision, Barr v. American Association of Political Consultants, sure to impact the future of the Telephone Consumer Protection Act (“TCPA”), the Court addressed the issue of whether the government-debt exception to the TCPA’s automated-call restriction violates the First Amendment, and whether the proper remedy for any constitutional violation is to sever the exception from the remainder of the statute.

The Supreme Court concluded that Congress impermissibly favored government-debt collection speech over political and other speech, in violation of the First Amendment, and thus must invalidate the government-debt collection exception of the TCPA, and sever it from the remainder of the statute. Despite concerns that the Court would address the constitutionality of the TCPA in its entirety, the Court left untouched the TCPA’s general restriction on calls made with an “automatic telephone dialing system” (“ATDS”).

Applying traditional severability principles, seven Members of the Court conclude that the entire 1991 robocall restriction should not be invalidated, but rather that the 2015 government-debt exception must be invalidated and severed from the remainder of the statute. . . . As a result, plaintiffs still may not make political robocalls to cell phones, but their speech is now treated equally with debt-collection speech.

 Addressing the decision to leave the remainder of the TCPA intact, the Court highlighted the “normal rule”, introduced in Free Enterprise Fund v. Public Company Accounting Oversight Bd., where the Court concluded that, “Generally speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to the problem, severing any problematic portions while leaving the remainder intact.”

This is not the first time, of late, that the Supreme Court has been petitioned to address the constitutionality of the TCPA. Back in October of 2019, the Court was petitioned to review the following issues: 1) whether the TCPA’s prohibition on calls made by ATDS is an unconstitutional restriction of speech, and if so whether the proper remedy is to broaden the prohibition to abridge more speech, and 2) whether the definition of “ATDS” in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.” The Court has still not announced whether it will accept this petition.

While the impact of the Supreme Court’s decision on the TCPA is limited, given that only the government-debt exception was severed, it still provides greater certainty and clarity for organizations facing TCPA litigation. Organizations are advised to review and update their telemarketing and/or automatic dialing practices to ensure TCPA compliance.

The Telephone Consumer Protection Act (“TCPA”) generally prohibits the use of automated dialing equipment or prerecorded voice messages to make calls, send text messages, or send faxes absent prior consent of the called party. This includes calls or texts to cellular phone numbers as well as calls to residential lines. There are limited exceptions to the TCPA’s consent requirements, including calls or texts sent for “emergency purposes”, meaning calls or texts made necessary in any situation affecting the health and safety of consumers. On March 20, 2020 the Federal Communications Commission (“FCC”) published a Declaratory Ruling confirming that the COVID-19 pandemic is an “emergency” that qualifies for the TCPA’s “emergency purposes” exception.

FCC History Regarding the TCPA’s “Emergency Purposes” Exception

Since the TCPA’s enactment in 1991, federal courts and the FCC have interpreted the “emergency purposes” exception narrowly, and guidance has been limited. In 2016 the FCC issued a narrow Declaratory Ruling in Blackboard-Edison on the TCPA’s “emergency purposes” exception, highlighting permissible automated calls from schools during “threat situations” affecting the “health and safety of students and faculty”. The FCC also clarified in this ruling that utility companies “may make robocalls and send automated texts to their customers concerning matters closely related to the utility service, such as a service outage or warning about potential service interruptions due to severe weather conditions, because their customers provided consent to receive these calls and texts when they gave their phone numbers to the utility company”. Finally, the FCC noted that the ruling was “tailoring relief to narrow circumstances presented in these petitions…without diluting the TCPA’s core consumer protections”.

FCC’s March 2020 Declaratory Ruling on the COVID-19 Pandemic

Now in its March 2020 Declaratory Ruling, the FCC has again narrowly specified that during the COVID-19 pandemic certain calls and messages qualify for the “emergency purposes” exception under the TCPA. Such calls must meet the following requirements: 1) “the caller must be from a hospital, or be a health care provider, state or local health official, or other government official as well as a person under the express direction of such an organization and acting on its behalf”, and 2) “the content of the call must be solely informational, made necessary because of the COVID-19 outbreak, and directly related to the imminent health or safety risk arising out of the COVID-19 outbreak.”

TCPA “Emergency Purposes” Exception and Workplace Correspondence

First, it is worth noting that while common sense would dictate that an employee’s provision of their telephone number to the employer should be viewed as consent to receive calls/texts (just as discussed above in Blackboard-Edison, where a utility company’s customers consented upon provision of their telephone numbers to the company), the TCPA and FCC guidance is silent on whether workplace correspondence are subject to TCPA liability. In at least one case where a claim has been brought against an employer related to the TCPA, the court dismissed the claim finding that the application’s language “authorizing [the employer] to collect, use….personal information provided for employment-related purposes” was consent.

