Our preview of the Supreme Court’s consideration of Duguid can be found here and our analysis of the oral argument can be found here. The Court’s decision is discussed below, and its opinion can be found here.

Background

Plaintiff Noah Duguid alleged that defendant Facebook had used an ATDS without the requisite consent to contact him via text message when its systems used an automated response protocol to alert a customer-provided number of an access attempt. Mr. Duguid alleged that he did not have a Facebook account and never provided consent for Facebook to send him text messages. In 2018, the Northern District of California dismissed Duguid’s TCPA claim against Facebook because it held that he had failed to properly allege the use of an ATDS where the complaint’s allegations “strongly suggested direct targeting rather than random or sequential dialing.” In 2019, the Ninth Circuit reversed the lower court’s decision. It reasoned that Duguid had sufficiently pled the use of an ATDS by alleging Facebook’s equipment “had the capacity to store numbers to be called and to dial such numbers automatically.” The Ninth Circuit thus held that any device or system that could store telephone numbers was an ATDS restricted by the TCPA. Facebook appealed this decision to the Supreme Court.

The TCPA defines an ATDS as equipment that has the capacity “(A) to store or produce telephone numbers to be called, using a random sequential number generator; and (B) to dial such numbers.” The Supreme Court took up the following question: “Whether the definition of ATDS in the TCPA encompasses any device that can ‘store’ and ‘automatically dial’” telephone numbers, even if the device does not ‘us[e] a random or sequential generator?’”

Although the Supreme Court’s Duguid decision stemmed out of a challenge to the Ninth Circuit’s ATDS definition, five other federal circuit courts of appeals had weighed in on that issue, creating a deep circuit split. The Second, Sixth, and Ninth Circuits had held that any predictive dialer or system that dials from a stored list should be considered an ATDS under the TCPA. On the other hand, the Third, Seventh, and Eleventh Circuits held that an ATDS must have the capacity to generate random or sequential telephone numbers to be subject to the restrictions of 47 U.S.C. § 227(b).

SCOTUS’s Decision: Supreme Court Reverses the Ninth Circuit

In an opinion authored by Justice Sotomayor, a unanimous Supreme Court held that to qualify as an ATDS subject to Section 227(b)’s restrictions, a device or system must use a random or sequential number generator in storing or in producing a telephone number. The Court found that because “the equipment in question must use a random or sequential number generator” to be an ATDS, “[t]his definition excludes equipment like Facebook’s login notification system, which does not use such technology.”

The Court started by confirming that a proper reading of the statutory text confirmed the narrower standard. The Court reasoned that under clear rules of grammar, the modifying phrase “using a random or sequential number generator” modifies both antecedent verbs: “store” and “produce.” Additionally, the Court reasoned that because the modifying phrase immediately follows the cohesive clause “store or produce telephone numbers to be called” it would be odd to apply the modifier to one part of the cohesive clause. Thus, the Supreme Court cut through the grammatical roadblock that had led some circuit courts into opining that equipment that could simply “store” telephone numbers could be considered to be a restricted ATDS.

Justice Sotomayor’s opinion also relied on the statutory context of the TCPA to support the Court’s holding. The Court noted that the TCPA’s ATDS restrictions “target a unique type of telemarketing equipment that risks dialing emergency lines randomly or tying up all the sequentially numbered lines at a single entity.” Congress intended to address a very nuanced problem; therefore, expanding the definition of an ATDS to encompass any equipment that merely stores telephone numbers would go beyond the intent of Congress, and “take a chainsaw to these nuanced problems when Congress meant to use a scalpel.” Additionally, the Court noted that such an expansive definition would encompass virtually all modern cellphones and expose ordinary cell phone owners to TCPA liability when they engage in speed dialing or send automated text message responses, which could not have been Congress’s intent.

As to public policy concerns, the Court refused to impose “broad privacy-protection goals” onto the statute’s narrow definition of ATDS, noting: “[t]hat Congress was broadly concerned about intrusive telemarketing practices, however, does not mean it adopted a broad autodialer definition.” The Court noted that the TCPA would continue to restrict artificial and prerecorded voice calls, regardless of the narrow reading of ATDS, and that fears of a “torrent” of “robocalls” are thus overstated. In the end, as Judge Sotomayor explained, “Duguid’s quarrel is with Congress, which did not define an autodialer as malleably as he would have liked.”

In a short concurrence, Justice Alito agreed with the Court’s ruling, but wrote separately to take issue with the main opinion’s reliance on a “set” grammar rule. He advised that the canons of statutory interpretation are meant to be used as tools to help identify the way in which “a reasonable reader” would have understood the text of a statute at the time it was issued. The other justices dealt with Justice Alito’s concurrence in a footnote, and reminded lower courts to be methodical when interpreting statutory text.

Impact

There are hundreds of litigations and arbitrations pending around the country dealing with claims of illegal use of an ATDS, and dozens of high-profile class action cases have been stayed pending the Supreme Court’s decision in Duguid. The Court’s decision will alter the course of current and future cases as courts and litigants now have a uniform definition of an ATDS when assessing ATDS-based claims brought under Section 227(b) of the TCPA. Additionally, Duguid has provided guidance for companies that wish to directly reach out to current and prospective customers, by settling the question of what types of devices and systems will be considered an ATDS so as to require specific prior consents for their use. The decision has already prompted calls for a legislative response to the Court’s more narrow interpretation of ATDS from lawmakers who want to “amend the [TCPA], fix the Court’s error, and protect consumers.”

The Court’s decision also moots much of the ATDS question remanded to the FCC in 2018 in ACA International v. FCC. Given that the Court has now interpreted the ATDS definition, the FCC will not be required to provide its own interpretation of the term. In addition, the Court undermines alternative formulations of the ATDS definition occasionally advanced by the FCC that inquire as to the ability to initiate a high volume of calls or texts in a short period of time. The Court’s statement that it does not “interpret the TCPA as requiring such a difficult line-drawing exercise around how much automation is enough” likely moots that line of inquiry. Finally, several pending petitions ask the FCC to create or modify exceptions to the ATDS restriction. Many of those petitions will have less practical impact going forward.

Prerecorded/artificial voice call claims and Do Not Call violation claims under the TCPA, however, were not the focus of the Court’s decision. Callers should remain vigilant about their communications practices and ensure that they have procedures in place to remain fully compliant with the TCPA.

If you have any questions, please contact our experienced TCPA team.

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To start, here is the first resolution we suggested for the industry:

Resolution for Voice Service Providers: Resolve to reduce illegal robocalls. Voice service providers long have supported the FCC’s ongoing efforts to target bad actors sending illegal and fraudulent robocalls, but in 2021, each carrier should resolve to do its part individually in the battle to stop illegal calls. All voice service providers must implement the STIR/SHAKEN call authentication framework by June 30, 2021 and should develop an effective robocall mitigation program to prevent their customers from originating illegal robocalls. These changes are necessary to stay on the right side of the anti-robocall battle. Each voice service provider should resolve to make reducing illegal robocalls a top priority.

Background: 2020 marked a turning point in the number of requirements that voice service providers have in the battle against illegal robocalls. These include:

• STIR/SHAKEN Implementation Mandate

STIR/SHAKEN is an industry-developed framework designed to allow communications service providers to distinguish legitimate calls from illegally spoofed calls so that they can take steps to mitigate the illegal calls. STIR/SHAKEN utilizes an encrypted authentication and verification process that establishes a chain of trust between the calling party and the called party. In March 2020, the FCC required “voice service providers” (including intermediate providers) to implement STIR/SHAKEN in the IP portions of their network by June 30, 2021, while in October creating with some exceptions, most notably for small carriers (fewer than 100,000 voice lines), who receive a two-year extension of the deadline.

• Call Blocking Order

On December 30, the FCC released an Order requiring voice service providers to meet certain affirmative obligations and to better police their networks against illegal calls. These requirements include an obligation to notify callers when calls are blocked, to provide customers upon request with a list of calls that were blocked, and to implement processes for addressing claims that calls were improperly blocked. Further, regardless of whether a provider blocks calls, every provider has certain obligations to “prevent and avoid” originating illegal robocalls, including an obligation to conduct due diligence on new and renewing customers.

• Reassigned number database deadline

On February 8, the FCC announced via Public Notice the compliance date for the remaining rule requiring service providers to report information to the Reassigned Numbers Database Administrator. Beginning April 15, 2021 and recurring on the 15th day of each month thereafter, service providers must report permanent disconnections of their subscribers.

• Development and submission of Robocall Mitigation Plans

The FCC will soon require voice service providers that have not fully implemented STIR/SHAKEN in their networks to submit a Robocall Mitigation Plan detailing their efforts to prevent and avoid originating illegal robocalls. A provider must include three things in its robocall mitigation program:

• • the provider must take reasonable steps to avoid originating illegal robocall traffic (the FCC recommends the use of reasonable analytics);
  • the provider must commit to respond to requests from the Industry Traceback Group to trace suspect calls for mitigation efforts; and
  • the provider must cooperate in investigating and stopping any illegal robocallers (meaning that the provider must block calls or callers that are believed to be illegal).

Keeping the Resolution

So how can a voice service provider keep this resolution? We have several suggestions.

First, if it has not already begun the work, a provider should begin ASAP to implement STIR/SHAKEN in the IP portions of its network. For the time being, implementation requires a provider to have direct access to telephone numbers or else it cannot obtain an SPC token from the STIR/SHAKEN Governance Authority. (Sometime later in the year, merely filing a Robocall Mitigation Plan will be sufficient.) Those that have direct access to numbers should obtain their token authority and obtain a technological solution for implementing STIR/SHAKEN. Those that do not, including resellers, should work with their underlying carriers to determine how STIR/SHAKEN will be implemented and, most importantly, what attestation level will be assigned to the provider’s outbound calls.

Second, every provider should begin to develop its Robocall Mitigation Plan. These plans will be highly individualized, depending on the service provider’s customer base, technologies, and position in the call flow. Nevertheless, we expect the FCC to hold providers to their stated plans, so both an insufficient plan and an overly ambitious plan pose risks to the service provider. KDW is working with several providers already to develop their plans.

Third, service providers must develop compliance mechanisms to address the new anti-robocall obligations that have been implemented. These include processes for receiving and promptly responding to Industry Traceback Group requests, processes for responding to Enforcement Bureau notices of customers that are violating the robocall rules, and “know your customer” due diligence when provisioning or renewing service to a customer. Finally, compliance will also include reporting service reassignments to fuel the FCC’s new Reassigned Number Database. These are not the only requirements that will be adopted, so we recommend that a service provider implement a process for receiving compliance updates regularly as well.

2021 will be a big year for anti-robocall efforts. Voice service providers will want to keep this resolution in order to stay on the right side of the illegal robocall battle.

Follow the Communications group for ongoing coverage of TCPA/Robocall news, including:

• Kelley Drye at the 2021 INCOMPAS Policy Summit On February 9, Partner Steve Augustino moderated a two-part Robocall Compliance panel at the 2021 INCOMPAS Summit. Watch both panels here.
• Effectively Mitigating Illegal Robocalls: What Service Providers Need to Do On March 3, join Partner Steve Augustino for a Telestrategies webinar that will help service providers understand the STIR/SHAKEN framework, informing service providers of their new obligations, how to respond to investigation requests, and how to develop an effective robocall mitigation program.
• TCPA Tracker The TCPA Tracker Newsletter is produced as a collaborative effort between Kelley Drye’s Litigation, Advertising/Privacy, and Communications practices to help you stay current on TCPA (and related) matters, including case developments, and provide an updated comprehensive summary of TCPA petitions pending before the FCC. Subscribe here.
• Kelley Drye’s Full Spectrum Kelley Drye’s Full Spectrum podcast features smart, informative conversations about the latest issues in the technology, telecommunications, and media industries. Bringing together thought leaders in business, government, and enterprise, Full Spectrum offers an in-depth exploration of current legal, regulatory, and business issues. Our “Inside the TCPA” series offers a deeper focus on TCPA issues and petitions pending before the FCC.

See below for recordings of both sessions:

FCC Panel

Industry Panel

Question Presented

The Supreme Court granted review of the question: “Whether the definition of ATDS in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential generator”?”

Six Circuits have previously answered the question. The Second, Sixth and Ninth held that a predictive dialer or system that dials from a stored list can qualify as an ATDS under the TCPA. The Third, Seventh, and Eleventh require that technology must have the capacity to generate random or sequential telephone numbers to qualify as an ATDS. The Seventh Circuit decision, Gadelhak v. AT&T Services, Inc., was penned by then-Judge Barrett, who participated in today’s argument. In addition, the D.C. Circuit’s 2018 remand in ACA International v. FCC questioned whether a broad reading of ATDS was lawful.

This case arises out of the Ninth Circuit’s broad approach to the definition of an automatic telephone dialing system under the TCPA.

Procedural History

The controversy comes before the Supreme Court on the basis of text messages that plaintiff Duguid allegedly received from Facebook in 2005. Duguid alleged that Facebook had violated the TCPA by maintaining a database of numbers on its computer and transmitting text message alerts to selected numbers from its database using an automated protocol. Facebook filed a motion to dismiss, arguing that Duguid had failed to plead the use of an ATDS. The district court held that the ATDS allegations were insufficient because they “strongly suggested direct targeting rather than random or sequential dialing” and dismissed the case. Soon after, the Ninth Circuit issued its decision in Marks v. Crunch San Diego, holding that an ATDS definition includes devices with the capacity to store numbers and to dial numbers automatically. Duguid appealed the prior dismissal of his claims and, applying Marks, the Ninth Circuit reversed. Facebook asked the Supreme Court to review the Ninth Circuit’s decision.

Briefing

Duguid, Facebook, and the United States have fully briefed the issue. Duguid argues for a broad definition of ATDS based on the statutory text and two canons of construction, the distributive-phrasing canon and last-antecedent canon, that he alleges show the adverbial phrase “using a random or sequential number generator” modifies the verb “to produce” but not the verb “to store.” Facebook, on the other hand, posits that the statutory language “using a random or sequential number generator” is an adverbial phrase that modifies both the verbs “store” and “produce.” Under that approach, the statutory text limits the definition of an ATDS to technology that uses a random- or sequential-number-generator. The United States filed a brief agreeing with Facebook that the plain text of the TCPA limits the definition of an ATDS to random- or sequential-number-generators. The government’s grammatical analysis focuses on the comma that precedes the adverbial phrase, pointing to past Supreme Court decisions and canons of statutory interpretation that advise such a comma is evidence that the phrase is meant to modify all antecedents (in this case, both the verbs “store” and “produce”).

Oral Argument

Argument in the case went over the scheduled hour by about 20 minutes. Facebook and the United States split the first 30 minutes and Duguid took the remaining time, excluding Facebook’s brief rebuttal. While oral argument does not always foretell the Court’s decision, certain trends developed.

• Grammatical Construction: A majority of Justices seemed to agree that Facebook and the United States had a stronger grammatical reading of the statute, but struggled with both the awkwardness of the construction, and the surplusage problem that their interpretation creates.
  • Justice Alito, for example, asked both Facebook and the United States whether it made sense to talk about random or sequential number generators as a device that can “store” numbers, wondering if their interpretation rendered the verb “store” superfluous. In response, the United States suggested that Congress was likely taking a “belt-and-suspenders” approach to drafting.
  • The Chief Justice, noting that most speakers do not resort to statutory canons of interpretation to understand language, suggested that the “sense” of the provision was more important than its syntax.
  • Justice Kavanaugh repeatedly asked about the different scope of the prohibition on artificial or prerecorded voice calls and “live” calls using an ATDS, as a way to understand the ATDS language.
  • Justice Gorsuch asked Facebook and the United States to address an alternate interpretation, offered by then-Judge Barrett in her decision in Gadelhak, that the clause “using a random or sequential number generator” could modify the phrase “telephone numbers to be called” instead of the verbs “store” and/or “produce.” Both parties asserted this interpretation would lead to their preferred outcome.
• Broader Questions on TCPA Scope: The Justices also pressed the parties on questions unrelated to the grammatical construction the statute.
  • Justice Thomas asked why “text messages” were covered by the TCPA at all, given that the statute’s language only regulates calls and later called the statute an “ill fit” for current technology. Justice Thomas’s question is indicative of a broader concern, shared expressly by Justices Sotomayor, Alito and Kavanaugh, that the TCPA may be ill-suited to regulate technology that looks very different from the technology available in 1991 when the TCPA was passed.
  • Justices Sotomayor, Barrett, Breyer, and Gorsuch each questioned whether the Ninth Circuit’s broad definition of an ATDS would expose all smartphone users to potential liability.
  • Justice Barrett was concerned specifically with the call-forwarding function and seemingly “automated” functions that modern cellphones are equipped with.
  • Duguid seemed unable to provide the Justices with a satisfactory answer on several of the non-grammatical issues and gave conflicting answers concerning the role for, and level of, human interaction necessary to remove technology from the definition of an ATDS.

The Court is expected to issue its ruling by Spring 2021. To learn more about the background of the case, the Circuit Courts’ varying definitions of an ATDS, and the potential implications for the Court’s ruling, consider listening to Kelley Drye litigator and Partner Paul Rosenthal’s preview podcast of Duguid or Kelley Drye’s monthly TCPA Tracker.

The December meeting may be the first attended by recently-confirmed Republican FCC Commissioner Nathan Simington, who will replace outgoing Commissioner Michael O’Rielly after today’s confirmation vote in the U.S. Senate. In addition, Chairman Pai recently announced that he intends to leave the FCC on Inauguration Day, January 20, 2021. As a result, the January 2021 FCC open meeting will be his last meeting before the change in administration.

You will find more details about the most significant items on the December meeting agenda after the break.

Securing the Communications Supply Chain – The draft Report and Order would require ETCs receiving Universal Service Fund support to remove and replace covered equipment and services posing a national security risk from their networks. It would also establish a reimbursement program to subsidize smaller carriers to remove and replace covered equipment, specifically those providers with two million or fewer customers, once Congress appropriates the estimated $1.6 billion needed to reimburse eligible providers for such costs. The draft Order would establish the procedures and criteria for publishing a list of covered communications equipment or services, and would adopt a reporting requirement for all providers of advanced communications services to annually report on covered equipment and services in their networks.

Modernizing Equipment Marketing and Importation Rules – The draft NPRM would propose updates to the Commission’s marketing and importation rules under its equipment authorization program. The proposed rules would permit, prior to equipment authorization, conditional sales of radiofrequency devices to consumers under certain circumstances. The NPRM also would propose to allow a limited number of radiofrequency devices subject to Certification to be imported into the U.S. prior to equipment authorization for certain pre-sale activities, including packaging and shipping devices, and loading devices with specific software.

TCPA Order on Reconsideration – The draft Order on Reconsideration would clarify the Commission’s previous interpretation of the TCPA that permitted government and government contractor calls without consumers’ prior express consent. The draft item would address long-standing questions regarding a 2016 Declaratory Ruling that first set guardrails on the government and government contractor exemption. The draft text of this item has not been publicly released.

Modernizing the E-Rate Program – The draft Order would amend the E-Rate invoice filing deadline rule to ensure program participants have sufficient time to complete the invoice payment process. Specifically, the Order would address situations where USAC issues a revised E-Rate funding commitment letter, in which case the FCC will allow recipients additional time to complete the work identified in the revised funding commitment. The draft text of this item has not been publicly released.

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If you have any urgent questions, please contact your usual Kelley Drye attorney or any member of the Communications Practice Group. For more information on other aspects of the federal and state response to the COVID-19 pandemic, as well as labor and employment and other issues, please visit Kelley Drye’s COVID-19 Response Resource Center.

FCC Seeks Comment on TCPA Exception for COVID-19 and Flu Vaccine Communications Under “Emergency Purposes” Exception

On September 18, 2020, the FCC’s Consumer and Governmental Affairs Bureau issued a Public Notice seeking comment on a request for clarification filed by the National Association of Chain Drug Stores (“NACDS”). NACDS requests clarification that communications from pharmacies related to COVID-19 vaccines, once available, and flu vaccines during the pandemic fall within the Telephone Consumer Protection Act’s “emergency purposes” exception to the statute’s prior express consent requirement. Comments are due September 25, 2020, and reply comments are due October 2, 2020.

FCC Opens Second Window for 2020 E-Rate Funding Requests

On September 16, 2020, the FCC’s Wireline Competition Bureau (“WCB”) directed the Universal Service Administrative Company (“USAC”) to open a second funding year 2020 filing window, allowing E-Rate program participants to request additional funding to purchase more bandwidth needed to meet the unanticipated and increased demand for e-learning during the pandemic. E-Rate program participants will be permitted to request additional funding for this limited purpose without having to undergo a new competitive bidding process. This window opened on September 21, 2020 with the publication of the Notice in the Federal Register and will close on October 16, 2020.

FCC Extends Inteliquent Waiver of Access Stimulation Rules Through December 1, 2020

On September 17, 2020, the WCB granted Onvoy d/b/a Inteliquent, Inc.’s (“Inteliquent”) second request to renew the temporary waiver of part of the FCC’s access stimulation rules. On June 23, 2020, the WCB granted Inteliquent’s request for renewal of its temporary waiver of certain access stimulation rules until September 1, 2020. Inteliquent requested a limited renewal of the temporary waiver with respect to traffic it terminates in four urban areas to preexisting customers on the basis that its terminating-to-originating traffic ratios in those areas continue to be particularly unbalanced as a result of the “unprecedented amounts of conference platform traffic that Inteliquent is terminating for pre-existing customers Zoom and Cisco Webex to facilitate remote work and other forms of social distancing.” Absent the waiver, Inteliquent would be required to accept financial responsibility for paying certain access charges associated with the traffic.

Inteliquent requested that the waiver be extended until March 1, 2021. However, the FCC only extended the waiver through December 1, 2020, in light of the ongoing uncertainty regarding the pandemic.

FCC Streamlines Financial Hardship Regulatory Fee Payment Request Procedures

On September 4, 2020, the FCC released a Public Notice highlighting streamlined processes for regulatees to request a waiver, fee reduction, deferral, and/or installment payment plan for FY 2020 regulatory fees in light of the pandemic. Waiver and installment plan requests must be filed on or before September 25, 2020. Waiver requests filed after that date will not be dismissed but any unpaid regulatory fees will be assessed the FCC’s 25% late payment penalty and may accrue interest.

FCC Extends E-Rate and RHC Gift Rule Waivers Through December 31, 2020

On September 3, 2020, the WCB extended waivers of the Rural Health Care (“RHC”) and E-Rate program gift rules through December 31, 2020. The FCC previously waived gift rules applicable to both programs to assist rural health care providers and schools and libraries affected by the pandemic by allowing them to accept free upgrades to connections, equipment, and other services. The WCB also waived the previously extended RHC deadline for responding to information requests from USAC through December 31, 2020. These waivers were set to expire on September 30, 2020.

Case Background

Allan came before the Sixth Circuit on appeal of the district court’s entry of summary judgment for plaintiffs. Plaintiffs alleged that defendant had placed 353 calls to them using an ATDS after they had each revoked consent. The district court held that defendant’s system qualified as an autodialer. It was undisputed that the system did not randomly or sequentially generate numbers. It would place calls to a daily-created list based on a stored list of a numbers in connection with collection of specific individual’s private education loan debt. By a 2-1 majority, the Sixth Circuit concluded that equipment may be an ATDS if it has the capacity to store numbers to be called, or to produce numbers using a random or sequential number generator, and to dial such numbers.

Majority Opinion

The majority opinion found that the ATDS definition is facially ambiguous. The TCPA defines an ATDS as “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator” (and the capacity to dial those numbers automatically). The opinion engaged in a grammatical analysis of the statutory text to resolve the definition’s latent ambiguity, which interpretation it then confirmed with reference to relevant statutory and administrative history.

The Sixth Circuit concluded that a predictive dialer or system that dials from a stored list could qualify as an ATDS under the TCPA. The Court relied on the existence of exceptions to help establish the rule. For example, the Court confirmed that the “prior express consent” exception permits calls made using an autodialer if the recipient has given his or her prior express consent to receiving those calls. Thus, it reasoned, “[a]n exception for consented-to calls implies that the autodialer ban otherwise could be interpreted to prohibit consented-to calls. And consented-to calls by their nature are calls made to known persons, i.e., persons whose numbers are stored on a list and were not randomly generated.” Ergo, the Court held that the definition of an ATDS must broadly sweep in stored-number systems and predictive dialers, not just calls to unknown individuals via random or sequential number generation.

Delving into the TCPA’s legislative history, the Court highlighted Congress’s intent to crack down on pervasive and intrusive telemarketing practices. Rather than regulate certain types of technology used to place calls, the TCPA was meant to curb the calls themselves – particularly the near-daily, multiple calls that formed the Allan plaintiffs’ cause of action.

Consistent with every other Circuit to have addressed the issue, the Sixth Circuit reached this decision without administrative guidance, holding that prior guidance from the FCC, including those pre-2015, was invalidated by the D.C. Circuit in its 2018 decision ACA International v. FCC. While some District Courts have relied on those prior FCC orders, the Circuit Courts, with the exception of the Second Circuit, have held that the prior orders were set aside.

Importantly, the Court affirmatively declined to comment on the potential impact of human intervention on dialing because, it found, the defendant failed to present a legal basis for that argument in this case.

Dissent

The dissent disagreed with the majority’s conclusion and methodology, putting forth a third interpretation of the statutory language. Rather than modifying the verbs “store” and/or “produce,” the dissent maintained that the language “using a random of sequential number generator” should be read to modify the entire phrase “telephone numbers to be called.” In the instant case, because the telephone numbers dialed were not generated randomly or sequentially, the dissent would have held that the equipment at issue did not qualify as an ATDS.

