TCPA In Jeopardy? US Supreme Court Reviews ConstitutionalityOn Wednesday, May 6th, the U.S. Supreme Court will hear oral argument in a case concerning the scope of the Telephone Consumer Protection Act (“TCPA”) that is of great interest to businesses and communications industry practitioners. In William P. Barr et al. v. American Association of Political Consultants et al., Case No. 19-631 (2020) (“Barr”) the Supreme Court agreed to review a ruling by the Court of Appeals for the Fourth Circuit, which declared a 2015 government debt collection exemption unconstitutional and severed the provision from the remainder of the 1991 TCPA. The 2015 amendment exempts calls from the TCPA’s autodialer restriction, if the call relates to the collection of debts guaranteed by the U.S. government. On Wednesday, the Supreme Court will consider if: 1) the government-debt exception to the Telephone Consumer Protection Act of 1991’s automated-call restriction violates the First Amendment; and 2) whether the proper remedy for any constitutional violation is to sever the exception from the remainder of the statute.

TCPA litigation has largely focused on the autodialer restriction over the past decade.  In 2015, the Federal Communications Commission (“FCC”) adopted an expansive interpretation of the restriction, which the U.S. Court of Appeals vacated and remanded in 2018. While the industry has waited for the FCC to offer further guidance, entities making calls and sending texts have navigated an environment plagued by uncertainty. Several courts of appeals have adopted conflicting interpretations of the autodialer provision. Meanwhile, the FCC could offer its interpretation at any time, throwing the issue into further litigation in all probability.  In this environment, the Supreme Court agreed to hear the constitutionality of one TCPA exemption in the Barr case. Many are hoping for a decision that goes beyond the 2015 amendment and offers definitive guidance on the autodialer provision’s scope. This post discusses what to expect – and what to watch for – in the Supreme Court’s oral argument this week.

Continue Reading TCPA In Jeopardy? US Supreme Court Reviews Constitutionality

Ad Law Access PodcastRecently the Second Circuit Court of Appeals issued an opinion providing its definition of an automatic telephone dialing system (ATDS) under the TCPA. That sets up a severe split of the Circuits with the Second and Ninth Circuits taking a broad approach while the Third, Seventh, and Eleventh Circuits have charted a narrower standard for defining an ATDS.

On the latest episode of the Ad Law Access Podcast, special counsel Paul A. Rosenthal provides an update on ATDS issues, walks through the different standards for an ATDS under the TCPA, and discusses where that leaves telemarketers and litigants going forward.

Listen on Apple, Google, Soundcloud or Spotify.

For more information, sign up for our monthly TCPA Tracker and visit the Advertising and Privacy Law Resource Center for additional information on this and other topics.

Advertising and Privacy Law Resource Center

Since its adoption, the Telephone Consumer Protection Act (TCPA) has periodically been attacked as unconstitutional on grounds that it violates the First Amendment right to free speech due to its content-based restrictions. Until today, those attacks have generally failed, leaving defendants with the threat of potentially crippling statutory damages. Today, the Fourth Circuit announced that part of the TCPA, an exemption for calls to collect government debts, is unconstitutional and will be stricken from the Act.

Generally speaking, and among other restrictions, the TCPA makes it unlawful to call or text a cell phone using an automatic telephone dialing system (ATDS) or artificial or prerecorded voice without the prior express consent of the called party. As part of the Bipartisan Budget Act of 2015, Congress created a content-specific exemption that allowed ATDS calls to be placed if they were to collect a government-backed debt (the “debt-collection exemption”). In other words, a debt collector calling to collect on certain government backed mortgages or student loans were exempt from the act, but the same debt collector would not be exempt if calling to collecting on a non-government backed loan.

Content-based laws must satisfy the strict scrutiny test of the First Amendment. This means that content-based exemptions, such as the debt-collection exemption, are presumptively unconstitutional and may be justified only if the government can show that the restriction is narrowly tailored to serve a compelling state interest. The Fourth Circuit Court of Appeals, in overturning the District Court’s decision, held that the debt-collection exemption does not meet that standard, and is therefore unconstitutional.

This decision was announced in the case of American Association of Political Consultants, Inc. (AAPC) et. al v. Federal Communication Commission (FCC). The Fourth Circuit agreed with the AAPC that the debt-collection exemption was content based, and consequently that strict scrutiny test was appropriate. As explained by the Court:

Under the debt-collection exemption, the relationship between the federal government and the debtor is only relevant to the subject matter of the call. In other words, the debt-collection exemption applies to a phone call made to the debtor because the call is about the debt, not because of any relationship between the federal government and the debtor… In these circumstances, the debt-collection exemption to the automated call ban constitutes a content-based speech restriction.