Assuming, however, that an employer’s automated calls/texts to their employees are subject to the TCPA’s consent requirements, the question arises whether safety-related calls/texts made to an employee would qualify under the “emergency purposes” exception.   While this is unclear, given the two FCC Declaratory Rulings discussed above, there is a strong argument that such calls or texts would be considered as for “emergency purposes” and thus would be exempt from the TCPA’s consent requirement.   This is particularly true as Blackboard-Edison applied the emergency purposes exception not just to students, but also to faculty (employees).

Further in the March 20 Declaratory Ruling the FCC emphasized that “In the Blackboard-Edison Declaratory Ruling, the Commission made clear that automated calls to wireless numbers made necessary by incidents of imminent danger including ‘health risks’ affecting health and safety are made for an emergency purpose and do not require prior express consent to be lawful”. Interestingly, while the March 20 Declaratory Ruling is limited to calls made by hospitals, health care providers or health/government officials, this statement seems to indicate that the FCC intended Blackboard-Edison to apply more broadly.

Finally, the March 20 Declaratory Ruling also provided examples of inappropriate uses of the emergency purposes exception including calls that contain advertising or telemarketing of services like “advertising a commercial grocery delivery service, or selling or promoting health insurance, cleaning services, or home test kits” as well as “debt collection calls”. This sheds some light on when the use of the TCPA’s “emergency purposes” exception is appropriate or not generally, and it would seem that safety-related calls to employees, especially in light of the COVID-19 pandemic, would not fall into the category of inappropriate, based on these examples.

Takeaway

These are uncertain times, and of course, the safety and health of employees is critical. To avoid potential risks of a claim under the TCPA (including class actions), employers looking to implement programs to communicate quickly and timely with employees about health and safety risks, including those posed by COVID-19, should assess the applicability of the emergency purposes exception and/or consider obtaining additional consent.

In back-to-back decisions bound to have significant impact on Telephone Consumer Protection Act (TCPA) class action litigation, the Eleventh and Seventh Circuit Courts recently reached similar conclusions, narrowly holding that the TCPA’s definition of Automatic Telephone Dialing System (ATDS) only includes equipment that is capable of storing or producing numbers using a “random or sequential” number generator, excluding most “smartphone age” dialers. Each court expressly rejected the Ninth Circuit’s more expansive interpretation from a ruling in 2018, concluding that the TCPA covers any dialer that calls from a stored list of numbers “automatically”. These decisions are significant as most technologies in use today only dial numbers from predetermined lists of numbers.

One of the most complex issues under the TCPA is determining whether the technology utilized qualifies as an ATDS. The TCPA prohibits using an ATDS to make calls to cell phone numbers, absent prior consent of the called party.  The complexity lies with the TCPA’s definition of an ATDS as: equipment which 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.

When the TCPA was enacted in 1991, most American consumers were using landline phones, and Congress could not begin to contemplate the evolution of the mobile phone.  The Federal Communications Commission (FCC) with its 2015 Declaratory Ruling & Order (2015 Order), attempted to provide clarifications on the TCPA for the mobile era, including the definition of ATDS and what devices qualify. The 2015 Order only complicated matters further, providing an expansive interpretation for what constitutes an ATDS, and sparking a surge of TCPA lawsuits in recent years. The FCC’s expansive definition in the 2015 Order was set aside by the D.C. Circuit Court in March 2018.

The Eleventh Circuit three-judge panel opinion concluded simply, “In the age of smartphones, it’s hard to think of a phone that does not have the capacity to automatically dial telephone numbers stored in a list, giving §227 [of the TCPA] an ‘eye-popping sweep’…Suddenly an unsolicited call using voice activated software (think Siri, Cortana, Alexa), or an automatic ‘I’m driving’ text message could be a violation worth $500…Not everyone is a telemarketer, not even in America.”

In the case before the Eleventh Circuit, the plaintiffs alleged that they had received over a dozen unsolicited calls over a one-year period, from the defendants . While the defendants acknowledged that that they had indeed placed the calls, they argued that this was not a TCPA violation, as their calling system required too much “human intervention” to qualify as an ATDS. The Court agreed with the defendants, finding that in each element of the calling system, there was a “human’s involvement” – from the marketing team creating a “set of parameters” regarding who they intended to contact, to a team of employees programing the “criteria” into the system, a team that reviews the final call list, and finally a team that presses a button labeled “make the call”. “Unless and until the employee presses this button, no call goes out…far from automatically dialing phone numbers, this system requires human involvement to do everything except press the numbers on a phone.”

Last week, less than one month after the Eleventh Circuit’s ruling, the Seventh Circuit, with a similar fact pattern reached a similar conclusion. The Seventh Circuit noted that accepting the plaintiffs’ arguments against the defendant’s dialing system would have “far-reach consequences…it would create liability for every text message sent from an iPhone. That is sweeping restriction on private consumer conduct that is inconsistent with the statute’s narrower focus”. The Seventh Circuit also emphasized the historical intention of the TCPA.

“The [defendant’s] system, like others commonly used today, pulls and dials numbers from an existing database of customers rather than randomly generating them.. ..  Determining whether such systems meet the statutory definition has forced courts to confront an awkwardness in the statutory language that apparently didn’t matter much when the statute was enacted: it’s not obvious what the phrase “using a random or sequential number generator” modifies. The answer to that question dictates whether the definition captures only the technology that predominated in 1991 or is broad enough to encompass some of the modern, database‐focused systems.”

As we reported last week, several petitions are currently before the Supreme Court addressing issues with the TCPA, all with the potential to significantly impact the future of TCPA class action litigation. Particularly relevant to the Eleventh and Seventh Circuit rulings, back in October of 2019, the Court was petitioned to review the following issues: 1) whether the TCPA’s prohibition on calls made by an ATDS is an unconstitutional restriction of speech, and if so whether the proper remedy is to broaden the prohibition to abridge more speech, and 2) whether the definition of “ATDS” in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.” The Court has still not announced whether it will accept this petition.

The future of the TCPA remains uncertain, and 2020 will hopefully provide clarity for organizations facing TCPA class action litigation. While it appears that courts are generally leaning towards the narrowing of the TCPA in a myriad of aspects, organizations are still advised to err on the side of caution, during this period of uncertainty, when implementing and updating telemarketing and/or automatic dialing practices.

In a decision that may have significant impact on businesses that face Telephone Consumer Protect Act (“TCPA”) related class action litigation, the Supreme Court recently accepted certiorari of a petition to rule on the constitutionality of the TCPA. The Court agreed to review a ruling of the Fourth Circuit which held that a TCPA exemption for government debt collectors was in violation of the First Amendment.

Specifically, the Supreme Court will address the issue of whether the government-debt exception to the TCPA’s automated-call restriction violates the First Amendment, and whether the proper remedy for any constitutional violation is to sever the exception from the remainder of the statute. The Fourth Circuit concluded that the government-debt exception was unconstitutional, and to sever the government-debt exception but leave untouched the TCPA’s general restriction on calls made with an “automatic telephone dialing system” (“ATDS”). It is still unclear whether the Supreme Court will only address severing the government-debt exception, or the constitutionality of the TCPA in its entirety.

This is not the first time, of late, that the Supreme Court has been petitioned to address the constitutionality of the TCPA. Back in October of 2019, the Court was petitioned to review the following issues: 1) whether the TCPA’s prohibition on calls made by ATDS is an unconstitutional restriction of speech, and if so whether the proper remedy is to broaden the prohibition to abridge more speech, and 2) whether the definition of “ATDS” in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.” The Court has still not announced whether it will accept this petition.

When the TCPA was enacted in 1991, most American consumers were using landline phones, and Congress could not begin to contemplate the evolution of the mobile phone. The TCPA defines ATDS as “equipment which 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.” 47 U.S.C § 227(a)(1).  In 2015, the Federal Communications Commission (FCC) issued its 2015 Declaratory Ruling & Order (2015 Order), concerning clarifications on the TCPA for the mobile era, including the definition of “Automatic Telephone Dialing System” (ATDS) and what devices qualify. The 2015 Order only complicated matters further, providing an expansive interpretation for what constitutes an ATDS, and sparking a surge of TCPA lawsuits in recent years.

In 2018, the U.S. Court of Appeals for the District of Columbia set aside the FCC’s expansive interpretation of what constitutes an ATDS and its approach to consent of reassigned wireless numbers. Since that decision, a circuit split has developed with the Third Circuit ruling that a dialer is not an ATDS unless it has the present ability to randomly or sequentially generate numbers and to dial them and the Ninth Circuit adopting a broader reading holding that the definition of ATDS includes any equipment that has the capacity to store random numbers and dial them, even if it cannot generate numbers randomly or sequentially. In February of 2019, a petition of writ of certiorari was filed with Supreme Court, to review the Ninth Circuit panel’s decision, but shortly after the parties reached a settlement agreement. Given the circuit split over the definition of ATDS under the TCPA, the issue is ripe for the Supreme Court to address.

There has been great uncertainty surrounding TCPA litigation in recent years, and 2020 may be the year organizations facing such litigation finally get some clarity on key issues. In the meantime organizations are advised to implement and update their telemarketing and/or automatic dialing practices to ensure TCPA compliance.

