SCOTUS Grants Certiorari in TCPA Case

Following the ACA International decision from the D.C. Circuit, it was a matter of when, not if.  The deepening splits of opinion regarding interpretation of the Telephone Consumer Protection Act have resulted in the U.S. Supreme Court granting certiorari to a case that could determine whether the  judicial system or the Federal Communications Commission  will be charged with interpreting the statute.

The case involves a federal court in West Virginia disregarding an FCC rule regarding “unsolicited advertisements.”  It dismissed the case because it did not deem a free ebook fax to be commercial in nature.  Specifically, the court did not believe it was bound to follow the FCC”s interpretation of the statute.

A Circuit Court of Appeals reversed the dismissal, holding that district courts did not have the power to  consider the validity of orders, like the FCC order at issue.  The higher court also held that the district court’s interpretation of the FCC rule contradicted its plain meaning.

The issue of whether the district court is bound to accept the FCC’s legal interpretation of the TCPA has been certified to the U.S. Supreme Court.  Resolution of this issue will almost certainly significantly impact TCPA litigation.

The ACA International decision vacated key parts of the FCC’s 2015 Declaratory Ruling and Order that, without limitation expanded the definition of an automatic telephone dialing system.  The FCC construed the definition of ATDS to include any equipment that potentially can be modified to generate random or sequential telephone numbers in the future.  Thus, “capacity” was defined to include present or future capacity, including with unspecified hardware and software modifications.  The only limitation on this expansive “capacity” definition is that “there must be more than a theoretical potential that the equipment could be modified” into an ATDS.  The FCC’s Order provided one example, a rotary telephone.

The D.C. Circuit Court of Appeals recently considered whether the FCC’s Declaratory Ruling and Order was at odds with the law’s original intent, and unnecessarily expanded the definitions of “capacity,” “ATDS” and “prior express consent.”  It then struck down the FCC’s definition of an ATDS as unreasonable because it could encompass smartphones.

Following ACA International, federal courts have been all over the map on the ATDS issue.  For example, the Ninth Circuit recently to a rather expansive view of what constitutes an ATDS.  Other Circuits have taken narrower views.

The case is PDR Network and the SCOTUS’ ruling will likely dictate how the TCPA is to be interpreted and applied.

Telemarketer-Friendly Ruling in Reassigned Number Case

Disregarding a recent Ninth Circuit decision providing an expansive definition of an ATDS, a district court in Minnesota has dismissed a TCPA case on the basis that equipment must have the “present capacity” to randomly or sequentially generate numbers to be considered an ATDS.  Equally as significant is that the court held that wrong number TCPA cases should consider the reasonableness of the caller’s reliance on a prior number holder’s express consent.” Stewart L. Roark v. Credit One Bank, N.A.

This is the first lower court ruling in the country to combine the “present capacity” and “random or sequential number generation” considerations, and to recognize the “reasonableness” standard when it comes to reassigned numbers.  Here, the defendant had the express consent to call the prior subscriber.  It also did not possess actual or constructive knowledge of the reassignment.

This common sense ruling is a clear victory for telemarketers.

Court Rules That Contractual Consent Can be Revoked

The Northern District of Alabama has reversed a prior ruling that plaintiff could not unilaterally revoke her consent to receive debt-collection calls because she agreed to provide that consent as part of a bargained-for exchange.  In doing so, the court opined that unilateral revocation of consent is permitted in the absence of any contractual restriction to the contrary.

The court reconsidered and decided that it was incorrect – a consumer can revoke contractual consent unless some express term in the contract limits that right.  The decisions underscore the importance of having professionally drafted consent language and website terms.

The takeaway here is that a contractual grant of consent is not the same thing as a contractual restriction to revoke it.  For example, a contract provision stating that one may revoke consent only in writing may be interpreted as a contractual restriction.

Richard B. Newman is an FTC attorney at Hinch Newman LLP.  He represents telemarketers and is a member of the International Association of Privacy Professionals.

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