On Tuesday, June 13, 2017, the House Judiciary Committee’s Subcommittee on the Constitution and Civil Justice held a hearing on “Lawsuit Abuse and the Telephone Consumer Protection Act.”

Based on the testimony, statements, and questions at the hearing, it seems that the Subcommittee is in the very early stages of considering possible reforms to the TCPA. Although there is no draft legislation yet, nor even an agreement in principle of what changes to pursue, several members of the Subcommittee—including Subcommittee chairman Steve King and Judiciary Committee chairman Bob Goodlatte—seem committed to find a way to rein in the statute’s disproportionately high social costs while maintaining its core purpose of protecting consumer privacy. Indeed, both Representatives expressed significant concern regarding the concrete harms that the current wave of TCPA litigation is having—injuring businesses trying in good faith to comply with the law; depriving consumers of desired (and, in some cases, sorely needed) communications; and enriching a small cohort in the legal profession who are pursuing their personal profit rather than the welfare of the American consumer.

Although there is no way to predict when (or even whether) actual legislation will be proposed and advanced to the full House, it is a step in the right direction that the issue is being debated and the TCPA’s full costs are being realized by those with the power to rein them in.

Below are highlights from the four witnesses’ written and oral testimony, as well as noteworthy points from the remarks and questions of the Representatives in attendance. The witnesses’ written testimony and a video recording of the hearing are available on the Subcommittee’s webpage.

Witness Testimony

Rob Sweeney. Mr. Sweeney is the founder and CEO of Mobile Media Technologies, LLC. His company uses technology called TextCaster to allow its institutional customers (including TV stations, local governments, healthcare providers, etc.) to (1) allow consumers to consent to receive text messages; (2) send text messages to consumers who have done so; and (3) enable consumers to revoke their consent for further text messages at any time.

Shortly after the FCC’s 2015 Omnibus Order interpreted the TCPA to require that consumers be enabled to use “any reasonable means” to opt out of receiving messages, two individuals started texting “STOP” to Mr. Sweeney’s customers. Because his TextCaster program did not at that time have a feature that treated “STOP” as opting out of further text messages—that update was not rolled out until November 2015—those individuals continued to receive text messages. Eventually, those individuals (both of whom were represented by the same plaintiffs firm in California) sent demand letters to the companies that had continued to text them after their “STOP” messages. As a result of the demand letters and cloud of potential TCPA liability, a number of companies have dropped the TextCaster service, which has cost Mr. Sweeney’s business over $300,000, forced him to lay off workers, and required him to spend over $100,000 in legal expenses combating those demands.

Especially contrasted against the nuanced legal opinions of the other witnesses, Mr. Sweeney’s testimony colorfully illustrated the real-world impact the TCPA can have on small businesses and everyday American workers.

Becca Wahlquist. Ms. Wahlquist, spoke on behalf of the U.S. Chamber Institute for Legal Reform. Ms. Wahlquist’s testimony (1) demonstrated the scope of the problem posed by the TCPA as interpreted by the FCC under former Chairman Wheeler; (2) identified and explained the root cause of those problems; and (3) proposed legislative changes that would eliminate, or at least mitigate, those problems.

On the scope of the problems associated with the TCPA, Ms. Wahlquist marshaled many facts and statistics about the number of TCPA filings and the rate at which they have increased in recent years; vignettes from real company-defendants forced into bankruptcy by TCPA liability; and some of the recent, large-dollar settlements that further encourage the plaintiffs’ bar.

In terms of analyzing the root cause of the TCPA’s many problems, Ms. Wahlquist also contextualized the TCPA for the Subcommittee—explaining the problems it was intended to address and why it fails to map onto modern technology. For example, she explained that the drafters were concerned with junk faxes because in 1991 fax machines of that era required expensive thermal paper that was wasted by receipt of a junk fax.

Finally, Ms. Wahlquist proposed nine specific revisions to limit the abusive misuse of the TCPA:

• Shorten the statute of limitations to one year (from the current four-year period)

• Import the affirmative defenses from the section of the TCPA that covers the Do Not Call List into the section governing autodialed/pre-recorded calls;

• Clarify that a device only has the “capacity” of an autodialer if it has the actual, present capacity to randomly or sequentially dial telephone calls;

• Create a safe harbor for callers that unknowingly dial a reassigned or wrongly provided number;

• Clarify the scope of any vicarious liability under the TCPA so that it covers only those persons who place—or retain an agent/telemarketer to place—calls to consumers;

• Eliminate the special rules that apply to cell phones, now that receiving calls on them is no longer as costly as it was in 1991;

• Expressly determine what restrictions to place on text-message communications (rather than having them simply be treated as “calls”); and

• Establish a set process for consumers to revoke their prior consent to receiving text messages, and allow the company a reasonable time to process that revocation.

Hassan Zavareei. Mr. Zavareei's position was that the TCPA is effectively achieving its goals of deterring robo-calls and spam faxes and thus should not be amended or altered in any way.