The Telephone Consumer Protect Act (“TCPA”) has seen lots of action in 2019, and in the final days of the year the Federal Communications Commission (“FCC”) issued a significant ruling concluding that “online fax services” i.e. e-faxes are outside the scope of the TCPA. The FCC’s ruling effectively prevents the common “junk fax” class action lawsuits against companies that send out e-faxes, assuming those faxes are not delivered to a traditional fax machine.

In 2005, the TCPA, which restricts telephone solicitations and use of automated telephone equipment, was amended to include the Junk Fax Prevention Act (JFPA) that restricted the use of the fax machines to deliver unsolicited advertising.

The FCC ruling stems from a 2017 petition by Amerifactors asking the FCC to clarify that faxes sent to “online fax services” are not faxes sent to “telephone facsimile machines”, and therefore do not violate the TCPA. An online fax service is “a cloud-based service consisting of a fax server or similar device that is used to send or receive documents, images and/or electronic files in digital format over telecommunications facilities” that allows users to “access ‘faxes’ the same way that they do email: by logging into a server over the Internet or by receiving a pdf attachment [as] an email.” At the time, Amerifactors was defending a class action suit on claims that it violated the TCPA, where the bulk of messages sent to consumers were from “online fax services.”

In finding that “online fax services” are not considered “telephone facsimile machines” the FCC turned to the plain language of the TCPA. The TCPA’s language demonstrates that Congress did not intend the statute’s prohibition to apply to faxes sent to equipment other than a “telephone facsimile machine”. In addition, the FCC highlights precedent dating back to 2003 that faxes “sent as email over the Internet” are not subject to the TCPA. Faxes sent by online fax services via an attachment that the consumer can delete without printing are effectively the same as “email sent over the Internet”.

Importantly, the FCC notes that faxes sent by online fax services do not lead to the “specific harms” to consumers Congress sought to address in the TCPA.

“The House Report on the TCPA makes clear that the facsimile provisions of the statute were intended to curb two specific harms: “First, [a fax advertisement] shifts some of the costs of advertising from the sender to the recipient. Second, it occupies the recipient’s facsimile machine so that it is unavailable for legitimate business messages while processing and printing the junk fax.” The record is clear that faxes sent to online fax services do not pose these harms and, in fact give consumers tools such as blocking capabilities to control these costs.”

 This ruling is considered a win for businesses, and will likely have a sweeping impact on litigation in this area. Stay tuned for more TCPA related developments in the coming year.

Last week, the Eleventh Circuit ruled that a single unsolicited text message doesn’t meet the harm requirement necessary to proceed with a Telephone Consumer Protection Act (TCPA) claim.   The Eleventh Circuit ruling, Salcedo v. Hanna, reverses a decision by a lower court allowing the plaintiff to move forward with a TCPA claim on grounds that he received an unsolicited text message from his former attorney.

“The chirp, buzz, or blink of a cell phone receiving a single text message is more akin to walking down a busy sidewalk and having a flyer briefly [waved] in one’s face,” Circuit Judge Elizabeth L. Branch opined for the Eleventh Circuit three-judge panel. “Annoying, perhaps, but not a basis for invoking the jurisdiction of the federal courts.”

In reaching its conclusion, the Eleventh Circuit panel drew from the legislative history of the TCPA, its own precedent and the Supreme Court’s decision in Spokeo v. Robins which emphasized that in order to meet the Article III standing requirement, a concrete injury must be alleged.

While we often report on the growing circuit split stemming from Spokeo in the context of data breach litigation, due its lack of clarity on what constitutes a concrete injury (see here and here), the Spokeo ruling has generated a similar circuit split in the context of the TCPA. For example, in 2017 the Ninth Circuit concluded that receiving two unsolicited text messages was sufficient to meet the Spokeo standard for a concrete injury. The Eleventh Circuit panel was not persuaded by the Ninth Circuit’s reasoning, highlighting that the Ninth Circuit,

“…stopped short of examining whether isolated text messages not received at home come within that judgment of Congress. Instead, it concluded that ‘Congress identified unsolicited contact as a concrete harm’… We disagree with this broad overgeneralization of the judgment of Congress.”  

The Eleventh Circuit did not quantify how many unsolicited text messages, if any, would be enough to satisfy the concrete harm requirement to establish standing under the TCPA. The Eleventh Circuit decision may suggest that TCPA text messaging class actions are no longer possible, at least in the Eleventh Circuit. However until the Supreme Court weighs in, by clarifying its ruling in Spokeo, we will continue to see a lack of consistency across the circuit courts, both in the TCPA and data breach litigation contexts.

Although the Eleventh Circuit concluded that a single unsolicited text message did not meet the actual harm requirement necessary to sustain a TCPA claim, any organization that uses text messaging for promotional marketing purposes, should be mindful of the legal and regulatory guidelines that govern text message communications. Likewise, when contracting out these services, companies should ensure that their vendors are compliant with all regulatory requirements.