United States: D.C. Circuit Issues Highly Anticipated Ruling In Telephone Consumer Protection Act Appeal

The D.C. Circuit answered months of speculation on Friday, March 16, 2018, when it finally issued its decision inACA International v. Federal Communications Commission (15-1211) . The decision is largely seen as a major win for defendants in Telephone Consumer Protection Act ("TCPA") lawsuits, as the D.C. Circuit struck down key portions of the Federal Communication Commission's ("FCC") previous expansive interpretations of the TCPA, including its definition of an "automatic telephone dialing system" ("ATDS") triggering application of the TCPA, and the FCC's illusory one-call safe harbor for reassigned numbers. The Court did, however, uphold the FCC's findings on reasonable revocation of consent and exemptions for healthcare-related messages.

Current FCC Chairman Ajit Pai hailed the Court's decision, saying in a statement, "Today's unanimous D.C. Circuit decision addresses yet another example of the prior FCC's disregard for the law and regulatory overreach. As the court explains, the agency's 2015 ruling placed every American consumer with a smartphone at substantial risk of violating federal law. That's why I dissented from the FCC's misguided decision and am pleased that the D.C. Circuit too has rejected it."

Commissioner Michael O'Rielly echoed Chairman Pai's sentiments, saying, "I am heartened by the court's unanimous decision, which seems to reaffirm the wording of the statute and rule of law. This will not lead to more illegal robocalls but instead remove unnecessary and inappropriate liability concerns for legitimate companies trying to reach their customers who want to be called. In effect, it rejects the former Commission's misguided interpretation of the law, inappropriate expansion of scope, and irrational view of reassigned numbers. While I disagree with the court's decision on the revocation issue, I believe there is an opportunity here for further review in order to square it with the Second Circuit's more appropriate approach."

Commissioner Jessica Rosenworcel, however, expressed disappointment and concern over the decision. "One thing is clear in the wake of today's court decision: robocalls will continue to increase unless the FCC does something about it. 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."

I. The FCC's Interpretation of the TCPA Basics

On July 10, 2015, after a contentious 3-2 party-line vote, the FCC issued a Declaratory Ruling and Order formally stating the FCC's interpretation of numerous provisions of the TCPA. In a 147-page ruling, the FCC expanded the scope of the TCPA in several key areas:

1. The present capacity of an ATDS.

The TCPA makes it unlawful for any person to initiate any call or text (other than a call or text made for emergency purposes or made with the prior express consent of the called party) using any ATDS or an artificial or prerecorded voice. An ATDS is defined in the statute 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."

In its 2015 Order, the FCC considered whether, to constitute an ATDS, equipment must have the present capacity at the time of use to generate random or sequential telephone numbers (i.e. telemarketing equipment), or merely be capable of being modified to have those functionalities in the future. 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. In other words, "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 autodialer. The FCC's Order only provided one specific example, stating that a rotary telephone is not an ATDS.

2. The available means for revocation.

The 2015 FCC Order considered the available means by which consumers may revoke their prior consent and made the seemingly broad proclamation that "consumers may revoke consent through any reasonable means." More specifically, the FCC held that "consumers may revoke consent in any manner that clearly expresses a desire not to receive further messages, and that callers may not infringe on that ability by designating an exclusive means to revoke." The FCC took the position that businesses can mitigate the risk by creating adequate business records and processes to record and respect revocations.

3. A caller's liability for reassigned numbers.

The FCC clarified that "the TCPA requires the consent not of the intended recipient of a call, but of the current subscriber [or customary user of the phone.]" Accordingly, if a phone number legitimately provided by a prior user is reassigned, potential TCPA violations loom when attempting to reach that prior user at the outdated phone number. The FCC provided a one-call exception for reassigned numbers. "[C]allers who make calls without knowledge of reassignment and with a reasonable basis to believe that they have valid consent to make the call should be able to initiate one call after reassignment as an additional opportunity to gain actual or constructive knowledge of the reassignment and cease future calls to the new subscriber." After the first call, however, callers are liable for any calls thereafter even if that "one additional call does not yield actual knowledge of reassignment."

