Recent News
FCC Flexes New Enforcement Muscle, Proposes $5 Million
Forfeiture for Unlawful Robocalls
On August 24, 2021, the FCC proposed to fine two individuals sending
prerecorded political messages $5,134,500 for making over 1,000
unlawful calls in violation of the TCPA. This proposed fine
is the first TCPA robocall fine proposed since the TRACED Act gave
the FCC authority to issue proposed fines without first issuing a
citation (warning) to the offending entity. (Previously, the
FCC had to issue a citation and then could take action only if
additional illegal calls were made after the citation.) The
TRACED Act authority now allows the FCC to go after illegal calling
more quickly, just as it has recently for illegal spoofing
violations.
In the Notice of Apparent Liability (NAL), the FCC concluded that
J.M. Burkman & Associates, and its two principals, John M.
Burkman and Jacob Alexander Wohl, apparently sent 1,141 prerecorded
messages to consumers' wireless phones without obtaining
consent from the recipients for the calls. Under Section
227(b) of the TCPA, prerecorded message calls require consent when
they are sent to wireless numbers and certain other telephone
numbers. The FCC's investigation indicated that the
consumers who received the calls apparently did not provide consent
to receive the calls. The FCC proposed a fine of $4,500 per
illegal call, yielding a fine of over $5 million. The
Commission also concluded that both the company originating the
calls and its two principals were liable for the calls. The
targets will have an opportunity to respond to the NAL before the
Commission considers whether to impose the proposed
forfeiture.
FCC to Consider Reduction of Robocalls to 911 Numbers and
Anti-Robocall Obligations of International Gateways at September
Open Meeting
The FCC included two robocall-related items on its September 30 meeting agenda.
The first FNPRM would propose to update the
FCC's rules governing the PSAP Do-Not-Call registry. Although
the FCC adopted rules in 2012 to establish the registry as a means
to protect PSAPs from unwanted robocalls, the registry has not been
fully implemented due to security concerns associated with
releasing PSAP telephone numbers to entities accessing the
registry. The FNPRM would propose that voice service providers
block autodialed calls to PSAP telephone numbers on the PSAP
Do-Not-Call registry, as an alternative to allowing entities
claiming to use autodialers to access the registry to identify
telephone numbers that may not be called. In addition, the FNPRM
would seek comment on whether autodialed calls and text messages
continue to disrupt PSAPs' operations, security risks
associated with maintaining a centralized registry of PSAP
telephone numbers, ways to address security issues (such as
enhanced caller vetting and data security requirements) and
alternative means to prevent robocalls to PSAPs (such as by
utilizing other technological solutions or leveraging the National
Do-Not-Call registry).
The second FNPRM would propose to require gateway
providers to assist in the battle against illegal robocalls by
applying STIR/SHAKEN caller ID authentication and other robocall
mitigation techniques to calls that originate abroad from U.S.
telephone numbers. The FNPRM would also seek comment on several
other proposals aimed at mitigating robocalls, including the
following requirements that would be applicable to gateway
providers: (1) responding to traceback requests within 24 hours;
(2) blocking calls upon notification from the Enforcement Bureau
that a certain traffic pattern involves illegal robocalling; (3)
utilizing reasonable analytics to block calls that are highly
likely to be illegal; (4) blocking calls originating from numbers
on a do-not-originate list; (5) confirming that a foreign call
originator using a U.S. telephone number is authorized to use that
number; (6) including robocall mitigation obligations in contracts
with foreign customers; and (7) submitting a certification
regarding robocall mitigation practices to the Robocall Mitigation
Database. In addition, the FNPRM would seek comment on a
requirement that service providers block calls from gateway
providers identified as bad actors by the FCC and on whether
additional information should be collected by the Robocall
Mitigation Database. The FNPRM would ask whether there are
alternative means to stop illegal foreign-originated
robocalls. Finally, while the rulemaking proceeding is
pending, the FCC would not enforce the prohibition in Section
63.6305(c) of the FCC's rules on U.S.-based providers accepting
traffic carrying U.S. NANP numbers that is received directly from
foreign voice service providers that are not in the Robocall
Mitigation Database.
FCC Enforcement Bureau Selects Incumbent USTelecom to
Continue as Registered Industry Consortium
As required by the Pallone-Thune Telephone Robocall Abuse Criminal
Enforcement and Deterrence Act (TRACED Act), the FCC must annually
select "a single consortium to conduct private-led efforts to
trace back the origin of suspected unlawful robocalls." On
August 25, the Enforcement Bureau released a Report and Order selecting the incumbent,
USTelecom's Industry Traceback Group, to continue as the
registered consortium. A second entity had also applied to
serve as the consortium but the FCC chose to continue with
USTelecom as the existing provider.
FCC Petitions Tracker
Kelley Drye's Communications group prepares a comprehensive
summary of pending petitions and FCC actions relating to the scope
and interpretation of the TCPA.
