by Brian C. Schaller

As an end to 2020 nears, there is a lot of movement on the Telephone Consumer Protection Act (TCPA) front that could spell significant changes. With the liability of businesses that call or text in the balance, these changes could mean quite a bit to the bottom line. Below we go in-depth into the following key issues all businesses who engage in calling & texting should be monitoring:

1. The most significant development is the oral arguments last week before the Supreme Court in Facebook, Inc. v. Duguid. At issue in the case is the definition of automatic telephone dialing system (also known as an autodialer or ATDS). Whether a call or text is made with an autodialer is often at the center of TCPA litigation; and with statutory damages of $500-$1,500 per call/text made in violation of the TCPA, the stakes are high. There is the possibility that SCOTUS could significantly narrow or even strike down the TCPA.

2. Also, there may be changes coming on the regulatory front. The current Federal Communications Commission (FCC) chairman, Chairman Pai, is stepping down, and the FCC has announced that it has taken another step towards implementing a safe harbor for those who happen to call/text reassigned numbers.

Will SCOTUS narrow the definition of autodialer, remove text messaging from TCPA, or strike down TCPA?

As InfoLawGroup discussed in previous posts over a number of years (see posts from 2015, 2018 and 2020), the FCC and the lower courts have been struggling to interpret the poorly written autodialer TCPA language that was passed in 1991. This resulted in a Circuit split, so the Supreme Court decided to finally weigh in on the issue. In the Duguid case oral arguments, the Supreme Court questioned both sides with quite a bit of vigor. It's seen as a fool's errand to read too much into the Justices' questioning during oral argument on how they will ultimately decide, but, here, it really does seem that a number of Justices favor Facebook's position that the definition of autodialer should be narrowly construed to only apply to devices that use a random or sequential number generator. Going even further, we think that some of the Justices' questions could be clues that the Supreme Court may find that text messages don't fall under the TCPA, or strike down portions, or the entire TCPA.

Narrow the Definition of Autodialer?

If the Justices side with Facebook, we think that the most likely outcome would be to resolve the Circuit split by finding that autodialer should be interpreted narrowly. InfoLawGroup discussed the Circuit split in quite a bit of detail earlier this year, so we won't go too much into the specifics in this post. The crux of the argument is whether a device that merely stores numbers and dials automatically is an autodialer. Before the Supreme Court, Facebook argued that an interpretation of autodialer that includes a device that stores numbers (without randomly or sequentially generating numbers) "creates a statute of impossible breadth and a fundamental mismatch between the ATDS definition and the targeted ATDS prohibitions." Facebook was supported by the Federal Government, whose attorney, Assistant to the Solicitor General, participated in oral arguments.

On the other side, Duguid (the Respondent) argued that the autodialer definition should be interpreted broadly, in part, due to privacy concerns and textual interpretation of the statute. The Respondent's arguments seemed to be cut down by several Justices. For example, Chief Justice Roberts stated:

"Congress didn't write the legislation with the technical rules in mind, and I think ordinary speakers wouldn't read them that way" . . . .

"And I think most people's first blush would suggest that the — your friend on the other side's reading makes the most sense."

Going even further than asking hard questions, Justice Gorsuch introduced an argument that the Facebook legal team hadn't raised, but was in a Justice Barrett decision on this issue when she was a Judge of the United States Court of Appeals for the Seventh Circuit. Justice Gorsuch asked Facebook whether the Justices could rule in Facebook's favor by finding that the TCPA's language regarding autodialer could mean "storing telephone numbers to be called — that are to be called using a random number generator." Justice Gorsuch also presented the same question to Duguid's counsel. Of course, both sides said that the interpretation would fall in their favor.

Several Justices seemed to latch on to an argument against a broad interpretation, specifically because of worries that it would lead to everyday use of a cell phone being subject to the TCPA. Interestingly, this same problem was raised by FCC Commissioner Ajit Pai's (who we discuss below) Dissenting Statement in a 2015 Omnibus Order ("2015 FCC Order") that pushed the autodialer debate to the forefront. Here, Justice Sotomayor honed in on the cell phone issue, first asking the government attorney supporting Facebook a question that seemed to indicate she didn't think that cell phones would fall under a broad interpretation:

"I from the beginning have wondered, could a TCPA lawsuit against individual smartphone users actually prevail, given that smartphones don't automatically dial phone numbers in the ways of this – in the way that a sequential numbering system does?"