The Court also concluded that the debt-collection exemption fails strict scrutiny because it is under-inclusive as it authorized many of the calls that the TCPA was enacted to prohibit. They also found that there was no compelling government interest, as the exemption cut against the privacy interests that Congress sought to safeguard by the TCPA.

Although the Court held that the debt-collection exemption was unconstitutional, it did not invalidate the entire statute as the appellant and many defendants in pending lawsuits had hoped. Instead, it determined that the appropriate remedy was to sever the exemption, leaving the rest of the statute intact.

Despite the Fourth Circuit’s decision, the battle over the constitutionality of the TCPA continues. The Ninth Circuit is currently considering a similar constitutional challenge to the TCPA in Gallion v. Charter Commc’ns Inc., in which oral argument was held on March 11.

The Fourth Circuit’s opinion in AAPC highlights the ongoing struggle over the scope and application of the TCPA.  As we’ve blogged about before, the FCC is believed to be on the cusp of issuing a new order on the definition of ATDS under the Act, which definition has been a hotbed of litigation and regulatory challenges.  We will continue to monitor developments and post updates on this site.

The current and future definition of what qualifies as an automatic telephone dialing system (ATDS or autodialer) remains a hotly debated and evaluated issue for every company placing calls and texts, or designing dialer technology, as well as the litigants and jurists already mired in litigation under the Telephone Consumer Protection Act (TCPA).  Last year, the D.C. Circuit struck down the FCC’s ATDS definition in ACA International v. FCC, Case No. 15-1211 (D.C. Cir. 2019).  Courts since have diverged in approaches on interpreting the ATDS term.  See, e.g., prior discussions of Marks and Dominguez.  All eyes thus remain fixed on the FCC for clarification.

In this post, we revisit the relevant details of the Court’s decision in ACA International, and prior statements of FCC Chairman Ajit Pai concerning the ATDS definition to assess how history may be a guide to how the FCC approaches this issue.

Continue Reading Taking Stock of the TCPA in 2019: What is an “Autodialer”?

Kelley Drye introduces a new Full Spectrum series, “Inside the TCPA,” which will offer a deeper focus on TCPA issues and petitions pending before the FCC. Each episode will tackle a single TCPA topic or petition that is in the news or affecting cases around the country. In this inaugural episode, partner Steve Augustino discusses the definition of an autodialer or ATDS. This episode addresses the 2018 D.C. Circuit decision in ACA International and the FCC’s new proceeding to examine the definition. With initial comments filed on June 13th, Steve  analyzes the principal arguments made by commenters and discuss whether Congress will weigh in on the matter. To listen to this episode, please click here.*

Future episodes of “Inside the TCPA” will tackle reassigned numbers, consent, and other topics raised before the FCC. This is a companion to Kelley Drye’s comprehensive list of petitions before the Commission available in our monthly TCPA Tracker newsletter. Please contact us if we can assist you with any of the FCC proceedings.

Kelley Drye’s Full Spectrum is available on iTunes. To subscribe, and keep up to date on the latest trends and topics in communications, simply find the built-in and undeletable podcast app, search “Kelley Drye Full Spectrum,” look for our logo, and hit “subscribe.”

You can also access the podcast through our website, Soundcloud, and Stitcher.

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iHeartMedia has agreed to pay $8.5 million to resolve allegations that the company sent unsolicited text messages to radio station listeners, in Messageviolation of the TCPA. According to the complaint, the company would invite listeners to send text messages in order to request songs or enter contests. Listeners who submitted requests or entries would receive messages from the company in return.

But rather than simply confirm receipt of the listener’s text, the plaintiffs alleged that the messages frequently included ads for the company’s partners. For example, when the plaintiffs sent a text message to enter a contest, they received a response inviting them to “play us in the brand new version of Words With Friends.” The text message included a link that led the recipient to the Words With Friends download page on their phone’s app store.

It’s tempting to think that a person’s text to your company constitutes consent to text them back, but it’s not that easy. While you may be able to send a simple confirmation of receipt, in order to send an ad, you need prior express written consent. Without that, you could be liable for statutory damages of up to $1,500 per text sent without consent. As this settlement demonstrates, those numbers can quickly add up.

