Client Alert: DC Circuit Partially Overturns 2015 FCC Order in Long-Awaited TCPA Ruling

Client Alerts Privacy & Data Security

By Lynn C. Percival

Earlier today, the U.S. Court of Appeals for the District of Columbia issued a long-awaited opinion addressing a challenge to the FCC’s 2015 order interpreting the Telephone Consumer Protection Act (“TCPA”). There are four major aspects of the court’s decision:

• The court rejected the FCC’s broad reading of the term “automatic telephone dialing system” (“ATDS” or “autodialer”). Several of the TCPA’s most onerous requirements apply to autodialers, including the requirement to obtain “prior express consent” for information calls transmitted via autodialer and “prior express written consent” for marketing calls transmitted via autodialer. In its 2015 order, the FCC took the highly controversial position that the TCPA defines autodialer so broadly that nearly any type of phone equipment can qualify as an autodialer. The DC Circuit rejected that interpretation. The court took the position that, under the FCC’s order, every smartphone could qualify as an autodialer, and every smartphone user (i.e., 80% of American adults as of the end of 2016) would violate federal law by making a call or sending a text message without prior express consent. The court did not, however, provide a definitive explanation of how to interpret the statutory definition of ATDS or apply the concept to the requirements of the TCPA. But the court did suggest that it would be inclined to address the issue in a subsequent petition or appeal. 
• The court rejected the FCC’s approach to reassigned numbers and the one-call safe harbor the agency created. Reassigned numbers present a problem for callers because callers do not receive notice when a number is reassigned from one phone subscriber to another. When the original subscriber has consented to receive autodialed calls, and the subsequent subscriber has not, the caller may unwittingly call the subsequent subscriber without consent. The FCC took the position in its 2015 order that this would normally constitute a TCPA violation, but the FCC created an exception for the first call placed without consent following a number reassignment. The DC Circuit rejected the FCC’s approach, ruling that it was arbitrary and capricious.
• The court upheld the FCC’s exemption for time-sensitive healthcare calls. In the 2015 order, the FCC granted an exemption from the TCPA’s consent requirement for certain exigent healthcare calls. The FCC excluded from the exemption calls that include a telemarketing component. In its petition to the DC Circuit, Rite Aid argued that the exemption conflicted with the Health Insurance Portability and Accountability Act and is arbitrary and capricious. The DC Circuit rejected those arguments and left the exigent healthcare exemption in place as articulated by the FCC.
• The court upheld the FCC’s approach to revocation of consent. In the 2015 order, the Commission decided that individuals may revoke their consent to receive calls (i.e., opt out of calls) through “any reasonable means” and that callers may not unilaterally designate the acceptable means of revocation. The FCC’s approach to revocation of consent has been problematic in practice because it requires businesses to account for any reasonable method through which an individual may revoke consent. Nevertheless, the DC Circuit declined to set aside this aspect of the FCC’s 2015 order.

We will continue to review the DC Circuit’s opinion and follow up with a more in-depth review of the ruling and its implications.