But, then, Justice Sotomayor asked Respondent's counsel a question that pointed in the other direction:

"Counsel, if we rule your way, the logical consequence is that every cell phone owner would be subject to the harsh criminal and civil penalties of the [T]CPA. Could you give me a reason, other than that it hasn't happened yet, for – for why Congress would have intended that?"

While questioning Facebook, Justice Breyer stated:

"If we take your friend's – your opponent's definition, then it would be unlawful for a person to use a cell phone, yes, that stores numbers, like an emergency hospital number, to make a call for – to the emergency line of the hospital." 

He also indicated that that the narrow definition may produce "a very peculiar or weird result" and told Facebook "you have a pretty strong claim in my opinion . . . you have a pretty strong case on the consequences and purposes."

Some of the Justices seemed extremely skeptical of aspects of Respondent's defense of a broad interpretation of autodialer, in particular, that the autodialer restriction is in place to protect people's privacy and human intervention is a proper legal test to limit the definition of autodialer. Justice Kavanaugh shot down the Respondent's argument that a broad definition was intended to protect privacy, stating:

"The problem with the structure of the statute that that creates is that the ATDS prohibition does not apply to calls to the residence. And that suggests that the ATDS prohibition was about something other than privacy."

While, Justice Gorsuch questioned:

"Why wouldn't this statute make a – a criminal of us all?" and rebuffed Respondent's attempt to read human intervention into the statute "I – I don't see where it excludes human actuation as part of the equation."

Remove Text Messages from the TCPA?

Although the main focus of the questioning was about the definition of an autodialer, the fact that the "calls" made in this case were text messages sent by Facebook may be of some significance. Justice Thomas, right out of the gate, focused on whether text messages should even be considered "calls" under the TCPA. Facebook's response, if followed by the Supreme Court, could have a major impact on marketers:

"It's not at all clear that a statute that was directed not just at calls but also, in particular, at artificial or prerecorded voice calls is really sensibly applied to texts at all. And if one were to hold that the statute were limited to actual voice calls and not to texts, that would be an alternative route for ruling in our favor in this case."

There was no further in-depth discussion of text messaging, but that doesn't necessarily mean that the Justices couldn't come down with an opinion that the generally accepted interpretation that text messages are calls within the meaning of the TCPA is unconstitutional.

Find the TCPA unconstitutional?

Facebook, Inc., v. Duguid wasn't the only TCPA case before the Supreme Court this year. In Barr v. American Association of Political Consultants Inc., the Supreme Court ruled that a 2015 amendment exempting autodialed calls without consent made to collect debts owed to or guaranteed by the United States (e.g., student loans) from the TCPA is unconstitutional. Instead of striking down the entire TCPA, the Supreme Court chose to sever just the amendment, and let the rest of the TCPA stand. Here, like with Barr, the Supreme Court could rule that just the autodialer restriction is unconstitutional and let the rest of the TCPA stand (including letting stand restrictions on using an automated or prerecorded voice). But, it is possible, given the pointed and critical questions by some of the Justices, particularly regarding how the TCPA is outdated, that the Supreme Court could decide to strike down the entire TCPA.

Although Justice Sotomayor signaled that it should be Congress that updates the TCPA, not the Court, Justice Thomas questioned the government's attorney:

"At what point do we simply say – and I understand the statutory construction and the — the — what we're attempting to do with this statute, but at what point do we say this statute is an ill fit for current technology?" and "— I think it's a little odd when we use these — we make great effort to interpret a statute that really wasn't intended for the universe in which we are operating now. And at what point do we just simply say that?"

Justice Alito seemed to almost view the TCPA with contempt, while signaling that just because a statute is obsolete the Supreme Court may be constrained from finding that it is unconstitutional:

"Guido Calabresi has argued that courts should have the power to declare statutes obsolescent and obsolete. And if — if we had that power, this statute might be a good candidate. But we haven't claimed it so far, and assuming we don't, perhaps we have to put out of our mind the whole parade of horribles that arises as a result of the advent of smartphones and social media."

Even if the Justices limit their decision to severing autodialer restriction, there would certainly be an upheaval in the calling/texting landscape; and could leave open some interesting questions. For example, would state statutes restricting autodialers continue in effect (particularly those that are more clearly worded than the TCPA)? In addition, would a ruling that the autodialer restriction is unconstitutional mean that the entirety of the TCPA was unconstitutional until the unconstitutional portion was severed? Note that after the Supreme Court's Barr decision came down, we are aware of several lower court decisions that found that the entire TCPA was unenforceable for the period that the government backed debt exception was in place (see Creasy v. Charter Commc’ns, Inc. and Lindenbaum v. Realgy Inc.), but, last week, one court found that argument "unpersuasive." (see Abramson v. Fed. Ins. Co.)

