Retailers Await FCC Robocall Decision Amid Court Splits

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By Alexis Kramer

Courts are scrambling to define what kind of equipment companies like Target Corp. and Comcast Corp. can use to send robocalls after an appeals court scrapped the Federal Communications Commission’s interpretation under a telemarketing law.

The U.S. Court of Appeals for the District of Columbia Circuit ruled last March that the commission’s old definition was too broad, leaving the agency to figure out a new approach to what constitutes an autodialer under the Telephone Consumer Protection Act. Retailers, marketers, and other companies are in the dark until the FCC issues a new order.

Lower courts have split over how to treat previous FCC readings of the term as they decide cases under the TCPA after the D.C. Circuit’s ruling in ACA International v. FCC, Bloomberg Law data show. The law requires companies to get express consent before using an autodialer to call or text consumers.

“Different judges in the same district, the same building even, are reaching different conclusions,” Mark S. Eisen, a TCPA attorney at Benesch Friedlander Coplan & Aronoff LLP in Chicago, said. “The split of authority leaves everything up in the air.”

The conflicting rulings have left businesses unsure whether they’re running afoul of the law. NCTA, The Internet & Television Association, whose members include Charter Communications and Discovery, Inc.; and the Retail Industry Leaders Association, which represents Walmart, The Home Depot Inc., and other retailers have told the FCC that the companies may face a deluge of lawsuits unless the agency comes up with a clearer definition.

A more narrow FCC interpretation could shed light on the types of devices that violate the law so businesses would know how to reach out to customers legally, Dan Deane, who leads the TCPA team at Nixon Peabody LLP in Boston said.

An FCC spokesperson declined to comment on when the agency might issue an order.

Cases Diverge

The TCPA defines an autodialer as a device that can store or produce, and dial random or sequential numbers.

The D.C. Circuit vacated part of a 2015 FCC order interpreting the statutory definition. The FCC had said devices that can’t store, produce, or dial random or sequential numbers may still qualify as autodialers if they could be altered to perform those tasks in the future. The appeals court said that interpretation could include everyday smartphones.

Earlier FCC orders said autodialers can be devices that automatically dial stored numbers, even if they can’t dial at random. The FCC’s 2003 and 2008 orders said autodialers include predictive dialers, which dial from a set list of numbers and predict when a sales agent will be ready to take the call.

Since ACA International, courts in 13 robocall cases have held that devices must currently be able to dial random or sequential numbers to constitute an autodialer, Bloomberg Law data show. Courts in 16 cases have held that predictive dialers are autodialers, even if they can’t dial at random.

Courts have also split over whether ACA International invalidated prior orders, and how that impacts the autodialer definition.

In 13 of the 16 predictive dialer rulings, courts found previous FCC orders still valid, the data show. The U.S. Court of Appeals for the Ninth Circuit’s said in a September ruling in Marks v. Crunch that the FCC’s previous orders are no longer binding, although autodialers can be devices that dial from a list of selected numbers within the statute’s meaning. Two other district courts issued similar rulings.

Courts in nine of the 13 cases that held devices must be able to dial at random said that previous FCC orders are no longer valid under ACA International. Courts in the other four cases declined to address the validity of earlier FCC orders.

It’s “extremely difficult” to figure out if a dialing system may qualify as an autodialer given the current landscape, Christine M. Reilly, who leads Manatt Phelps & Phillips LLP’s TCPA compliance and class action defense group, told Bloomberg Law.

Companies need to use a system that’s either been tested in the courts or can’t make automated calls, Reilly said. Barring that, they should ensure they get customer consent to avoid liability, she said.

Businesses should remain cautious until the FCC issues a new interpretation, according to Octavio Gomez, who leads Morgan & Morgan PA’s consumer protection department. In the meantime, plaintiffs will continue filing lawsuits, given that district court rulings are increasingly taking their part since the Ninth Circuit ruled Sept. 20 in Marks, Gomez said.

Marks created “the most dramatic shift” in how courts define an autodialer, Eisen said. The Ninth Circuit said the TCPA’s statutory definition was ambiguous and interpreted it in a way that would render every smartphone an autodialer, he said.

Ian C. Ballon, counsel for defendant Crunch San Diego LLC and an internet attorney at Greenberg Traurig LLP, told Bloomberg Law he plans to appeal Marks to the U.S. Supreme Court.

Input Sought

The FCC sought public comment after the D.C. Circuit ruling on what devices constitute autodialers and how to define a device’s “capacity” to store and dial random or sequential numbers. It also asked how automated a device’s dialing function must be to qualify as an autodialer.

The commission sought further comment after the Marks ruling. It asked how it should interpret any ambiguities in the TCPA, whether smartphones have the capacity to store numbers, and how Marks affects the analysis in ACA International.

Telecom attorneys are hoping the FCC will “provide clarity so that industry will be able to know before a call is made whether it will be subject to the TCPA,” Steven A. Augustino, a TCPA attorney at Kelley Drye & Warren LLP, said.

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