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FCC Seeks Comment on Consumer-Based TCPA Petition with Potentially Wide-Reaching Effects

In mid-February, the Federal Communications Commission (FCC) released a Public Notice soliciting comment on a request from consumer petitioners for a declaratory ruling or rulemaking related to the prior express consent” provision of the Telephone Consumer Protection Act (TCPA).  If granted, the relief sought could impact a wide variety of businesses that relied upon the current FCC interpretations that are challenged.

In the petition, two consumers seek to reverse two FCC rulings that the provision by a consumer of a telephone number to the caller constitutes prior express consent” under the TCPA.  First, the petitioners challenge a 1992 order in which the Commission determined that persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.”  Second, the petitioners question a 2008 Commission order which concluded that the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt.”  The petitioners claim that the FCC contravened Congressional intent when it adopted these two orders by improperly reading an implied consent provision into the TCPA.  As such, they seek a declaratory ruling or a rulemaking that would result in the following: (1) overturning previous interpretations of the prior express consent provision such that implied consent may be given in certain circumstances; and (2) adoption of a uniform standard to satisfy the prior express consent requirement for both cellular and residential telephone numbers.  Comments on these requests are due on March 10, 2017 and replies are due on March 27, 2017.

A second consumer-based TCPA petition was also filed in January, but was subsequently withdrawn, in which a consumer plaintiff in a recently dismissed TCPA action sought clarification of the proper application of the FCC’s prior express consent and revocation of consent rules specifically with regard to calls from common carriers.  The petitioner was a T-Mobile subscriber who alleged that T-Mobile violated the TCPA by sending him multiple promotional text messages about T-Mobile products, despite numerous requests by the petitioner to stop sending them.  The petitioner sued, but the case was referred for arbitration pursuant to the binding arbitration clause in the petitioner’s service agreement with T-Mobile.  According to the petition, the arbitrator in the case was persuaded that as a result of the FCC’s long-standing policy that wireless service providers are not required to obtain additional consent” from their subscribers prior to initiating prerecorded or autodialed calls or messages for which the subscriber is not charged, the Commission’s rules regarding revocation of consent do not apply to T-Mobile with respect to calls and messages sent to subscribers.  The petitioner sought the following relief from the FCC: (1) a ruling that a cellular telephone customer can revoke consent to receive text messages from his or her service provider; (2) a ruling that cellular or common carriers are not exempt from the TCPA; and (3) a ruling that clarifies the prior express consent” exception for wireless service providers.  The petition also requested additional relief specific to the dispute with T-Mobile.  The FCC had begun a comment cycle on this petition, but the petitioner and T-Mobile filed a joint motion to withdraw it on the ground that the petitioner had filed a motion for reconsideration with the arbitrator, and that pending the outcome of that motion, the parties had resolved their dispute.  We will monitor the FCC’s TCPA docket in case the petition is refiled at a later date.

FCC Chairman Pai Offers Ideas for Aggressive Action” on TCPA Issues

To close out his first week as Chairman of the FCC, Ajit Pai spoke briefly at a meeting of the FCC’s Consumer Advisory Committee on Friday, January 27, 2017, and made clear that one of his priorities will be to address robocalls,” which are the number one source of complaints to the FCC.  However, we expect that his methods will be much different than those employed during Chairman Wheeler’s tenure.

Chairman Pai is a supporter of the TCPA, the federal statute aimed at limiting the number of telemarketing calls that consumers receive.  However, he was highly critical of the FCC’s interpretation of the Act under his predecessor.  Notably, then-Commissioner Pai issued a scathing dissent to the Commission’s 2015 omnibus TCPA Declaratory Ruling and Order, which in his view, improperly expanded the definition of an autodialer” and imposed a near-strict liability standard by adopting the one-call safe harbor for calls to reassigned phone numbers.  Chairman Pai also dissented in part from the Commission’s determination in a July 2016 declaratory ruling that federal contractors are not persons under the Act and therefore not subject to TCPA liability.  In that dissent, he stated that the Commission’s interpretation contradicts the plain meaning of the statute, and it is odd to suggest that a contractor’s status as a person’ could switch on or off depending on one’s behavior or relationship with the federal government.”  Less than a month later, he likewise dissented from the Commission’s order adopting rules to implement a new government debt collection exemption to the TCPA, on the basis that the restrictions the FCC imposed contravened Congress’s intent in creating the exemption.

