After two and a half years, the U.S. Court of Appeals for the District of Columbia issued a highly anticipated ruling reviewing the Federal Communications Commission’s (“FCC” or “Commission”) July 2015 Declaratory Ruling and Order (“2015 Order”) in which the FCC issued interpretative guidance on several aspects of the Telephone Consumer Protection Act (”TCPA”). Over a dozen organizations sought review of the FCC’s 2015 Order. The D.C. Court, on appeal, reviewed four key aspects of the 2015 Order: 1) which sorts of automated telephone dialing system (“ATDS”) equipment are subject to the TCPA’s restrictions, 2) if a party consents to a call, whether the caller is still in violation if the consenting party’s wireless number is, unbeknownst to the caller, reassigned to a different party, 3) how may a consenting party revoke consent, and 4) whether the FCC too narrowly interpreted an exemption for certain healthcare-related calls.

The D.C. ruling, by a unanimous three-judge appellate panel, set aside the FCC’s expansive interpretation of what constitutes an ATDS and its approach to the consent of reassigned wireless numbers. The Court, however, upheld the FCC’s approach to revocation of consent by “reasonable means” expressing a desire to receive no further messages from the caller and the scope of the FCC’s exemption for certain healthcare calls.

ATDS Equipment

In setting aside the FCC’s expansive interpretation of what constitutes ATDS equipment, the appellate panel concluded that the FCC’s opinion that all equipment that has the theoretical “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 panel held that this “ostensible limitation affords no ground for distinguishing between a smartphone and a Firefox browser”. The panel determined that the FCC’s interpretation of ATDS was “an unreasonably expansive interpretation of the statute”.

Wireless Number Reassignment

The appellate panel also rejected the FCC’s approach to calls made to a person who previously have consent but whose number has since been reassigned to another nonconsenting person. The FCC concluded that calls in that situation are a violation of the TCPA, but did allow for a “one-call safe harbor” (i.e. one call post-reassignment, regardless of whether the caller has any awareness of the reassignment).  The Court set aside this interpretation as a whole on grounds that the FCC’s “one-call safe harbor” was “arbitrary and capricious”.

Revoking Consent

In contrast to the first two aspects of the FCC’s 2015 Order, the Court upheld the FCC’s guidance allowing consumers to revoke consent through any “reasonable means clearly expressing a desire to receive no further messages from the caller”. The FCC was originally petitioned to clarify whether callers could unilaterally prescribe exclusive means for consumers to revoke consent. The Commission explicitly declined this request, on the belief that allowing, “callers to designate exclusive means of revocation” could “materially impair” the “right to revocation”. The Court agreed with the FCC’s conclusion.  Notably, the Court did state “[t]he Commission’s ruling absolves callers of any responsibility to adopt systems that would entail ‘undue burdens’ or would be ‘overly burdensome to implement” and that “callers will have every incentive to avoid TCPA liability by making available clearly-defined and easy-to-use opt-out methods.”  Seeming to address a recent wave of lawsuits based on alleged unreasonable revocation attempts by call or text message recipients, the Court further stated, “[i]f recipients are afforded [clearly-defined and easy-to-use opt-out methods], any efforts to sidestep available methods in favor of idiosyncratic or imaginative revocation requests might well be seen as unreasonable.  The selection of an unconventionally method of seeking revocation might also betray the absence of any ‘reasonable expectation’ by the consumer that she could ‘effectively communicate’ a renovation request in the chosen fashion.”

Healthcare Exemption

The FCC was originally petitioned to exempt from the TCPA consent requirement “certain non-telemarketing, healthcare calls” alleged to “provide vital, time-sensitive information patients welcome, expect, and often rely on to make informed decisions.” Although the Commission acknowledged the “exigency and public interest” in certain healthcare-related calls, it was concerned that this policy argument failed with other types of healthcare calls such as “account communications and payment notifications” that could still potentially qualify as “vital, time-sensitive”.

As a result, the FCC’s 2015 Order limited the healthcare exemption to calls for which there is “exigency and that have a healthcare treatment purpose, specifically: appointment and exam confirmations and reminders, wellness checkups, hospital pre-registration instructions, pre-operative instructions, lab results, post-discharge follow-up intended to prevent readmission, prescription notifications, and home healthcare instructions”. The exemption would not cover calls that include telemarketing, solicitation, or advertising content, or which include accounting, billing, debt collection, or other financial content.”

The Court concluded that the FCC was “empowered to draw the distinction it did, and it adequately explained its reason for doing so”, and therefore did not act “arbitrary and capricious”, as petitioners argued.

FCC Response

Shortly after the Court’s decision was announced, the FCC Commissioners issued statements in response. Chairman Pai, Commissioner Carr, and Commissioner O’Reilly all viewed the decision favorably.  Commissioner Rosenworcel’s statement reflected her view that the Court’s decision would allow robocalls to continue unless the FCC does something to address them.  Importantly, it appears an appeal of the Court’s decision is unlikely as Chairman Pai stated, “I’m pleased today’s ruling does not impact the current FCC’s efforts to combat illegal robocalls and spoofing.  We will continue to pursue consumer-friendly policies” and “we’ll maintain our strong approach to enforcement.”

Takeaway

The D.C. Court’s ruling both clarifies key aspects of the FCC’s 2015 Order and provides the FCC with direction on how to address rulemaking in this area going forward. However, numerous issues of the TCPA’s breadth and scope remain.  Organizations  are advised to consider the D.C. Court ruling together with FCC Chairman Pai’s position on the TCPA, when implementing and updating telemarketing and/or automatic dialing practices going forward.