4. Exemption for healthcare-related messages.

In limited situations, calls to address exigent circumstances, where the calls are "free to the called party," are exempted from certain of the TCPA's consent requirements. The FCC exempted some types of health care-related calls, including time-sensitive information such as appointment confirmations, prescription notifications, and lab results.

II. A Review of the Issues on Appeal

Business groups filed several lawsuits challenging the FCC's July 10, 2015 Order seeking (1) reversal of the FCC's broad interpretation of ATDS; and (2) determination whether the FCC exercised its regulatory authority appropriately or whether the agency expanded the TCPA in a way that Congress never intended. The appeal presented the following questions:

1. Whether the FCC interprets an ATDS in a way that unlawfully turns on the equipment's potential rather than present abilities, nullifies the statutory random-or-sequential-number-generation requirement, and provides inadequate guidance to regulated parties.

More specifically, the Petitioners argued that the FCC's interpretation of an ATDS "leads to absurd and unconstitutional results because virtually every kind of modern phone, including every smartphone and office phone, could be modified to generate random or sequential numbers." The FCC left callers "in the dark about what modifications are too theoretical or attenuated to turn a modern-day phone into an ATDS," the Petitioners claimed. In response, the FCC argued that dictionary definitions, ordinary usage, and principles of statutory interpretation all dictate that "capacity" can include potential abilities.

2. Whether the Commission unlawfully prevented callers from reasonably relying on the "prior express consent of the called party" by imposing liability for good faith calls to reassigned numbers.

The Petitioners highlighted the fact that callers have no reliable means of tracking reassignments, and the Commission's purported solution of exempting the first call "does not fix the Order's defects." The FCC argued however that "its independent decision to allow a one-call safe harbor is a reasonable measure to balance the interests of callers and consumers."

3. Whether the Commission unlawfully imposed an unworkable regime for handling revocation of consent.

For revocation, the Petitioners argued that callers must be able to prescribe a uniform procedure for revocation, and a "case-by-case approach is arbitrary and capricious." The FCC argued that because the TCPA "is silent on the issue of how consumers may revoke consent, the Commission had broad authority to fill that statutory gap."

4. Whether it was reasonable for the Commission to exempt healthcare-related calls to wireless numbers only when those calls serve a healthcare-treatment purpose, and not when the calls instead serve non-treatment purposes such as telemarketing, advertising, billing, or debt collection.

The FCC argued that "[t]he Commission reasonably determined that calls regarding billing and accounts do not warrant the same treatment as calls for healthcare treatment purposes, because timely delivery of these types of messages is not critical to a called party's healthcare, and they therefore do not justify setting aside a consumer's privacy interest."

Oral argument was held on October 19, 2016.

III. D. C. Circuit's Decision

After almost 17 months of delay, the D.C. Circuit issued its ruling on March 16, 2018, and granted the petition in part and denied it in part. Judge Srinivasan authored the opinion, joined by Judges Pillard and Edwards.

1. The Court vacated the FCC's definition of ATDS.

Concerns over smartphones drove the Court's analysis on the definition of an ATDS. As to the issue of capacity, the D.C. Circuit saved some of its strongest language for its finding that the FCC's definition of an ATDS could not stand, calling it "utterly unreasonable." The Court was especially concerned that the definition would encompass smartphones that need additional equipment, either through add-ons or downloads, to function as an autodialer. "If a device's 'capacity' includes functions that could be added through app downloads and software additions, and if smartphone apps can introduce ATDS functionality into the device," the Court reasoned, "it follows that all smartphones, under the Commission's approach, meet the statutory definition of an autodialer."

The Court found that such an interpretation is both unreasonable and impermissible: "The TCPA cannot reasonably be read to render every smartphone an ATDS subject to the Act's restrictions, such that every smartphone user violates federal law whenever she makes a call or sends a text message without advance consent."

The Court further took issue with the 2015 Order's lack of clarity on the definition of an ATDS, specifically highlighting that the Order was ambiguous as to whether a device qualifies as an ATDS only if it can generate random or sequential numbers to be dialed, or whether it qualifies as an ATDS even if it lacks that capacity. Moreover, the Order did not explain the human intervention necessary for a device to meet the requirements for an ATDS. The Court noted that the FCC has taken competing positions that the basic function of an ATDS is the ability to function without human intervention, yet the Order indicated that a device might still qualify as an ATDS even if it required human intervention.