The dissent gave four reasons why its interpretation was the “best” reading among the three possible interpretations. First, it does not require a judicial rewrite of the statute as does the definition of an ATDS that includes stored-number systems: even if unartfully drafted, it is grammatically correct. In contrast, the majority’s definition requires a grammatically incorrect reading of the statute. Second, it avoids the problem of superfluity associated with a definition of ATDS that excludes stored-number systems (thereby rendering the term “store” in the statute’s definition surplusage). Third, the dissent concludes that the interpretation is consistent with the FCC’s early orders interpreting the TCPA. The FCC’s early definitions of an ATDS define it “as a device that uses a random or sequential number generator.” And fourth, the dissent argues that Congress’s intent was in fact to curb the use of machines that dialed randomly or sequentially generated numbers, pointing out language from an early congressional hearing to that effect. (KDW note: This argument is similar to the argument made by then-Commissioner Ajit Pai in dissent to the 2015 FCC decision that was overturned in ACA International v. FCC.)

What Comes Next

The Sixth Circuit’s position only further deepens the divide between the Circuits with six, evenly split Circuits having offered their positions. In the short term, the Allan decision expands the definition of an ATDS for callers and litigants in the Sixth Circuit; thus, increasing the potential risks and exposure.

The Allan decision is not likely to have lasting effect, however, because the United States Supreme Court has accepted a case to address the ATDS definition. The Sixth Circuit’s reasoning in Allan closely tracks the Ninth Circuit’s decision in Duguid v. Facebook, 926 F.3d 1146 (9th Cir. 2019). That decision has been accepted for review by the Supreme Court and will be argued in the fall. The resolution of the appeal should settle the question of what is an ATDS, providing (we hope) consumers and businesses alike with clear guidance on permissible autodialing systems.

Interestingly, the defendant in Allan had opposed a motion to stay the pending appeal until the Supreme Court reached a decision in Facebook. With this unhelpful ruling in hand, the defendant in Allen may file its own petition for certiorari, and/or seek further review by the Sixth Circuit en banc.

[1] These circuits stand opposite to the Seventh and Eleventh Circuits, which hold that an ATDS must use a random or sequential number generator. Although the Third Circuit has also weighed in Dominguez v. Yahoo, Inc., 894 F.3d 116 (3d Cir. 2018), the Allan court took the position that it did not expressly construe the definition. “The Third Circuit has not expressly addressed this question, but it did assume (without providing any analysis) that an ATDS must use a random or sequential number generator.” Allan at 5, n.3; but see Dominguez v. Yahoo, Inc., 629 F. App’x 369 (3d Cir. 2015) (considering “the definition of ‘random or sequential’ number generation” and confirming “the phrase refers to the numbers themselves rather than the manner in which they are dialed.”)

The TCPA prohibits telemarketing calls to be placed using an ATDS without the requisite level of prior consent. Thus, the definition of what technology qualifies as an ATDS is often a fundamental, threshold question upon which TCPA litigation turns. Prior to 2015, the FCC had offered various, sometimes vague, interpretations of the term. In 2015, the FCC offered an expansive definition, which was set aside in March 2018 in the ACA International decision. While the issue has been before the FCC on remand for over two years now, courts nevertheless engaged in their own analysis of the statute, resulting in a broadening Circuit split on how the law is interpreted and applied and divergent outcomes based on the court in which the case is filed. Now the Supreme Court is poised (potentially) to resolve that dispute.

DEFINITION OF AN ATDS

Since the March 2018 decision of the Court of Appeals for the D.C. Circuit in ACA International set aside the FCC’s overbroad and expansive definition of an ATDS, two distinct interpretations of an ATDS have emerged. In Marks v. Crunch San Diego, the Ninth Circuit held that any equipment that dials telephone numbers from a stored list qualifies as an ATDS under the TCPA. That expansive approach threatens to encompass ordinary smartphones on the market within the TCPA’s ambit. This approach is also employed by the Second Circuit. In contrast, the Third, Seventh, and Eleventh Circuits have opted for a narrower, more textually honest and logical interpretation, that requires a showing that equipment has the present capacity to generate numbers using randomly or sequentially and dial them. (Arguably, the D.C. Circuit’s decision also called for an interpretation closer to the Third, Seventh and Eleventh Circuit interpretations). District Courts in the remaining Circuits (as well as some where the Circuit Courts have spoken) have generally (but inconsistently) adhered to one of these two approaches. Some of our prior discussions of these issues can be found here and here.

FACEBOOK SEEKS AN END TO TCPA CONFUSION

In Facebook, Inc. v. Noah Duguid, et al, Case No. 19-511 (2020), plaintiff Noah Duguid alleges that defendant Facebook had contacted him via text messages without appropriate levels of consent using an ATDS, as that term is defined under the TCPA. Mr. Duguid is not a Facebook customer and alleges that he received repeated login notification text messages from Facebook. Plaintiff alleges that he never provided the company with his cellphone number, much less prior express written consent to be contacted by text. Plaintiff’s original complaint was filed in the Northern District of California in March 2015 and dismissed without prejudice for failure to properly allege that an ATDS was used to send the texts at issue. In his Amended Complaint, Duguid added factual allegations that Facebook used an ATDS by maintaining a database of numbers on its computer and transmitting text message alerts to selected numbers from its database using an automated protocol.

Facebook again moved to dismiss Duguid’s allegations arguing that the TCPA was unconstitutional and that Duguid failed to plead the use of an ATDS. On February 16, 2017, the District Court granted Facebook’s motion to dismiss, finding the ATDS allegations were insufficient. Because of that finding, the court never reached the constitutional question. The court reasoned that Duguid’s ATDS allegations “strongly suggested direct targeting rather than random or sequential dialing,” which did not indicate the use of an ATDS. Importantly, the District Court rendered its opinion before the Ninth Circuit’s interpretation of the ATDS definition in Marks v. Crunch San Diego in September 2018.

On June 13, 2019, the Ninth Circuit reversed the lower court’s dismissal. Applying the Marks standard, the Ninth Circuit reasoned that Duguid had sufficiently alleged that Facebook used an ATDS by alleging the equipment “had the capacity to store numbers to be called and to dial such numbers automatically.” The Ninth Circuit separately addressed Facebook’s constitutional challenge to the TCPA and agreed that, although the TCPA included content- and speaker-based restrictions on speech, the overall statute could be salvaged by severing what it saw as the most offensive aspect—the government debt exception.

ISSUES BEFORE THE COURT

Facebook appealed and in its petition to the Supreme Court presented both the constitutional challenge and definitional question for review.

On July 6, 2020, the Supreme Court upheld the constitutionality of the TCPA in William P. Barr et al. v. American Association of Political Consultants et al., Case No. 19-631 (2020), thus mooting the constitutional challenge in Facebook’s petition. Our analysis of that decision can be found here.

On July 9, 2020, three days after it released its decision in Barr, the Supreme Court granted certiorari on the following question: Whether the definition of ATDS in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential generator”?

CONCLUSION

The Supreme Court’s resolution of this circuit split has the potential to forever change business communications by making it more or less difficult for businesses to reach their customers. As noted, a threshold question in TCPA litigation is whether equipment used to originate a call or text is an ATDS. The D.C. Circuit, in remanding the FCC’s 2015 expansive definition, noted that definition’s “eye-popping sweep.” Just how far the 29-year-old TCPA’s definition should reach into modern dialing technology has been a central question in litigation since the D.C. Circuit remand. How the Supreme Court addresses this could affect the methods businesses use to provide notifications and reminders to customers as well as how they obtain new customer and collect debts.

In addition to resolving the question of an ATDS, the Supreme Court’s acceptance of Facebook’s petition has other implications. In the short term, companies and practitioners are likely to see stays across the robust and active TCPA docket as lower courts await direction on this core (often threshold) legal question from the Supreme Court. While the decision in ACA International returned the ATDS definition to the FCC for consideration, the Supreme Court’s grant also makes it less likely that the FCC will take any additional affirmative steps on the definition of an ATDS until the Facebook case is decided.

The Supreme Court’s next term opens on October 5, 2020, and oral argument will be scheduled for a date sometime thereafter. A decision can be expected to be published sometime between the argument and when the terms recesses in late June/July 2021.

Background

When first enacted in 1991, the TCPA prohibited calls placed using an automatic dialer or prerecorded voice with certain, specific exceptions. In 2015, Congress amended the TCPA to permit calls that relate to the collection of debts guaranteed by the U.S. government. That amendment does not permit the use of the same technology for debts guaranteed by private lenders or calls related to other topics, which served as the basis for challenges that the exception rendered the statute unconstitutionally content-based in violation of the First Amendment. In 2019, the Fourth Circuit agreed, finding the exception failed strict scrutiny, was unconstitutional, and should be severed from the TCPA. The government disagreed with the Fourth Circuit’s decision and petitioned the Supreme Court to review the decision. Plaintiffs also filed a cross-petition.