On May 4, 2016, the FCC issued a Notice of Proposed Rulemaking to exempt robocalls made to collect “a debt owed to or guaranteed by the United States” from the TCPA’s prior express consent requirement. The new rules will implement a provision of the Bipartisan Budget Act of 2015. In its Notice, the Commission seeks comment on a number of issues, including as follows:

What types of calls should be covered by the exemption? The Budget Act created the TCPA exemption for calls made “solely to collect a debt” owed to the United States.  The Commission seeks comment on the proper interpretation of that language.  It also proposes to allow debt servicing calls under the exemption because such calls “may provide a valuable service by offering information about options and programs designed to keep at-risk debtors from defaulting or becoming delinquent on their loans.”  Finally, the Commission seeks comment on the proper interpretation and scope of the phrase “owed to or guaranteed by the United States.”
Who can be called? The Commission proposes that the exemption will cover “only calls to the person or persons obligated to pay the debt.”  It would exclude calls to persons who the caller does not intend to reach, and would apply the “one-call window” rule for reassigned numbers.  The Commission seeks comments on these proposals and asks commenters to provide alternative approaches they feel would be appropriate.
Who may place the calls? The Commission proposes that the exemption would cover calls made by creditors and those calling on their behalf, including agents.  It seeks comment on whether it should adopt this approach, or consider a narrower or broader interpretation under the Budget Act exemption.
How should the Commission limit the number and duration of the calls? The Budget Act provides the Commission with discretion to restrict covered calls, including by limiting the frequency and duration of the calls.  Thus, the Commission has proposed a three-call-per-month maximum for autodialed, prerecorded, or artificial voice calls to wireless numbers.  The limit would apply regardless of whether a call went unanswered.  The Commission posits whether a different limitation would be appropriate for live agent calls.  Without setting forth specific proposals, the Commission also seeks comment on the appropriate duration for the calls, as well as other restrictions (i.e., limiting calls hours to 8:00 AM to 9:00 PM).
Should consumers be permitted to stop covered calls? The Commission proposes “that consumers should have a right to stop [covered] calls at any point the consumer wishes.”  It proposes that stop-calling requests would continue to apply even after the debt is transferred to other collectors.  It further proposes to require callers to inform consumers of their right to make a stop-calling request.

Comments on the Commission’s proposals are due on June 6, 2016 and replies are due on June 21, 2016. Following the comment period, we expect the proceeding to move quickly because the Commission is statutorily mandated to adopt rules to implement the exemption no later than August 2, 2016.

iStock_000036215158Large-335x251On January 11, 2016, the FCC’s Consumer and Governmental Affairs Bureau released an order denying a petition by a text message platform provider for a declaratory ruling that the Commission should evaluate TCPA liability for these types of entities under the same standard established for fax broadcasters.  In the Order, the Bureau explained that a separate liability standard for text message apps and platforms was laid out in the Commission’s July 2015 Omnibus TCPA Order and that “text broadcasters can be liable for TCPA violations based on the factors discussed in that decision.”

The petitioner, Club Texting, Inc., filed its request for a declaratory ruling in 2009.  In the petition, Club Texting asked the Commission to apply the fax broadcaster TCPA liability standard to text message platforms, such that “liability will attached only if a text broadcaster ‘demonstrates a high degree of involvement in, or actual notice of, the unlawful activity and fails to take steps to prevent such transmissions.’”  In support of this request, Club Texting claimed that if the Commission made an affirmative finding that text broadcasters are not “senders” for TCPA purposes, it would “promote compliance” by the broadcasters’ third party clients that “are in the best position to ensure that recipients have consented to receive the text messages.”

FCC TCPA Declaratory Ruling

Nearly six years after the petition was filed, the FCC released its July 2015 Omnibus TCPA Order, in which it responded to approximately two dozen petitions for clarification of a variety of TCPA-related issues, including the Commission’s definition of a “caller” for purposes of determining TCPA liability.  In the Order – which is currently being challenged in the U.S. Court of Appeals for the D.C. Circuit – the Commission determined that a calling or texting platform or application may face primary liability under the TCPA as the “caller” based on a case-by-case analysis of whether the entity takes the steps necessary to physically place the telephone call (or text), or is so involved in the placing of a call to have been deemed to initiate it (as opposed to merely having some role, however minor, in the causal chain that results in the making of the telephone call).  The Commission further explained that other relevant factors when making its determination could include “the extent to which a person willfully enables fraudulent spoofing of telephone numbers or assists telemarketers in blocking Caller ID, by offering either functionality to clients,” or whether the text broadcaster “has knowingly allowed its client(s) to use that platform for unlawful purposes.”

The FCC’s standard is similar to the “high degree of involvement” standard applicable to fax broadcasters, but the Commission made clear that it was not applying the fax broadcaster standardper se.  This raises the possibility that outcomes involving calls or texts will differ than they would if faxes were involved.  Until we see cases adjudicating liability, however, we will not know how much of a difference the standard makes in practice.