The ruling also struck down long-standing TCPA rulings going back to 2003 on the issue of predictive dialers. While the FCC has taken the position for 15 years that a predictive dialer is an ATDS, the D.C. Circuit found that the 2015 Order and its predecessors do not give a clear answer as to whether a device qualifies as an ATDS only if it can generate random or sequential numbers for dialing.

The panel raised the issue that the current interpretations of an ATDS are ambiguous as to whether a call made by a system that has the capacity to function as an ATDS, but not made in automatic mode, still violates the TCPA. While the Court did not rule on this issue, finding that it was not properly before the Court, it did note "the issue in light of its potential interplay with the distinct challenges petitioners do raise."

In the end, the D.C. Circuit largely tossed the FCC's body of interpretations as to the definition of the ATDS out the window, taking with it case decisions based on those interpretations. Defendants look to have a new day, and a complete do-over, on the proper interpretation of the definition of an ATDS by the legal system.

2. The Court also vacated the FCC's stance on reassigned numbers.

The Court began its analysis by noting that millions of wireless numbers are reassigned each year, but ultimately disagreed with the Petitioners' view that the FCC's interpretation of "called party" to refer to a post-reassignment subscriber was inconsistent with the statute. Instead, the Court found that "called party" can mean "intended recipient" as well as the current subscriber, citing favorably to the concept of "reasonable reliance." The Court did, however, agree with the Petitioners' argument that the one-call safe harbor is arbitrary: "[W]hy does a caller's reasonable reliance on a previous subscriber's consent necessarily cease to be reasonable once there has been a single, post-reassignment call?" The one-call safe harbor remained too close to strict liability to pass muster and, as a result, the D.C. Circuit overruled the FCC on this point.

Again, the D.C. Circuit's ruling seems to open the door to defendants for a re-do on the legal system's interpretation of the TCPA as imposing presumptive liability for calls to reassigned numbers.

3. The D.C. Circuit affirmed the FCC's interpretation of consumers' ability to revoke consent.

The Court found that the Commission's approach to revocation of consent, where a called party can revoke his or her consent by any reasonable means was reasonable. The 2015 Order did not reach the issue of whether the Order forecloses callers and consumers from contractually agreeing upon revocation procedures. In addition, the Court also observed that if a calling party provides a revocation mechanism, a called party's failure to use the mechanism could mean that the revocation was not in a reasonable manner and hence ineffective.

While the D.C. Circuit's ruling affirmed the FCC's basic position that consumers can revoke consent by reasonable means, the ruling left open the door to calling parties obtaining and attempting to enforce contractual consent, and building defenses to attempted revocations based on the consumer's failure to follow an established revocation mechanism.

4. The Court also upheld the FCC's stated scope for healthcare-related messages.

The Petitioners, namely Rite Aid, challenged the FCC's exemption for select healthcare-related calls that included, for example, appointment and exam reminders, pre-operative instructions, and lab results, but did not cover telemarketing or billing and debt collection. The Court sided with the FCC and concluded that the narrow exemption did not restrict communications required to flow freely by HIPAA. "There is no obstacle to complying with both the TCPA and HIPAA," the Court found, reasoning that the HIPAA statute does not include any requirements that would "frustrate the TCPA" by permitting healthcare providers to use ATDS equipment "to bombard nonconsenting wireless users with calls and texts concerning outstanding charges...."

IV. Moving Forward

Litigation under the TCPA has grown at an aggressive rate over the past six years. Understanding the evolving interpretations of the critical TCPA issues is essential to successfully defending such claims.

Companies using telephone equipment that might have qualified as an ATDS under the 2015 Order now have numerous arguments that their equipment does not run afoul of the statute. Consumer-facing companies must still honor a consumer's revocation. TCPA defendants can chalk the decision up as a win.

Troutman Sanders LLP has unique industry-leading expertise with the TCPA, with experience gained trying TCPA cases to verdict and advising Fortune 50 companies regarding their compliance strategy. We will continue to monitor legislative developments and regulatory implementation of the TCPA in order to identify and advise on potential risks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions