United States: New FCC Order Spurs Legal Challenges

The Association of Credit and Collection Professionals (ACA) swiftly-filed a petition for review of the FCC's July 10, 2015 Declaratory Ruling and Order (FCC 15-72) in the U.S. Court of Appeals for the D.C. Circuit. The petition challenges the FCC's treatment of automatic dialing systems, predictive dialers and its definition of prior express consent. Similar petitions were also filed by Sirius XM Radio and the Professional Association for Customer Engagement (PACE), which filed in the D.C. Circuit and Seventh Circuit, respectively. These entities are frustrated with longstanding ambiguity that has rendered TCPA compliance challenging and nerve-wracking. Lacking clear guidance, companies either risk large-scale class action liability, or must steer so far clear of potential wrongdoing that otherwise efficient practices are made onerous and expensive. Apart from these impracticalities, the ACA argues that the FCC has and continues to exceed its Congressionally-delegated authority when it expands the scope of the TCPA beyond its intended target of abusive telemarketers and into the sphere of other industries.

While the TCPA initially contemplated only automated telephone dialing system that could store or produce, as well as dial random or sequential telephone numbers, the FCC recognized beginning in 2003 that the rising tide of technology demanded it regulate a new class of equipment which could be loaded with lists of recipient phone numbers to be dialed automatically without human intervention. These machines, termed predictive dialers, maximize telemarketers' efficiency by initiating calls just as the telemarketer becomes available to speak on them. While the machines fell outside of the statutory definition of an ATDS, the FCC deemed their inclusion appropriate because doing so furthered underlying legislative intent: to fetter the degree of access of telemarketing callers to the public. To this end, the FCC emphasized that the main requirement for an ATDS is not the capacity to generate random or sequential numbers, but rather to be able to "dial numbers without human intervention." In re Rules & Regulations Implementing the TCPA, 18 FCC Rcd. at 14092.; see also Sterk v. Path, Inc., 46 F. Supp. 3d 813, 819 (N.D. Ill. 2014) motion to certify appeal granted, No. 13 CV 2330, 2014 WL 8813657 (N.D. Ill. Aug. 8, 2014).

The question for many telemarketers and their ilk then became how much human intervention would be enough to remove a semi-automated dialing mechanism, or SMS message platform from the TCPA's purview. Unfortunately, the July 10th Declaratory Ruling does little to answer that question. The FCC declined to delineate clear contours or compliance guidelines, instead announcing that "how the human intervention element applies to a particular piece of equipment is specific to each individual piece of equipment, based on how the equipment functions and depends on the human intervention, and is therefore a case-by-case determination." FCC 15-72 at 15.

Absent any useful guidance from the agency, concerned industries will continue to rely on the inconsistent body of case law that discusses machine capacity and human intervention with regards to ATDS status. For instance, in Marks v. Crunch San Diego, the Southern District of California held that an SMS platform was not an ATDS where the relevant human intervention was relatively far removed from the sending of messages from the gym to customers, including when customers volunteered their phone numbers and employees entered them into databases. 55 F. Supp. 3d 1288, 1293 (S.D. Cal. 2014) reconsideration denied, No. 14-CV-348 BAS BLM, 2014 WL 6632810 (S.D. Cal. Nov. 20, 2014). But many other courts have declined to follow this decision, ruling instead that the human intervention must happen during the initiation of the message or phone call; human action which occurs well before that stage will not discount a system's ATDS status. See, e.g., Sterk v. Path, Inc., 46 F. Supp. 3d 813, 819-20 (N.D. Ill. 2014) motion to certify appeal granted, No. 13 CV 2330, 2014 WL 8813657 (N.D. Ill. Aug. 8, 2014); McKenna v. WhisperText, No. 5:14-CV-00424-PSG, 2015 WL 428728, at *4 (N.D. Cal. Jan. 30, 2015).

The FCC's recent order also reinforces the longstanding premise that businesses may be liable under the TCPA for using machines that have the present or future capacity to perform completely autodialed call, even if they are not used as such. The rationale for this policy is that a corporation might avoid liability by flipping a secret capability switch, such that their wrongdoing would be difficult to detect. The ACA and defendants through the years have objected to this provision as overly oppressive, arguing that detection of wrongdoing, however challenging, ought to be an evidentiary burden shouldered by plaintiffs. Wary defendants might be heartened by decisions like that in Legg v. Voice Media Grp., Inc., in which the court declined to find for a plaintiff in the summary judgment phase because he had failed to show that defendant's broadcasts did not involve human intervention. 20 F. Supp. 3d 1370, 1376 (S.D. Fla. 2014). Even though the messages in question were sent en masse to a database at precise intervals, the court imagined it was possible that defendant "employed individuals to transmit each broadcast at the predetermined time." Id. It found further that a reference to VMG’s messages as "autodialed" did not address whether the messages were sent using an ATDS within the meaning of the TCPA, and without human intervention. Id. This evinces a greater willingness to impose upon plaintiffs a burden of proof about the actual circumstances under which defendant's calls are made than some in the industry fear the law commands. Even as the FCC's rules present growing hurdles for a variety of industries engaged in telephone communication with the public, individual court decisions might give greater consideration to the commercial freedoms of speech and interest in fostering trade served by identifying and permitting legitimate customer communication and marketing practices.

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