Federal Court Pushes FCC to Clarify Robocall Regulations

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By Lydia Beyoud

Oct. 19 — Federal appeals court judges pressed the Federal Communications Commission to clarify its interpretation of an automatic dialing system’s capacity to make automated “robocalls” and “robotexts” at an Oct. 19 oral argument related to a challenge to 2015 agency regulations tightening the Telephone Consumer Protection Act of 1991.

For nearly three hours, Judges Sri Srinivasan, Cornelia T. L. Pillard and Harry T. Edwards of the U.S. Court of Appeals for the District of Columbia Circuit questioned attorneys for the FCC and petitioners ACA International, a trade group representing third-party debt collectors, on whether the FCC exceeded its authority in redefining automatic dialing systems (ACA Int'l v. FCC, D.C. Cir., 15-01211, oral argument 10/19/16 ).

Critics of the FCC's robocall restrictions say the regulations haven't kept pace with modern technology, commerce or society, and could result in consumers losing out on contact from companies that they might desire, such as an appointment reminder or certain product notifications. The petitioners in the consolidated lawsuit, including Rite Aid Corp., Sirius XM Radio Inc. and the Consumer Bankers Association, want the FCC to provide greater clarity about which devices and practices are subject to the TCPA.

Edwards said the TCPA only prohibited the use of autodialer equipment to initiate a robocall or robotext, but did not speak to a device’s capacity to use such equipment. Some critics of the 2015 FCC order, which defined autodialer to include any equipment with the capacity to dial random or sequential numbers, regardless of whether it was used for that purpose, contend the regulations could encompass smartphones.

FCC trial attorney Scott Noveck said early on during the oral argument that the agency had repeatedly said that smartphones aren’t consider automated dialing equipment per se.

However, when presented with a hypothetical situation by Pillard, Noveck said that the smartphone would be considered an autodialer for the purposes of the agency’s regulations. In the hypothetical, a telemarketing company employee downloaded to her smartphone a company application that enabled autodialing, then used the same phone during the weekend to call a phone member.

Noveck said the agency relied on a device's capacity to make robocalls or robotexts for evidenciary purposes as a way to help consumers engaged in lawsuits against companies allegedly violating the TCPA, which can include fines of at least $500 per violation.

Edwards also pressed Shay Dvoretzky, a partner at Jones Day representing the petitioners, on the matter. The petitioners are disputing the definition of “autodialer” in their challenge to the order, but the statute’s “prohibition is what we’re concerned about,” Edwards said.

Regulatory Complexity

The questions from the judges indicated they were grappling with the FCC’s interpretation of autodialer capacity to make automated calls or texts versus using that capacity, Diana L. Eisner, an associate at Manatt, Phelps & Phillips, LLP in Washington, told Bloomberg BNA. The judges' observation that the TCPA stipulates restrictions on the use of autodialers — rather than their capacity — “was really spot on,” Eisner said. “This whole interpretation of capacity has led to a lot of confusion” for various industries, Eisner said, whose clients aren't directly related to the case.

Laura Phillips, a partner at Drinker Biddle & Reath LLP in Washington, told Bloomberg BNA it was surprising how “incoherent” many of the questions and responses from both sides were. “There was a huge amount of confused questioning and confused answers” on what the FCC regulations mean and whether they make sense contextually with the statute, Phillips said, whose clients are also not directly involved in the case.

The panel also sought clarity on what the FCC viewed as reasonable means for consumers to revoke their consent to be contacted and how caller liability should be interpreted when they contact an individual with a reassigned number.

The court focused on the impact of ambiguities in the statute leading businesses to cease using autodialers altogether and on the burdens companies would face to comply with the regulations.

The judges also questioned whether a single call safe harbor, which would allow callers to make a single contact to a reassigned number without risking TCPA liability, would be sufficient if a robocall or robotext failed to receive a response from someone, indicating the caller didn’t reach the intended person. Under the FCC's regulations, any subsequent contact to the reassigned number could trigger liability.

Chevron Deference

By the end of the session, there was some concern that neither side had made a “knockout punch” statutory argument that all the judges could agree with, Phillips said.

“This is kind of a muddled mess,” and the outcome of the case may depend on how much the panel believes the FCC can fix on remand, should it choose to remand all or part of the 2015 regulations back to the agency, she said.

Phillips said it seemed like the judges wanted to grant the agency appropriate deference under the Chevron doctrine, but also had some pointed questions.

The FCC frequently relies on deference granted to federal agencies to interpret the statutes they administer under the doctrine established in a landmark 1984 U.S. Supreme Court decision ( Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc., 467 U.S. 837 (1984), and argued for such deference in this case.

However, given the complexity and ambiguity of the TCPA and the uncertainty it has created for industries that use autodialers, the court could determine the FCC exceeded its authority in this case, Eisner said.

That outcome “would set a very interesting precedent, more generally, on the amount of deference given to an agency and could show that even in the consumer protection realm, the courts are willing to take a very hard look at what the agency does,” she said.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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