Supreme Court Affirms

In the controlling opinion written by Justice Kavanaugh (joined by Chief Justice Roberts and Justice Alito), relying on Reed v. Town of Gilbert and applying strict scrutiny, the Supreme Court held that the government debt exception to the TCPA was an unconstitutional content based speaker restriction. As a remedy, the majority opted to sever the government debt exception from the TCPA, which leaves the remainder of the TCPA fully operative.

Justice Kavanaugh reasoned that both severability principles and the Communication Act’s severance clause mandated severance in this case. Justice Kavanaugh also reasoned that the remainder of the TCPA survived the constitutional challenge because Congress has a continuing interest in protecting consumer privacy, noting that “[t]he continuing robocall restriction proscribes tens of millions of would-be robocalls that would otherwise occur every day.”

In a short concurrence, Justice Sotomayor argued that the exception should be subjected to intermediate scrutiny; however, she agreed that the exception also did not survive that analysis and therefore should be severed.

In a partial dissent, Justice Breyer (joined by Justices Ginsburg and Kagan) argued that the Supreme Court should have applied intermediate scrutiny because the restriction did not suppress a particular viewpoint or threaten the neutrality of a public forum. Justice Breyer reasoned that the exception survived intermediate scrutiny because the speech related harm of the exception was modest in proportion to the important government goal of protecting the public fisc. Justice Breyer also found that the exception was narrowly tailored because it only applied to the limited categories of calls related to the collection of government debt. For Justice Breyer, strict scrutiny should only apply when a restriction interferes with the marketplace of ideas or interferes with an individual’s right to communicate with the government. With respect to the proper remedy, however, Justice Breyer agreed that severability of the offending exception was appropriate.

In another partial dissent, Justice Gorsuch (joined, in relevant part, by Justice Thomas) attacked the Court’s severability doctrine, including because the application of the doctrine in this instance did not provide the plaintiffs with the relief that they had initially sought. Instead of a remedy which allows for the plaintiffs to speak more freely, severance banned additional speech. For Justice Gorsuch, that result undercuts the purpose of the First Amendment, which is intended to act as a buffer against government restriction of speech, not assist it. Thus, he felt severance was an insufficient response.

Ultimately, 7 Justices agreed that severance of the government debt exception was the proper remedy, while only two (Justices Gorsuch and Thomas) concluded that the entire TCPA should be struck down as an improper content-based restriction.

Impact

Unless a caller was relying upon the government debt exception to avoid liability under the TCPA, this decision does very little to change the status quo on TCPA enforcement and compliance. The opinion did not wade into the contentious definition of an automatic telephone dialing system under the TCPA (which has become the subject of a widening Circuit split). Accordingly, callers should remain vigilant whenever telemarketing and consistently audit their telemarketing procedures to avoid potential liability.

In the first ruling, P2P Alliance, the Bureau ruled that an automatic telephone dialing system (“ATDS”) is not determined by whether the equipment has the capability to send a large volume of calls or texts in a short period of time. Instead, the Bureau, while recognizing that the Commission’s interpretation of the ATDS definition remains pending, ruled that “whether the calling platform or equipment is an autodialer turns on whether such equipment is capable of dialing random or sequential telephone numbers without human intervention.” The Bureau also provides an illuminating discussion of the so-called “human intervention” element of prior FCC statements regarding autodialers.

In the second ruling, Anthem, Inc., the Bureau denied a petition to exempt certain healthcare-related calls from the TCPA’s consent requirements. In this order, the Bureau breaks less new ground and instead reiterates that prior express consent must be obtained before a call (or text) is made and that the supposed value or “urgency” of the communication does not necessarily make it permissible.

Besides these two petitions, the Commission has nearly three dozen petitions pending before it on a variety of matters relating to exemptions from the TCPA’s consent requirements, the collection and revocation of consent, the “junk fax” provisions, and other questions raised by the flood of TCPA class action litigation in the last five years. If the FCC begins addressing these other pending petitions, the course of TCPA class action litigation could change significantly.

In March 2018, the United States Court of Appeals for the D.C. Circuit issued a landmark rebuke of the FCC’s interpretation of the TCPA. The case, ACA International v. FCC, reviewed a 2015 Omnibus Declaratory Ruling on a variety of matters, the most notable of which was the FCC’s expansive interpretation of an “automatic telephone dialing system” (“ATDS”), the use of which triggers therobo TCPA’s prior express consent requirements and private right of action provisions. In ACA International, the court found the FCC’s interpretation “impermissibly broad” and remanded the case to the FCC for further consideration.

Since that time, the FCC has taken comment twice on the ACA International remand, but FCC Chairman Pai has focused the agency’s efforts on identifying and reducing illegal robocalls rather than addressing the remand. Chairman Pai has repeatedly said that unwanted automated calls is a top consumer complaint and he has pursued a multi-faceted approach to preventing or blocking those calls before they reach consumers.

The Commission has

• authorized voice service providers to block incoming calls that “reasonable call analytics” identify as likely illegal calls,
• mandated that service providers implement a call authentication framework to prevent unlawfully spoofed calls,
• directed specific service providers to block certain calls or have their own calls blocked by other providers,
• proposed multiple fines exceeding $100 million each for illegally spoofed calls, and
• authorized a comprehensive database to identify when telephone numbers have been reassigned from a subscriber who may have given consent to a new subscriber.

The Anthem and P2P Alliance Rulings

Against this backdrop, the flood of TCPA class action cases has powered a rising tide of petitions for declaratory rulings addressing specific aspects of the TCPA’s requirements, from when consent is needed, how it may be obtained, and how it may be revoked. At Kelley Drye, we have chronicled these developments in our monthly TCPA Tracker and its accompanying FCC Petitions Tracker of the nearly three dozen pending petitions. The total number of petitions has risen slightly over time, as new petitions have modestly outnumbered decisions issued by the Commission.

P2P Alliance Petition (Two-Way Texting With Manual Intervention). In May 2018, the P2P Alliance, a group that represents providers and users of “peer to peer” text messaging services, sought a declaratory ruling that peer to peer messaging services did not involve an ATDS and thus were not subject to the restrictions on ATDS calls/texts contained in the TCPA. The petition sought a ruling with respect to text messaging services that enable two-way text communication, requiring a person to manually send each message. Although the Bureau declined to rule with respect to any specific platform – citing a lack of sufficient evidence regarding the how the platforms operate – the Bureau issued a ruling with several important clarifications.

First, the Bureau ruled that the ability of a platform or equipment to send “large volumes of messages” is not probative of whether that platform or equipment constitutes an ATDS under the TCPA. The Bureau declared that “whether the calling platform or equipment is an autodialer turns on whether such equipment is capable of dialing random or sequential telephone numbers without human intervention.”

This conclusion effectively puts to rest ambiguous statements in some prior orders that TCPA plaintiffs had argued brought any high-volume calling platform within the scope of the TCPA. Furthermore, the Bureau’s conclusion appears most consistent with decisions by several U.S. Courts of Appeal that have ruled an autodialer must employ a random or sequential number generator to meet the TCPA’s definition of an ATDS. The Bureau noted, however, that the “details” of the interpretation of an ATDS were before the Commission in ACA International so, until the Commission addressed that issue, the Bureau was relying solely on “the statutory definition of autodialer.”

The Bureau’s ruling contains an illuminating discussion of the so-called “human intervention” element of prior FCC statements regarding autodialers. Per the Bureau’s ruling, “If a calling platform is not capable of dialing such numbers without a person actively and affirmatively manually dialing each one, that platform is not an autodialer.” The Bureau explained the “actively and affirmatively” dialing standard as requiring a person to manually dial each number and send each message one at a time. Use of such technologies is not an “evasion” of the TCPA, the Bureau commented, because the TCPA “does not and was not intended to stop every type of call.”

Thus, while the full contours of the ATDS definition are still to be defined by the Commission, the Bureau’s P2P Alliance ruling helps to clarify that an “active and affirmative” manual process for sending calls or messages removes a platform or piece of equipment from the ambit of the TCPA. This ruling could buttress many district court rulings that have found sufficient human intervention in the operation of many calling or texting platforms.

Anthem Petition (Prior Express Consent for Healthcare-Related Calls). The Anthem petition addressed by the Bureau was filed in June 2015, one month before the FCC released the Omnibus Declaratory Ruling addressed in ACA International. (Anthem has a more recent petition addressing post-Omnibus order issues that remains pending.) In the June 2015 petition, Anthem asked the Commission to create an exemption for informational healthcare-related calls/texts initiated by healthcare providers and sent to existing patients, arguing that such communications were beneficial to patients and could be protected by an opt-out process it believed the Commission was then considering for ATDS calls. The Commission received limited comment in September 2015 (while the ACA International appeal was being litigated) and has received virtually no filings discussing the petition since that time.

In the ruling, the Bureau denied virtually all of Anthem’s requests, emphasizing instead the TCPA’s requirements for prior express consent for ATDS calls. Specifically, the Bureau ruled that “makers of robocalls generally must obtain a consumer’s prior express consent before making calls to the consumer’s wireless telephone number.” (emphasis in original). It rejected Anthem’s request for an exemption permitting such calls, subject to opt-out, and repeated that the “mere existence of a caller-consumer relationship” does not constitute consent. Importantly, however, the Bureau affirmed prior statements that a consumer who has knowingly released their phone number for a particular purpose has given consent to receive calls at that number.

To the extent that the Anthem petition sought an exemption based on the “urgency” of healthcare-related communications, the Bureau declined to create such an exception, emphasizing, however, that the “emergency purposes” exception could apply to the extent the calls/texts satisfied the Commission’s rules and its recent COVID-19 Declaratory Ruling.

In the end, the ruling likely will not change the status quo for calls and texts being made today. The Bureau emphasized previous rulings requiring prior express consent and endorsed previous statements about how such consent may be obtained. Further, the Bureau affirmed the “emergency purposes” exception, although declining to expand its scope. Thus, entities making calls or texts following prior FCC guidance should not need to make any changes as a result of the Anthem ruling.

Looking Ahead

These decisions are not the broad rulings that many hoped for when ACA International was remanded to the FCC in March 2018. Chairman Pai was highly critical of the 2015 Omnibus order from the FCC (from which he dissented) and welcomed the ACA International decision. He has focused the agency on reducing unwanted calls prior to addressing the legal interpretations called for by the remand. Now, however, with those actions at an advanced stage and with his expected time as Chairman of the FCC about to end, many are wondering if the Pai Commission will revisit the ATDS definition, revocation of consent, and safe harbor questions remanded to it. Even if it does not, however, the Commission has nearly three dozen other petitions still pending, which could provide needed guidance on discrete issues that have arisen in TCPA litigation.

We don’t know at this time which way the FCC is likely to go, or even if it will address more TCPA issues during Chairman Pai’s tenure, but enterprises and service providers should watch the FCC closely over the next few months.

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.

Background

In Am. Ass'n of Political Consultants v. Sessions, 323 F. Supp. 3d 737 (E.D.N.C. 2018), a group of political and polling organizations who wished to use autodialer technology to contact potential voters, sued the Government challenging the constitutionality of the TCPA’s autodialer ban. The group argued that the autodialer ban is a content-based restriction on speech, which does not survive strict scrutiny under First Amendment jurisprudence. According to the plaintiffs, the autodialer restriction fails strict scrutiny’s narrow tailoring requirement because it allows the FCC to promulgate various exemptions based on the content of the call and the 2015 amendment exempts calls related to the collection of government debt. Therefore, the law is not narrowly tailored to advance the privacy interests of the TCPA. Additionally, Plaintiffs asserted that less restrictive means could advance the TCPA’s interests.

The district court disagreed with the Plaintiffs and found that the government debt collection exemption survived strict scrutiny because it is a narrow exception, which furthers the compelling interest of government debt collection. Additionally, the court declined to consider the constitutionality of the FCC’s exemptions because it reasoned that it was not the correct court to hear such challenges. Regarding Congressional delegation of authority to the FCC to create exemptions, the court reasoned that the delegation “does not substantively except any communications” and therefore “is not facially or inherently content-based.” Lastly, the court concluded that the supposed less restrictive means would not be as effective in achieving the purposes of the TCPA.

Plaintiffs appealed the decision to the Fourth Circuit. In Am. Ass'n of Political Consultants, Inc. v. Fed. Commc'ns Comm'n, 923 F.3d 159 (4th Cir. 2019), the Fourth Circuit held that the government debt exemption failed strict scrutiny due to under-inclusiveness. The Fourth Circuit concluded that the exemption is underinclusive because: (1) the exemption “subverts the privacy protections underlying the ban” by authorizing many intrusive calls, and (2) debt collection calls are “among the most intrusive, disruptive, and complained of phone calls.” However, instead of invalidating the entire TCPA, the court relied on a severance clause in the Communications Act of 1934 (which contains the TCPA) and severed the government debt collection exemption. The court reasoned that severance was appropriate because Congress explicitly intended the severance of constitutionally infirm portions of the Communications Act and the autodialer restriction had worked effectively for twenty-four years before Congress amended it to exempt government debt collection calls.

Consequently, on November 14, 2019, the Solicitor General petitioned the Supreme Court to review the Fourth Circuit’s decision to settle the question of the TCPA’s constitutionality and to provide clarity on the severance of unconstitutional portions of the statute. On January 10, 2020, the Supreme Court accepted the petition for review.

Previewing the Supreme Court Review

The Supreme Court accepted two questions regarding the TCPA:

1. Is the 2015 government debt collection exemption constitutional, and
2. Is the appropriate remedy to sever the provision from the TCPA?

On the first question, the Government argued that the government debt collection exemption is not content-based but relationship-based as it is dependent on the relationship between debtors (called parties) and their creditor (the Government). Therefore, it argued, the government debt collection exemption is actually subject to intermediate scrutiny, which it passes since it is a narrow exception, which applies to a few calls only and furthers the significant interest of protecting the public fisc. This comports with the autodialer restriction, which is a content-neutral time, place, and manner restriction. The American Association of Political Consultants (Respondents in the Supreme Court) asserted that the Fourth Circuit correctly found that the autodialer restriction as currently written is a content-based restriction, which fails strict scrutiny and renders the TCPA unconstitutional.

Remedy

As to the second question, Respondents argued that First Amendment jurisprudence mandates that courts should issue decisions that protect speech and not abridge it. Thus, Respondents argued, finding the TCPA to contain a content-based restriction on speech, the proper remedy should have been to strike down the restriction on speech, not to sever the “speech-promoting exception.” Respondents also argued that the autodialer restriction must be invalidated because the TCPA, even after the Fourth Circuit’s remedy, continues to be an unconstitutional restriction on speech. .

Amicus Curiae Positions

In addition to the arguments presented by the litigants, interested parties filed 17 amicus curiae briefs. On the one hand, supporting the government and the constitutionality of the exemption were many states, members of Congress, student loan servicing centers and several consumer interest groups. In the amicus brief submitted by the states, the states argued, among other things, that the robocall ban should be upheld because it prohibits highly intrusive robocalls regardless of content and therefore passes First Amendment scrutiny. In the amicus brief submitted by the members of Congress, they argued that the TCPA is a critical law that stops intrusions on Americans’ privacy, deters scams, and protects the integrity of the telephone as a means of communication. Consumer groups similarly argued that the TCPA protects government interests “of the highest order” (according to Public Citizen) and argued that invalidation would harm consumer privacy. The consumer interests generally argued that, even if the government debt collection provision fails to satisfy scrutiny, the remainder of the TCPA should survive.

Notably, while not supporting either party, consumer groups the National Consumer Law Center and Consumer Federation of America, joined by telecommunications carrier Verizon, argued that the government’s interest is compelling and argued in support of the TCPA’s restrictions on calling, particularly restrictions on unconsented calls to cellular phones.

On the other hand, supporting the position that the provision is unconstitutional were the U.S. Chamber of Commerce, debt collection companies, several business groups and several free speech groups. In its amicus brief, the Chamber of Commerce argued that the TCPA should be invalidated because the autodialer restriction has become a tremendous source of meritless litigation that FCC guidance has not addressed. Similarly, trade groups such as the Retail Energy Supply Association argued that the government debt collection exemption is not severable because Congress would not have adopted such broad restrictions on automated calls without the exemptions adopted in the statute. Debt collectors such as Portfolio Recovery Associates sounded a similar point, arguing that the TCPA’s “open ended delegation of authority” to the FCC to create exemptions renders the statutory scheme unconstitutional. The Retail Litigation Center, while ostensibly not taking a position on either issue, offered an extensive critique of the TCPA’s “real world effects” on communications with customers and urged the Court to “address this dysfunction” in its disposition of the case.

What to Watch For in Oral Argument

With this lineup of arguments, the Supreme Court will hear oral argument in a highly unusual setting. Due to the COVID-19 pandemic, the Supreme Court scheduled its first-ever arguments to be held via teleconference for this week, giving court-watchers an unprecedented opportunity to hear arguments live, rather than via audio files released after the argument. Due to the teleconferencing format, the Justices will ask questions in order of seniority, rather than the customary rapid-fire open questioning format. In earlier arguments this week, the approach permitted a more straightforward examination of the issues, with fewer interruptions in the litigant’s arguments.

The resolution of Barr could affect many stakeholders. A key question to watch will be the extent to which the Court entertains questions relating to severability of the government debt collection exemption and the broader TCPA critiques offered by various amicus parties. While the Supreme Court has ruled in several TCPA cases recently, thus far, it has addressed the issues narrowly or on grounds not exclusive to the TCPA. We will be watching to see if the Court may deviate from this approach in Barr and bring some clarity to the more contentious provisions of the TCPA.

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If you have any questions, please contact your usual Kelley Drye attorney or any member of the Communications Practice Group. For more information on labor, advertising, and other issues, visit Kelley Drye’s COVID-19 Response Resource Center.

Over 500 Service Providers Pledge to “Keep Americans Connected”

On March 13, 2020, FCC Chairman Ajit Pai called on broadband and telephone service providers to forgo service terminations due to inability to pay, waive late fees, and open Wi-Fi hotspots for those who need them for the next 60 days. As of March 31, 2020, the FCC’s Keep Americans Connected page lists 550 participating service providers and 10 trade associations. The providers that have taken the pledge have agreed to, for the next 60 days: (1) not terminate service to any residential or small business customers because of their inability to pay their bills due to the disruptions caused by the coronavirus pandemic; (2) waive any late fees that residential or small business customers incur because of their economic circumstances related to the coronavirus pandemic; and (3) open their Wi-Fi hotspots to any American who needs them.

The Pledge applies only to residential and small business customers. “Small business” is not defined in the Pledge and may be subject to some variation depending upon the service provider. The Pledge does not apply to enterprise customers.

Additional Voluntary Actions for Low-Income Consumers

Chairman Pai also asked providers to expand or implement programs for low-income Americans, and to relax data cap policies in appropriate circumstances. Several carriers have already rolled out modified service offerings aimed at providing Internet access for free or at a reduced cost to low-income individuals and households, as well as K-12 households. Consumers and small businesses should review the list of service providers to determine if additional offerings are available in your area.

FCC Pauses Most Lifeline De-Enrollments for 60 Days

The FCC also has taken actions designed to protect customers of the FCC’s Universal Service Program providing wireless service to low-income customers. On March 17, 2020, the Wireline Competition Bureau issued an order (DA 20-285) waiving the Lifeline program’s recertification and reverification requirements (sections 54.405(e)(4) and 54.410(f) of the Commission’s rules) until May 16, 2020. This FCC order follows several state orders and decisions prohibiting or discouraging public utilities from disconnecting a consumer’s communications services. The FCC order also postpones the March 26, 2020 effective date of the requirement under section 54.406(a) of the Commission’s rules that eligible telecommunications carriers must require their enrollment representatives to register with USAC to May 25, 2020. On March 30, 2020, the FCC also waived the de-enrollment requirement for non-usage of the Lifeline service until May 29, 2020 and extended the previous waivers to May 29 as well so that all of the waivers would expire at the same time.

FCC Eases Rules for Providers of Video Relay Services for the Deaf and Hearing Impaired

On March 16, 2020, the Consumer and Government Affairs Bureau issued an order (DA 20-281) waiving several telecommunications relay services ("TRS") rules and at-home Video Relay Service ("VRS") pilot program requirements in response to increased demand for communications assistants ("CAs") and an anticipated reduction in the number of CAs able to work from call centers. Under the order, rules that limit the number of at-home minutes a CA can handle, that require CAs to have at least three years of experience, and multiple other rules designed to protect against fraud by CAs are waived for 60 days. In addition, the waiver permits a VRS CA to handle international calls (otherwise prohibited under the pilot program) and, in the traditional TRS program, waives the speed-of-answer call requirements. The applicable provisions of the Commission’s rules are waived through May 15, 2020. These actions should enable TRS and VRS providers to keep up with increased demand and to better utilize workforces that are unable to report to a traditional call center during the COVID-19 outbreak.

FCC Temporarily Grants Wireless Carriers Access to Additional Spectrum

The FCC has taken several actions designed to expand the ability of wireless service providers to handle the anticipated increase in demand from remote workers and distance learning in schools. On March 15, 2020, the FCC began granting Special Temporary Authority to several U.S. carriers, allowing them access to additional spectrum for the next 60 days in order to handle the increase in network traffic because of social distancing and stay-at-home orders issued in response to the COVID-19 pandemic. T-Mobile, Verizon (also here), U.S. Cellular, AT&T, rural wireless ISPs, and a tribal service provider in New Mexico have all received permission to utilize additional spectrum. Commissioner Jessica Rosenworcel, in a tweet, questioned whether U.S. networks can handle increased traffic and called on the FCC to utilize the disaster reporting system for COVID-19 and expand reporting requirements beyond telephone service to reflect the “broadband age.”

FCC Actions to Promote Service to Schools, Libraries, and Rural Healthcare Providers

Recognizing the likely increase in distance learning and telehealth services, the FCC has taken multiple actions designed to ease its rules applicable to existing FCC subsidies and is planning to accelerate new programs to support telehealth applications. Schools, libraries, and rural healthcare providers should review these actions carefully to determine their impact on their current operations.

The FCC’s primary actions are as follows:

On March 18, 2020, the Wireline Competition Bureau released an order (DA 20-290) waiving gift rules in the Rural Health Care and E-Rate programs to “enable service providers to offer, and RHC and E-Rate program participants to solicit and accept, improved broadband connections or equipment for telehealth or remote learning.” The order is intended to allow schools, libraries, and rural healthcare providers to meet anticipated short-term demands outside of the restrictions of the programs. By waiving the gift rules, applicants are free to accept – and service providers are free to offer – arrangements that would otherwise qualify as gifts. For example, a service provider might make significantly discounted service available, might waive data caps, or might provide free (or loaner) equipment to meet additional demand, all of which might have disqualified the service provider from future E-Rate or RHC bidding. Under the order, the gift rules (47 C.F.R. sections 54.503(d)(1), 54.603(b), 54.611(b)(2), 54.622(h)(1), 54.623(a)(1)(vi), 54.627(c)(3)(ii)(H), and 54.627(d)(1)(ii)(F)) will be waived through September 30, 2020.

On March 26, 2020, the Wireline Competition Bureau waived a number of rules in its Rural Healthcare Program affecting existing users of the support programs. Most importantly, the Bureau’s order (DA 20-345) permits RHC applicants to extend existing evergreen arrangements with service providers by one year, without conducting an additional competitive bidding process, thereby ensuring continuity of service during the crisis.

On March 30, 2020, the FCC announced that the Commission would consider two actions providing up to $300 million in new support for telehealth services. The Commission first will consider an order implementing a $100 million Telehealth Pilot Program first proposed in 2019. In addition, the Commission will consider an order that implements the recently-passed CARES Act, which provided $200 million to support telehealth applications. The $200 million may be used by healthcare providers for telecommunications services, information services, and devices to support telehealth and will be allocated via streamlined applications for the duration of the crisis. The news release does not specify timing for these actions, but they likely would be voted upon by the Commissioners soon.

FCC Clarifies that the TCPA Does Not Restrict Hospital, Healthcare Provider, and Government COVID-Related Communications

Finally, the FCC’s Consumer and Governmental Affairs Bureau issued an order that will enable many enterprises and small businesses to send certain emergency related communications under the Telephone Consumers Protection Act’s ("TCPA’s") “emergency purposes” exception. On March 20, 2020, the Bureau released a Declaratory Ruling (DA 20-318) regarding the TCPA’s “Emergency Purposes” exception to the consent requirement. The Bureau order declares that COVID-19 constitutes an emergency under the TCPA’s exception, thus allowing communications (voice calls and texts) related to the emergency without consent. The order specifically permits calls/texts where (1) the communication is made by a hospital, healthcare official, state, local or federal government official, or a person or entity acting on their behalf; and (2) the communication is informational, directly related to the COVID-19 pandemic, and related to the imminent health or safety risk of the pandemic. The order provides several non-exhaustive examples of communications that would fall within the emergency purposes exception. The Bureau made clear, however, that marketing messages may not be included in the communications. Indeed, on the same day, the Bureau released a warning identifying several COVID-related scams that had arisen.

It is important to note that this clarification applies to both voice calls and text messages that are sent by the designated entities (so long as the content is related to the COVID-19 crisis). The order is designed to ensure that time-sensitive messages are delivered promptly and are not impeded by the TCPA’s consent requirements. For entities not identified in the Bureau’s clarification, we recommend that you obtain the advice of counsel to determine how the TCPA applies to the proposed call or message. On March 30, 2020, a group of banking interests petitioned the FCC to extend its declaratory ruling to COVID-related communications from banks and financial institutions.

If you have any questions, please contact your usual Kelley Drye attorney or any member of the Communications Practice Group. For more information on labor, advertising, and other issues, visit Kelley Drye’s COVID-19 Response Resource Center.

Chairman Pai Unveils ‘Keep Americans Connected’ Pledge

On March 13, 2020, Chairman Ajit Pai called on broadband and telephone service providers to forgo service terminations due to inability to pay, waive late fees, and open Wi-Fi hotspots for those who need them for the next 60 days. The March 13, March 16, and March 19 releases each included lists of participating providers, and the FCC’s Keep Americans Connected page lists 475 participating service providers and 10 trade associations. The providers that have taken the pledge have agreed to, for the next 60 days: (1) not terminate service to any residential or small business customers because of their inability to pay their bills due to the disruptions caused by the coronavirus pandemic; (2) waive any late fees that any residential or small business customers incur because of their economic circumstances related to the coronavirus pandemic; and (3) open its Wi-Fi hotspots to any American who needs them. The list of participating providers includes major carriers like AT&T, Verizon, T-Mobile, Sprint, Comcast, Charter and RCN.

Chairman Pai also asked providers to expand or implement programs for low-income Americans, and to relax data cap policies in appropriate circumstances. Several carriers have already rolled out modified service offerings aimed at providing Internet access for free or at a reduced cost to low-income individuals and households, as well as K-12 households. Providers that have not yet taken the pledge should seriously consider whether they can do so, or if they can in some other way make their services more accessible, available or affordable to their customers.

FCC Temporarily Grants Wireless Carriers Access to Additional Spectrum

On March 15, 2020, the FCC began granting Special Temporary Authority to several U.S. carriers, allowing them access to additional spectrum for the next 60 days in order to handle the increase in network traffic because of social distancing and stay-at-home orders issued in response to the COVID-19 pandemic. T-Mobile, Verizon (also here), U.S. Cellular, and AT&T have all received permission to utilize additional spectrum. Commissioner Jessica Rosenworcel, in a tweet, questioned whether U.S. networks can handle increased traffic and called on the FCC to utilize the disaster reporting system for COVID-19 and expand reporting requirements beyond telephone service to reflect the “broadband age.”

FCC Grants Waivers to Permit Schools, Libraries and Rural Healthcare Providers to Accept Free or Discounted Services

On March 18, 2020, the Wireline Competition Bureau released an order (DA 20-290) waiving gift rules in the Rural Health Care and E-Rate programs to “enable service providers to offer, and RHC and E-Rate program participants to solicit and accept, improved broadband connections or equipment for telehealth or remote learning.” The order is intended to allow schools, libraries and rural healthcare providers to meet anticipated short-term demands outside of the restrictions of the programs. By waiving the gift rules, applicants are free to accept – and service providers are free to offer – arrangements that would otherwise qualify as gifts. For example, a service provider might make significantly discounted service available, might waive data caps or might provide free (or loaner) equipment to meet additional demand, all of which might have disqualified the service provider from future E-Rate or RHC bidding. Under the order, the gift rules (47 C.F.R. sections 54.503(d)(1), 54.603(b), 54.611(b)(2), 54.622(h)(1), 54.623(a)(1)(vi), 54.627(c)(3)(ii)(H), and 54.627(d)(1)(ii)(F)) will be waived through September 30, 2020.

FCC Clarifies that Hospital, Healthcare Provider and Government COVID-Related Communications Fall Within “Emergency Purposes” Exception to the TCPA

On March 20, 2020, the FCC’s Consumer and Governmental Affairs Bureau released a Declaratory Ruling (DA 20-318) regarding the TCPA’s “Emergency Purposes” exception to the consent requirement. The Bureau order declares that COVID-19 constitutes an emergency under the TCPA’s exception, thus allowing communications (voice calls and texts) related to the emergency without consent. The order specifically permits calls/texts where (1) the communication is made by a hospital, healthcare official, state, local or federal government official or a person or entity acting on their behalf; and (2) the communication is informational, directly related to the COVID-19 pandemic and related to the imminent health or safety risk of the pandemic. The order provides several non-exhaustive examples of communications that would fall within the emergency purposes exception. The Bureau made clear, however, that marketing messages may not be included in the communications.

It is important to note that this clarification applies to both voice calls and text messages that are sent by the designated entities (so long as the content related to the COVID-19 crisis). The order is designed to ensure that time-sensitive messages are delivered promptly and are not impeded by the TCPA’s consent requirements. For entities not identified in the Bureau’s clarification, we recommend that you obtain the advice of counsel to determine how the TCPA applies to the proposed call or message.

FCC Waives Lifeline Reverification and Recertification De-Enrollments for 60 Days, But Fails to Address De-Enrollments Due to Non-Usage

On March 17, 2020, the Wireline Competition Bureau issued an order (DA 20-285) waiving the Lifeline program’s recertification and reverification requirements (sections 54.405(e)(4) and 54.410(f) of the Commission’s rules) until May 16, 2020. This FCC order follows several state orders and decisions prohibiting or discouraging public utilities from disconnecting consumer’s communications services. The FCC order also postpones the March 26, 2020 effective date of the requirement under section 54.406(a) of the Commission’s rules that eligible telecommunications carriers must require their enrollment representatives to register with USAC to May 25, 2020. However, the order does not waive the de-enrollment requirement for non-usage of the Lifeline service, setting up a conflict with at least one state public utility commission non-disconnection order.

In addition, the FCC took the following actions in response to the pandemic:

• On March 19, 2020 the Wireless Telecommunications Bureau issued an order (DA 20-291) waiving the Commission’s rules requiring licensees to transition their part 90 operations to part 96 operations in the 3650-3700 MHz band. This applies to licensees that would have had to transition between April 17, 2020 and October 17, 2020, and the new deadline is October 17, 2020. The Commission did not want the customers of the part 90 licensees to lose any broadband and essential services during the declared state of emergency and recognized the difficulties with implementing transition plans during this time. Moreover, in the order, the Bureau suspends acceptance and processing of new site registrations for all part 90 wireless broadband licensees in the 3650-3700 MHz band effective with applications received on or after March 19, 2020.
• On March 16, 2020, the Consumer and Government Affairs Bureau issued an order (DA 20-281) waiving several telecommunications relay services ("TRS") rules and at-home Video Relay Service ("VRS") pilot program requirements in response to increased demand for communications assistants ("CAs") and an anticipated reduction in the number of CAs able to work from call centers. Under the order, 47 U.S.C. §§ 151, 152, 154(i), 154(j), 225, and sections 0.141, 0.361, and 1.3 of the Commission’s rules, 47 CFR §§ 0.141, 0.361, 1.3, the provisions of sections 64.604 and 64.606 of the Commission’s rules are waived through May 15, 2020.
• On March 17, 2020 the FCC issued a public notice (DA 20-282) directing any television station scheduled to complete phase 9 of the post-incentive auction transition to submit a waiver request if they are delayed in meeting the May, 1, 2020 deadline due to COVID-19.
• On March 20, 2020, the FCC issued a public advisory and launched a webpage in response to consumer and news reports that scammers are using the COVID-19 outbreak to spread misinformation and conduct fraudulent activity using robocalls and text messages.
• On March 13, 2020, the Wireline Competition Bureau issued a public notice (DA 20-273) directing USAC to extend the deadline for E-Rate applicants to submit their Funding Year 2020 FCC Form 471 applications to April 29, 2020. Additionally, the public notice directed USAC to automatically provide all applicants with a 14-day extension for any Program Integrity Assurance ("PIA") requests.

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In the meantime, litigation has continued to move forward in many cases. Most recently, the U.S. Court of Appeals for the 11th Circuit addressed the ATDS definition, agreeing with decisions by the 2nd and 3rd Circuits on an interpretation that requires the use of a random or sequential number generator, and disagreeing with an interpretation of the 9th Circuit to the contrary. Our colleagues at a KDW sister blog, AdLaw Access, provide the analysis of this decision and its impact.

Kelley Drye continues to closely monitor this, and other TCPA developments. Click here to read our advisory and summary of the Pallone-Thune TRACED Act. You can find additional coverage at Kelley Drye’s Legal Download, where Partner Steve Augustino discusses what an illegal call really is, highlights of the TRACED Act, and what’s next for the FCC.

Be sure to subscribe to Kelley Drye’s Full Spectrum podcast, which features our “Inside the TCPA” series, and check out our monthly TCPA Tracker newsletter, which helps you stay current on TCPA (and related) matters, case developments and provides an updated comprehensive summary of TCPA petitions pending before the FCC.

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