Club Texting Petition

Against this backdrop, the FCC’s order in Club Texting is primarily procedural.  In denying the Club Texting petition, the Bureau reaffirmed the position in the Order and noted that “the Commission has clarified the standard to be applied to text broadcasters and that standard is not the same standard as applies to fax broadcasters.”  It did not revise the standard, nor did it offer any meaningful clarifications of how the standard will be applied.  Indeed, the order explicitly states that it is not adjudicating the liability of any particular text broadcasting service at this time.

We note that the FCC has proposed to fine a “robocall broadcaster” previously.  The case involved Dialing Services, Inc., a developer of a software platform that allows customers to record their own messages and send them to a designated list of recipients.  The Commission issued a Notice of Apparent Liability against the company in May 2014, and proposed a $2.9 million penalty on the basis that Dialing Services had allowed its customers, through its platform, to make 184 unlawful prerecorded message calls to cell phones.  According to the Commission, because of the company’s involvement in the call process, Dialing Services made or initiated the calls.  The Commission has yet to convert the NAL to a Forfeiture Order, however.  Arguably, the Commission should apply the standard announced in the 2015 TCPA Declaratory Ruling to determine Dialing Services’ liability in the case.

For now, service providers should expect the Commission to continue in its efforts to cast a wide consumer protection net, and companies involved in activities regulated by the TCPA should take whatever steps are necessary to avoid unwanted attention from regulators or the plaintiffs’ bar.

downloadOn Monday, Missouri Attorney General Chris Koster filed a lawsuit against Charter Communications, Inc., alleging that the cable, internet, and telephone service provider’s third party telemarketers made thousands of telemarketing calls to consumers who had placed their numbers on the federal and Missouri do-not-call lists, or requested not to receive telemarketing calls from Charter. According to the Attorney General’s press release, the Office received 350 complaints from Charter subscribers and non-subscribers about telemarketing calls – which some had been receiving up to three times per day.

According to the complaint, Charter had entered into contracts with third-party telemarketers to place telemarketing calls on its behalf to numbers on Charter-provided lists. These third parties allegedly used autodialers, identified themselves as Charter, and received a commission based on sales to phone numbers on the lists provided by Charter. The complaint, which was filed in the U.S. District Court for the Eastern District of Missouri, alleges that these third-party telemarketers made calls to thousands of consumers whose phone numbers were on applicable Do Not Call lists and did not lawfully honor consumers’ requests to be added to DNC lists, and that such calls were made without an applicable Established Business Relationship exemption or consent to be called. The complaint states that Charter is liable for these third parties’ calls, which allegedly violate the Telephone Consumer Protection Act, Telemarketing Sales Rule, and Missouri Merchandising Practices Act’s “No-Call Law” and “Telemarketing Law.”

While we have seen an influx of consumer class action lawsuits alleging TCPA violations in recent years, state Attorneys General have the authority to investigate and seek civil penalties for violations of both federal and state telemarketing laws. Attorney General Koster is seeking, in addition to permanent injunctive relief, civil penalties of at least $500 for each violation of the TCPA, up to $16,000 for each violation of the TSR, and up to $5,000 for each violation of the Missouri Merchandising Practices Act.

On July 10, 2015, the Federal Communications Commission (“FCC” or the “Commission”) released the text of its omnibus Declaratory Ruling and Order (“TCPA Declaratory Ruling and Order” or “Ruling”), which the Commission adopted by a 3-2 vote almost a month earlier, on June 18, 2015.

In Friday’s Ruling, the FCC responded to 21 petitions by a number of companies and trade associations who sought relief or clarification regarding the requirements of the Telephone Consumer Protection Act of 1991 (“TCPA”).  The Ruling redefines what equipment falls within the definition of “autodialer,” specifies liability for calls to reassigned telephone numbers, provides consumers with a right to revoke consent by any reasonable means, and establishes new exceptions for financial and healthcare related calls, among other changes.

Chairman Wheeler and Commissioner Clyburn both voted in favor, while Commissioners Rosenworcel and O’Rielly approved in part but dissented in part, and Commissioner Pai dissented.

Overview

In this Client Advisory, we address the Ruling’s discussion of the definition of “autodialer,” reassigned phone numbers, consent revocation, and certain financial and healthcare exemptions.  The Advisory also highlights other aspects of the Ruling, such as clarity that telecommunications carriers and VoIP providers can enable call blocking technologies in response to consumer requests, the liability for calling and texting platforms, a limited exemption for a one-time text immediately sent in response to a consumer’s request for information, the effect of consents obtained prior to the FCC’s 2012 rule change and the conclusion that Internet to text services fall within the scope of the TCPA.

The Advisory concludes with a review of the effective dates of the Ruling and next steps regarding possible appeals, filing deadlines, and potential legislative solutions. Continue Reading A First Look at the FCC’s 2015 TCPA Declaratory Ruling and Order