Both the Creasy and Lindenbaum Courts discussed how the Supreme Court in Barr deciding the case without a majority made it more difficult to decide their respective cases. In Barr, even though most of the Justices agreed that the 2015 amendment was unconstitutional, they couldn't agree as to why it was unconstitutional (making the decision a plurality). The Lindenbaum court called Barr "a deeply fractured plurality opinion." If, here, like in Barr, the Supreme Court decides with a fractured plurality opinion, this could lead to even more confusion for the lower courts and for businesses attempting to comply with the TCPA.

Shakeup at FCC and Possible Effects on TCPA

Rulemaking for the TCPA falls under the Federal Communications Commission. As discussed above, the FCC in 2015 issued an Omnibus Order which, upon other things, broadened the definition of autodialer to anything that has the "future" capacity to dial automatically, and only allowed for the caller/texter to make one call/text to a reassigned number without violating the TCPA. Any call/text after that (even if the call/text recipient doesn't notify the caller that the number has been reassigned), would be a violation of the TCPA. There was a poignant dissenter to this 2015 FCC Order, Ajit Pai, who argued against both of these points. With the change to a Republican administration when Trump became President, the previous Democratic chairman who spearheaded the 2015 FCC Order, Tom Wheeler, resigned and was replaced with a Republican Chairman. Here, it was Ajit Pai. While Pai was Chairman, the FCC saw the parts of the 2015 FCC Order that expanded the definition of autodialer and implemented a one call safe harbor for reassigned numbers (both of which Pai opposed), struck down by the D.C. Circuit Court in ACA International, et al., v. Federal Communications Commission. Under Pai's leadership, the FCC responded to the ACA decision by calling for public comments on this issue (once following ACA, and another time after a Ninth Circuit decision), but the FCC has yet to weigh in. Now, Pai has announced that he will be stepping down on January 20 (coinciding with President Donald Trump's leaving office). Although earlier than his term expiring, a resignation when a new party takes power is normal. With Democratic President-Elect Joe Biden slated to name the next Chairman, the shift of the FCC will be Democratic. It makes sense that new Democratic FCC will follow the old Democratic FCC's stance on broadening the definition of autodialer as far as the courts will allow.

Reassigned Numbers

Also, under Pai's leadership, the FCC began the process to create a Reassigned Numbers Database to try to solve the problem of businesses calling a number that has been reassigned to a person who didn't consent to receive calls. Two years ago, in an Order that laid out the Reassigned Numbers Database plan, Pai released a statement touting the solution and laying out his view of how to deal with unwanted calls, "There is no silver bullet to end the scourge of robocalls. That’s why we’re pursuing a comprehensive strategy that includes call authentication, call blocking, strong enforcement action — and today, a reassigned numbers database." Implementation has taken longer than expected, but the FCC recently announced a significant milestone to implementation. It selected SomosGov as the Reassigned Numbers Database Administrator. As InfoLawGroup discussed in a post on the original announcement of the program, the Order establishes a safe harbor from TCPA liability for those that check the Database. The FCC announcement didn't address when this Database (and its safe harbor) will be operational. Although progress on implementation is moving quite slowly, we are sure that businesses would welcome the availability of the safe harbor in 2021.

What Businesses Should Do

These legal developments foreshadow possible big changes to the risks and compliance with making calls and texts. In 2021, we predict that the regulation/restrictions on calling and texting are going to be pulled in two different directions. On the one hand, we think the conservative majority Supreme Court is likely to narrow the definition of autodialer and that the Reassigned Numbers Database safe harbor provisions may be available. This would be good news for businesses running calling/texting campaigns and bad for the class action plaintiff's bar that continues to bring lawsuits for violations of the TCPA. On the other hand, a Democratic-lead FCC could issue orders and prioritize positions that are not seen as business friendly, which would inevitably increase the current onslaught of TCPA litigation.

There will probably still be a lot of uncertainty in complying with the TCPA in 2021, particularly given that the Supreme Court isn't expected to give a decision in the Duguid case until mid-year. So, InfoLawGroup continues to recommend that businesses take a conservative approach to their calling and texting campaigns. Although businesses should not yet change their current legal compliance because of the potential developments we discussed in this post, there may be key changes on the way and updates for 2021.