FCC Issues Declaratory Ruling Setting Forth Expansive Definition For Autodialer

A sharply divided FCC issued its anticipated TCPA Declaratory Ruling and Order late Friday. In its TCPA Omnibus Declaratory Ruling and Order, the FCC sets forth a range of new statutory and policy pronouncements that have broad implications for all types of businesses that call or text consumers for any purpose.  This Ruling  is effective upon the July 10th release date, except for some limited relief to some callers to come into compliance on the form or content of prior written consents.  Requests may be lodged with the FCC, however, to stay its enforcement pending review.  Since the Ruling is counter to the views of a number of courts in recent litigation, I anticipate that this Ruling will be hotly litigated. At least one lawsuit has already been filed questioning the scope of the FCC's authority to disregard statutory language.  The American Collectors Association filed a lawsuit questioning whether the FCC's Ruling exceeds the statutory language of the TCPA and exceeded congressional intent underlying the TCPA.

This article examines how the Ruling addressed the definition of an autodialer.  Various petitioners had asked the FCC to issue a Ruling clarifying what equipment fell within the definition of an “automatic telephone dialing system” or “ATDS.”  The TCPA defines an ATDS as equipment which has the capacity:

(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and

(B) to dial such numbers.

(47 U.S.C. § 227(a)(1) (emphasis added).)

FCC was asked to address two important recurring issues : (1) whether “capacity” refers to what equipment can do now, or what some modified version of that equipment could do in the future; and (2) whether “using a random or sequential number generator” is an element of the definition at all.

The FCC concluded that “the TCPA’s use of ‘capacity’ does not exempt equipment that lacks the ‘present ability’ to dial randomly or sequentially.”  Rather, “the capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities.”  The FCC explained that this broad interpretation was supported by the Congressional intent underlying the TCPA and would help “ensure that the restriction on autodialed calls [would] not be circumvented.”  The FCC stated in the Ruling that “little or no modern dialing equipment would fit the statutory definition of an autodialer” if it adopted a less expansive reading of the word “capacity.”  Nonetheless, the FCC declined to provide any specific insight as to what would not fall within the definition of autodialer:

"[W]e do not at this time address the exact contours of the “autodialer” definition or seek to determine comprehensively each type of equipment that falls within that definition that would be administrable industry-wide….  How the human intervention element applies to a particular piece of equipment is specific to each individual piece of equipment, based on how the equipment functions and depends on human intervention, and is therefore a case-by-case determination."

When mentioning "human intervention," the FCC seemed focused on the number of calls that could be made, rather than the ability to pick and choose which calls were going to be made.  This concern regarding the quantity of calls that could be made supported the FCC's determination that predicative dialers fall within the definition of an autodialer in the TCPA.  The FCC noted that the ability to make so many calls could lead to many calls being made to emergency numbers for non-emergency reasons, which was a concern that the TCPA was intended to address.  Nonetheless, the FCC did not address what level of human intervention was required to fall outside the scope of the TCPA.

Although the FCC insisted that this interpretation has “outer limits” and does not “extend to every piece of malleable and modifiable dialing equipment,” the only example offered was admittedly farfetched:

"[I]t might be theoretically possible to modify a rotary-dial phone to such an extreme that it would satisfy the definition of “autodialer,” but such a possibility is too attenuated for us to find that a rotary-dial phone has the requisite “capacity” and therefore is an autodialer."

The FCC rejected concerns that such a broad definition would apply to smartphones, but not because smart phones would fall outside of the definition.  Rather, the FCC rejected this concern because there was no evidence that smart phones were being used to contact consumers. 

The FCC was not unanimous in its adoption of this Ruling, but divided 4-2 based on party lines.  Commissioner Pai’s dissent explained that the new autodialer definition “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.”  He also noted that smartphone owners are certain to be sued.  "Having opened the door wide, the agency cannot then stipulate restraint among those who would have a financial incentive to walk through it.”

Commissioner O’Rielly objected to the FCC disregarding the random number or sequential number generator element in  the statutory definition of an autordialer.  “Calling off a list or from a database of customers … does not fit the definition.”  Commissioner O'Reilly also surmised that interpreting "capacity" so broadly was unnecessary since the real concern appeared to be that companies would secretly switch their system over to an autodialer within the definition as a way to surreptitiously circumvent the TCPA.  Commission O'Reilly believed that this conduct could be addressed as an evidentiary issue by placing the burden of proof on the company to establish that the equipment was not being used as an autodialer when a call was placed. 

Given the breadth of the FCC’s purported interpretation of ATDS, which clashes with the views of a number of courts in recent litigation and is replete with ambiguity, this portion of the Ruling will most certainly be challenged.

Questions

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June D. Coleman | 916.321.4500