During his remarks in January, Chairman Pai said the problem is only getting worse and that’s why I hope the Commission will take aggressive action, hopefully with your counsel, to end it.”  He did not detail any particular initiatives that he plans to undertake to address the issue of unlawful telemarketing calls.  However, we anticipate that his approach will focus more on industry collaboration rather than unilateral action by the Commission.  Some ideas for which he suggested he might seek industry input include establishing a safe harbor for carriers so they can block spoofed calls from overseas without fear of liability and developing a reassigned number database to help legitimate callers avoid dialing the wrong number.  Chairman Pai also noted that the Commission may consider overturning the federal contractor exemption in order to close a potential loophole in [the Commission’s] robocalling regulations.”

A Closer Look at Pai’s Dissent in the 2015 TCPA Declaratory Ruling
With the D.C. Circuit still considering the appeal of the FCC’s 2015 TCPA Declaratory Ruling and Order, Chairman Pai is limited (for now at least) in what he can do to pursue his vision of the TCPA.  Nevertheless, with a partial remand of the 2015 Order at least a possibility, it is worthwhile to take a look back at then-Commissioner Pai’s dissent in that proceeding as an indicator of where a Pai-led FCC might take the TCPA.
Autodialers: Pai made clear in his dissent that he believes that under the TCPA’s definition of an automatic telephone dialing system” (“ATDS”) only equipment that has the capability to dial sequential numbers or random numbers qualifies as an autodialer.  If a piece of equipment cannot do those two things—if it cannot store or produce telephone numbers to be called using a random or sequential number generator and if it cannot dial such numbers—“ Pai asked, then how can it possibly meet the statutory definition?  It cannot.”  The principal issue addressed in the 2015 order was whether the statute’s reference to the capacity” of ATDS equipment referred to the potential capabilities of the equipment.  On this front, Pai’s view was clear:  He believed that the statutory definition of an ATDS was limited to the equipment’s present capacity,” not to its potential or theoretical capacity, and his dissent spends much time explaining why the concept of potential capacity was a bridge too far for him.
But one point that can sometimes be missed in that discussion is Pai’s focus on what sort of capacity is relevant.  Pai’s interpretation of the statute closely hues to the two specific capabilities listed – the ability to dial random numbers or to dial sequential numbers.  The FCC’s interpretation, Pai charged, transforms the TCPA from a statutory rifle-shot targeting specific companies that market their services through automated random or sequential dialing into an unpredictable shotgun blast covering virtually all communications devices.”  Pai was willing to claim victory for the rifle-shot” set, stating that if today’s callers have abandoned random or sequential dialers due to the TCPA’s prohibition, then the TCPA has accomplished the precise goal Congress set out for it” and, if parties want to address more modern types of abusive dialing equipment, they should go to Congress for action. 
Thus, it seems that, if given the chance to re-assess autodialers, Chairman Pai would focus more narrowly on equipment prominent in the early 1990s when the TCPA was passed and would be less inclined to apply the TCPA’s restrictions to predictive dialers, which Chairman Pai appears to consider as more akin to speed dialers that the FCC’s 1992 TCPA orders concluded were not within the scope of the TCPA’s prohibition.
Reassigned Numbers: Commissioner Pai also dissented from the FCC’s interpretation of called party” in the context of telephone numbers that have been reassigned from one subscriber to another.  Commissioner Pai noted that, with the prevalence of reassignments today, even the most well-intentioned and well-informed business will sometimes call a number that’s been reassigned to a new person.”  Pai rejected the idea that the TCPA imposes strict liability on a caller for calls that reach someone other than the intended recipient of the call.  Instead, Pai endorsed the interpretation that the called party” in the statute refers to the caller’s expected recipient of the call.  He argued that this interpretation was clearer and easier for caller to administer, while giving the actual recipient that ability to stop unwanted calls by informing the caller that they’ve reached the wrong party. 
Since his dissent, Chairman Pai has indicated his support for the creation of a database to identify reassigned numbers.  Such a database, he believes, is within the Commission’s plenary authority over telephone numbers, although he has indicated that Congressional appropriations to run the database may be necessary.  Such a database has a long way to go, but it appears that a Pai-led FCC would at least be open to exploring the possibility. 
Revocation of Consent: On the issue of revocation of consent, Commissioner Pai objected to what he considered to be an unworkable approach.  While Pai supported a consumer’s ability to stop unwanted calls from occurring, he raised concerns with the open-ended process that the 2015 Declaratory Ruling allowed.  His dissent famously mocked the FCC’s conclusion, wondering whether a customer at a McDonald’s drive-through could declare I’m not lovin’ it” and seek to revoke consent to be contacted via an autodialer or robocall.  It appears that Chairman Pai would prefer to leave it to the parties to determine reasonable methods to revoke consent, if given the opportunity.
Industry-specific Exemptions: Finally, it is noteworthy that Commissioner Pai also dissented from the portions of the 2015 Declaratory Ruling that created certain exemptions for particular industries or types of calls.  He objected to the exemption created for prison phone calls, and questioned whether the specific interpretations supporting it might lead to more robocalls, not fewer.  In particular, Commissioner Pai took issue with the interpretation that calls to set up a billing relationship” were not advertising or telemarketing calls.  If this interpretation were followed more broadly, he asked, What telemarketer will continue to hock goods the old-fashioned way when it can escape the TCPA’s particular constraints on telemarketing by claiming to just set up billing relationships for services not yet performed?” Commissioner Pai’s comments – and his subsequent dissent to the implementing order addressing calls to collect government-backed debts – suggest that the approach of creating specific exemptions to TCPA rules will not be favored by a Pai-led FCC.


With the rise in TCPA litigation, numerous parties have sought clarification of the rules. Kelley Drye’s Communications group has compiled this comprehensive summary of the pending petitions. 
Number of Petitions Pending New Petitions Filed Upcoming Comments Decisions Released
18 (+7 seeking a retroactive waiver of the opt-out requirement for fax ads)

1 petition for reconsideration of the rules to implement the government debt collection exemption

1 application for review of the decision to deny a request for an exemption of the prior-express-consent requirement of the TCPA for mortgage servicing calls”

3 requests for reconsideration of the 11/2/16 fax waiver in response to petitions by 22 parties

1 request for reconsideration of the 10/14/16 waiver of the prior express written consent rule granted to 7 petitioners
M3 USA Corporation – seeking a retroactive waiver of the opt-out requirement for fax ads (filed 2/14/17)

Foot Levelers, Inc. – seeking a retroactive waiver of the opt-out requirement for fax ads (filed 2/2/17)
Chester Limited, Inc. – seeking a retroactive waiver of the opt-out requirement for fax ads (filed 1/23/17)
Cunningham and Moskowitz – consumer petition seeking a rulemaking to overturn the Commission’s interpretation that prior express consent” includes consent resulting from a party’s providing a telephone number to the caller (filed 1/22/17)
Paul Armbruster – consumer petition seeking a declaratory ruling or rulemaking regarding a consumer’s right to revoke consent to receive text messages from a common carrier (filed 1/20/17; withdrawn 2/17/17)
Renue Systems Development Corp., Inc. et al. – seeking a retroactive waiver of the opt-out requirement for fax ads (Comments due 2/16/17; Replies due 2/23/17)
Foot Levelers, Inc. – seeking a retroactive waiver of the opt-out requirement for fax ads (Comments due 2/23/17; Replies due 3/2/17)
Chester Limited, Inc. – seeking a retroactive waiver of the opt-out requirement for fax ads (Comments due 2/16/17; Replies due 2/23/17)

M3 USA Corporation – seeking a retroactive waiver of the opt-out requirement for fax ads
(Comments due 3/8/17;
Replies due 3/15/17)
Cunningham and Moskowitz – consumer petition seeking a rulemaking to overturn the Commission’s interpretation that prior express consent” includes implied consent resulting from a party’s providing a telephone number to the caller
(Comments due 3/10/17; Replies due 3/27/17)
Public Notice – TCPA Consumer Webinar (held on 2/16/17)
Click here to see the full FCC Petitions Tracker.
West Virginia Court Rejects Theory of Vicarious Liability in TCPA Case

Judge Bailey of the Northern District of West Virginia recently granted summary judgment to defendants UTC Fire and Security, and Honeywell International, holding they could not be held vicariously liable for telemarketing calls placed by their dealers.  In re Monitronics Int’l, Inc. TCPA Litigation, MDL No. 1:13-MD-2493, 2016 U.S. Dist. LEXIS 177105, at *42 (N.D. W Va. Dec. 22, 2016).  Plaintiffs argued that an agency relationship existed through actual agency, apparent agency, and/or ratification between defendants and their dealers because, among other allegations: (i) the dealers held themselves out as authorized representatives on the calls; (ii) defendants reviewed or provided the dealers with sales scripts; and (iii) defendants did not move swiftly enough to stop the alleged illegal calling when it came to their attention.  The Court disagreed, holding: the fact that entities were permitted to hold themselves out as authorized dealers or some similar description is insufficient to hold the moving defendants in this case liable.”  Id. at *37-38.  For this proposition, the court relied on the Seventh Circuit’s decision in Leon v. Caterpillar Indus., Inc., 69 F.3d 1326, 1336 (7th Cir. 1995) (“the mere fact that Calumet uses Caterpillar’s name does not render it an agent of Caterpillar, just as every bar which advertises that they sell a particular brand of beer is not the agent of the brewery whose name they advertise.”)

The Monitronics court expressly rejected a contrary ruling that it had issued through a predecessor judge in Mey, a case frequently relied upon by TCPA plaintiffs.  The ruling is therefore significant because it provides guidance for defendants seeking a dismissal of claims based on third party liability.  At the same time, however, nothing in this decision changes the FCC’s express ruling in In re the Joint Petition Filed by Dish Network, LLC that vicarious liability principles apply to the TCPA as a whole. 28 F.C.C.R. at 6587-89 ¶¶ 35, 38 (2013).  Thus, vicarious liability under the TCPA continues to be in play, provided a plaintiff can demonstrate sufficient evidence of the existence of an agency relationship.  A Notice of Appeal relating to this decision was recently filed in the Fourth Circuit Court of Appeals.   

9th Circuit Rules That Revocation of Consent Must Be Express

On January 30, 2017, the Ninth Circuit released an order clarifying the meaning of consent under the TCPA, and how a consumer may effectively revoke such consent to be contacted in the future. Van Patten v. Vertical Fitness Group, LLC, No. 14-55980 (9th Cir.) involved a plaintiff who received two unwanted text messages asking him to rejoin his gym after cancelling his membership.  When he originally joined the gym, the plaintiff listed his cell phone number as his contact number, and signed an application that contained his cell phone number as his contact information.  Three days after joining, the plaintiff canceled his gym membership.  He later received two text messages to his cell phone asking him to rejoin the gym, and brought a lawsuit claiming violations of the TCPA.

The defendant argued that the plaintiff did not have standing to bring a claim based on a bare statutory violation of the TCPA, in reliance on the Supreme Court’s opinion in Spokeo. Citing the Supreme Court’s rationale in Spokeo, the Ninth Circuit affirmed that “‘both history and the judgment of Congress play important roles’ in supporting [the] conclusion that a violation of the TCPA is a concrete, de facto injury” sufficient to confer Article III standing. The court noted that in enacting the TCPA, Congress made findings that unrestricted telemarketing can be an intrusive invasion of privacy” and are a nuisance.”  Accordingly, the Ninth Circuit affirmed that a plaintiff alleging a violation under the TCPA need not allege any additional harm beyond the harm of receiving unsolicited telemarketing phone calls or text messages, which, by their very nature, invade the privacy and disturb the solitude of their recipients.  Thus, receipt of an unsolicited telemarketing call or text message in violation of the TCPA is a concrete injury in fact sufficient to confer Article III standing.   

The Ninth Circuit next turned to whether the plaintiff, in filling out the courtesy card and signing the membership application, gave prior express consent, and if so whether he revoked that consent by cancelling his gym membership.  The Court first considered the question of consent, and determined that simply providing a phone number does not mean that the consumer has expressly consented to be contacted for any purpose whatsoever.  Instead, when a consumer provides his or her phone number during a business transaction, that consumer provides his or her consent to contact for communications related to that transaction.  In other words, the transaction context matters in determining the scope of a consumer’s consent to contact.” In this case, the Ninth Circuit found that text messages inviting the plaintiff to come back” and reactivate his gym membership were sufficiently related to the reason the plaintiff gave his number in the first place to fall within the scope of his consent to be contacted. 

Finally, the Court turned to the question of revocation.  The plaintiff argued that by cancelling his gym membership, he had revoked his consent. The court disagreed, finding that when revocation is made it must clearly express a desire not to be called or texted, and merely cancelling his membership did not do so.  Had the plaintiff stated when he cancelled his membership that he did not wish to be contacted further, or simply responded STOP in response to the first text message he received, he would have revoked his consent.  By failing to clearly express a desire not to be contacted in the future, the plaintiff did not revoke his consent. 
Speaking Engagements
TCPA / Fair Credit Reporting Act/ Debt Collection Issues

On March 28, 2017 partner Lauri Mazzuchetti will present TCPA / Fair Credit Reporting Act/ Debt Collection Issues during PLI’s 22nd Annual Consumer Financial Services Institute in New York, NY. For more information, and to register, please click here.