In a decision likely to impact future litigation over robocalls and texts, a federal appeals court Friday struck down key parts of a Federal Communications Commission order that had expanded the legal definition of an autodialer.
The FCC’s 2015 declaratory ruling and order has been sharply criticized by defense attorneys and representatives from the U.S. Chamber of Commerce, who say it exposes companies to huge penalties under the Telephone Consumer Protection Act, or TCPA, even when making tailored marketing or business calls.
Friday’s unanimous, 51-page decision by a panel of the U.S. Court of Appeals for the D.C. Circuit—written by Judge Sri Srinivasan—agreed the FCC order adopted an overbroad definition for what constitutes an “automatic telephone dialing system,” or ATDS. Under the TCPA, calls made via an autodialer without the receiver’s consent can carry statutory penalties of between $500 and $1,500 per violation.
“The Commission’s understanding would appear to subject ordinary calls from any conventional smartphone to the Act’s coverage, an unreasonably expansive interpretation of the statute,” Srinivasan wrote for the panel. He was joined by Judge Cornelia Pillard and Senior Circuit Judge Harry Edwards.
Shay Dvoretzky of Jones Day, who argued against the FCC order for a group of industry petitioners, welcomed the decision in a statement. “For years, abusive class-action lawsuits have been brought against all sorts of legitimate businesses, seeking billions of dollars in statutory penalties for ordinary phone calls,” he said.
“The D.C. Circuit recognized the ‘eye-popping sweep’ of the FCC’s order and properly set it aside as inconsistent with the statute and with reasoned decision-making,” Dvoretzky added. “The court’s decision should have a profound effect on TCPA litigation across the country.”
Jay Edelson of Chicago-based Edelson PC, a plaintiffs firm that has pursued a number of TCPA actions, was more downbeat. “This is a good day for companies that want to spam consumers with phone calls and texts messages and a bad day for everybody else,” he said in an email.
The main issue in the case was language in the commission’s order further interpreting the TCPA’s definition of an ATDS. The statute itself defines it as equipment that has the “capacity” to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial them.
Since the statute’s passage, the FCC has adopted a series of interpretive orders about autodialers. The most recent order in 2015 interpreted the term “capacity” as encompassing the device’s “potential functionalities” with modifications such as software changes. It also said that equipment that can dial numbers from a list qualifies as an autodialer.
“It is untenable to construe the term ‘capacity’ in the statutory definition of an ATDS in a manner that brings within the definition’s fold the most ubiquitous type of phone equipment known, used countless times each day for routine communications by the vast majority of people in the country,” the panel said in its decision.
“It cannot be the case that every uninvited communication from a smartphone infringes federal law, and that nearly every American is a TCPA-violator-in-waiting, if not a violator-in-fact,” it added.
The decision was also applauded by current FCC Chairman Ajit Pai, who called it “yet another example of the prior FCC’s disregard for the law and regulatory overreach.”
FCC Commissioner Jessica Rosenworcel, meanwhile, issued a separate statement condemning the ruling and called on the commission to take action in response. “Robocalls are already out of control. One thing is clear in the wake of today’s court decision: robocalls will continue to increase unless the FCC does something about it,” she said.
“That means that the same agency that had the audacity to take away your net neutrality rights is now on the hook for protecting you from the invasion of annoying robocalls,” Rosenworcel added.