In response to the point that receiving calls is less burdensome to consumers nowadays on account of the lower cost of cell phone ownership, Mr. Zavareei noted that many consumers—particularly low-income consumers—use prepaid wireless plans and thus are still burdened by receiving unauthorized calls. He expressed the view that the TCPA is a narrow statute with ample safe harbors for emergency messages, healthcare-related communications, and similar desired communiques. He also argued that the TCPA’s express-consent requirement is easy to satisfy, including by providing one’s phone number to a caller.

Mr. Zavareei dismissed concerns over the small-dollar recovery often afforded to individual consumers in TCPA class settlements, observing that the purpose of the statute is deterrence of unlawful conduct, not compensation for injured parties, and that that goal would be served regardless of whether the money went to individual consumers or their lawyers. Mr. Zavareei further argued that courts are capable of dealing with bad TCPA actors by dismissing claims brought by serial litigants.

Mr. Zavareei concluded by recommending that the TCPA be amended to (1) state that providing a phone number does not constitute “express consent” to being called at that number; and (2) that the statutory language “make or initiate” should be amended to clarify that upstream actors are liable for TCPA violations of their agents unless the agents “entirely contro[l] the selection of the destination telephone numbers, content of the text messages, and the timing of deliver.” (emphases in written testimony).

Adonis Hoffman. Mr. Hoffman is chairman of Business in the Public Interest, Inc. and an adjunct professor at Georgetown, as well as a former Legislative Counsel to the House.

He used his testimony to point out the way in which large-dollar settlements have spurred incredible proliferation of lawsuits under the TCPA (which he refers to as “Total Cash for Plaintiffs’ Attorneys”). He also emphasized that, although eye-popping awards against major corporations get most of the press, TCPA demands and lawsuits also have a devastating—and, indeed, often a more devastating—effect on small and minority-owned businesses.

Mr. Hoffman concluded by proposing a liability cap for TCPA awards, a safe harbor for substantial compliance, and amending key provisions of the statute (such as the definition of an autodialer).

Representatives’ Remarks and Questions

Chairman Steve King (R-IA). Chairman King used his comments and questions to highlight the theme that the TCPA was a sensible enactment when passed but, as times and technology have changed, has become unclear in its scope and complex in its application. He also expressed concern that the chilling effect of potential TCPA liability would prevent members of the public from receiving useful—even necessary—communications. He also noted that, although he thinks reform is needed, any changes must keep the statute’s original privacy-protective goals in mind. Chairman King also asked what percentage of TCPA cases are actually litigated to judgment, and Ms. Wahlquist responded that there are no good data on that point, in part because there is no way to track cases that do not progress past the issuance of a demand letter.

Rep. Bob Goodlatte (R-VA). Like Chairman King, Rep. Goodlatte (who, as noted above, is chairman of the full Judiciary Committee) expressed significant concern that members of the public would not receive important information because companies, doctor’s offices, etc. will opt not to send that information for fear of TCPA exposure. He also noted that he has seen reports indicating that much of the robo-calling / telemarketing conduct that the TCPA was actually concerned with is now being conducted either by callers from overseas or from entities that mask the caller’s phone number such that identifying the actual caller is impossible. That, he said, raised his concern that the costs imposed by the TCPA are not even justified by rigorous enforcement against telemarketers / robo-callers. Finally, Rep. Goodlatte also expressed some surprise that the statute did not expressly grant courts discretion to reduce an award that was plainly excessive under the circumstances. Ms. Wahlquist responded that that discretion simply does not exist under the law as currently drafted and interpreted.

Rep. Louie Gohmert (R-TX). Rep. Gohmert seemed primarily concerned with ensuring that consumers are able to get important information from potential callers (e.g., refill or appointment reminders). Mr. Hoffman said that one option, in addition to possible legislative changes, would be for the FCC to change some of its past interpretations of the statute—an option that seemed to draw interest from Rep. Gohmert.

Ranking Member Steve Cohen (D-TN). Rep. Cohen expressed strong support for the TCPA as it had been interpreted by the FCC under former Chairman Wheeler, including, in particular, applying its proscriptions to text messages. He also said that he thought this was a matter for the Energy & Commerce Committee, not Judiciary. He also championed the strict-liability nature of the regime and the extent to which the private right of action has succeeded in reducing the incidence of robo- and telemarketing calls.

Rep. Jamie Raskin (D-MD). Rep. Raskin said that in his view the question was whether the courts were sufficiently empowered to deal with these suits and, in particular, the abusive tactics described in some of the witnesses’ testimony. Ms. Wahlquist responded that some tools do exist—such as finding a named plaintiff and counsel to be inadequate class representatives if they’re serial TCPA abusers—but also pointed out that those options are not available early in the litigation process to weed out claims that do not address actual harm. She also said that there has been wide variety in the analytical rigor (and degree of rationality) applied by different courts across the country, which makes the judicial backstop not sufficient.

Rep. Jerry Nadler (D-NY). Rep. Nadler said that he was unconcerned with the relatively small per-consumer recovery in the class actions, so long as the overall awards were large enough to deter callers from violating the statute. He also expressed support for the continued maintenance of a private right of action under the TCPA. Mr. Zavareei agreed, saying that centralized enforcement by the FCC would afford no protection at all to consumers.