Number of Petitions Pending
- 30 petitions pending
- 1 petition for reconsideration of the rules to implement the government debt collection exemption
- 1 application for review of the decision to deny a request for an exemption of the prior express consent requirement of the TCPA for "mortgage servicing calls"
- 1 request for reconsideration of the 10/14/16 waiver of the prior express written consent rule granted to 7 petitioners
New Petitions Filed
- Enterprise Communications Advocacy Coalition – Petition for Declaratory Ruling
On July 30, 2021, the Enterprise Communications Advocacy Coalition
(ECAC) filed a Petition for Declaratory Ruling seeking federal
preemption of portions of recently enacted Florida legislation (SB
1120), which amends the Florida Do Not Call Act and the Florida
Telemarketing Act. The ECAC contends that portions of SB 1120
imposes obligations more restrictive than the TCPA Regulations and
impose additional prohibitions on calls and the use of dialing
equipment that are legal under federal law. The Petition
relies upon a 2003 Commission TCPA order which states that
"that any state regulation of interstate telemarketing calls
that differs from our rules almost certainly would conflict with
and frustrate the federal scheme and almost certainly would be
preempted."
- Perdue for Senate, Inc. – Petition for Declaratory Ruling
On July 2, 2021 Perdue for Senate, Inc. (Perdue for Senate) filed
a Petition for Declaratory Ruling,
asking the FCC to confirm that the Telephone Consumer Protection
Act (TCPA) does not regulate ringless voicemail technology (RVM).
Specifically, Perdue for Senate wants the FCC to rule that
"the delivery of a voice message directly to a voicemail box
through RVM technology does not constitute a 'call' subject
to prohibitions on the use of an automatic telephone dialing system
("ATDS") or an artificial or prerecorded voice under
Section 227(b)(1)(A)(iii) of the TCPA or Section 64.1200(a)(1)(iii)
of the FCC's rules." In the lead up to the January
2021 Senate runoff elections in Georgia, Perdue for Senate employed
vendors that used RVM technology to deliver voice messages directly
to potential voters' voice mailboxes. According to Perdue
for Senate, these RVM transmissions fall outside of the scope of
the TCPA and other FCC rules because, not only are they not
"calls," they are also not transmitted via a wireless
network, and the technology does not bill the recipients of the
messages. Perdue for Senate claims that RVM technology is a
"beneficial alternative" to robocalls, in that it allows
non-profit organizations to relay important information without
disrupting the lives of message recipients and/or adding charges to
their bills.
This is the third petition to be presented to the FCC involving
ringless voicemail technology. Two prior petitions relating
to ringless voicemail were filed and subsequently withdrawn by the
petitioners prior to a Commission decision.
Upcoming Comments
- Perdue for Senate, Inc. – Petition for Declaratory Ruling; Comments due Oct. 4; Replies due Oct. 19.
Decisions Released
- None
Click here to see the full FCC Petitions
Tracker.
Cases of Note
Sixth Circuit Holds District Courts Have Jurisdiction Over
TCPA Claims Arising During Pre-Barr Period of
Unconstitutional Government-Debt Exception
In November 2020, we reported on Lindenbaum v. Realgy, a decision out
of the Northern District of Ohio that granted defendant's
motion to dismiss because the TCPA's so-called
"government-debt exception" rendered the TCPA's
prohibitions on calls sent through an automated telephone dialing
system or through prerecorded messages void in its entirety between
2015 and 2020. Plaintiff appealed that decision to the Sixth
Circuit, which reversed.
The Lindenbaum plaintiff alleged that she received prerecorded
calls, not placed to collect government-debt, between 2015 and
2020. The district court held that it lacked subject-matter
jurisdiction over calls allegedly placed in violation of the TCPA
between 2015, when the statute was amended to add the
government-debt exception, and 2020, when the Supreme Court held it
unconstitutional in Barr v. American Association of Political
Consultants ("AAPC"). The basis
for the Court's ruling in AAPC was that the
government-debt exception discriminated on the basis of speech:
prerecorded messages placed to collect private debt were prohibited
under the statute, while the same calls placed to collect
government-owned debt were exempted.
Applying AAPC, the district court dismissed
plaintiff's claims, arguing that because the clearest statement
in AAPC should apply retroactively was in a
footnote joined by only three judges, AAPC's
effect in severing the government-debt exception should only apply
prospectively. At the time defendant's calls were allegedly
placed to plaintiff, the TCPA unconstitutionally regulated certain
speech and exempted other based on its content. The statute,
therefore, was void and the court lacked subject matter
jurisdiction.
Lindenbaum appealed the dismissal of her case to the Sixth Circuit.
Appellee-Defendant put forth two arguments: (i) the district court
correctly held that AAPC's severance of the
government-debt exception applied prospectively, and (ii) imposing
liability for a prerecorded message placed while the
government-debt exception was in place, but refusing to hold liable
government-debt collectors who lacked fair notice that the
exception they relied on was unconstitutional, created the same
First Amendment violation recognized by the Court
in AAPC. The Sixth Circuit rejected both
arguments.
On the first argument, the Sixth Circuit agreed with Appellant that
the district court erred in its analysis. The court reasoned that
"the Constitution itself displaces unconstitutional
enactments," not the judiciary. "Unconstitutional
enactments are not law at all." Thus, the role of the court is
to interpret what "the statute has meant from the start in the
absence of the always-impermissible provision." That is what
the Court did in AAPC: it recognized that the
Constitution has "automatically displaced" the
government-debt exception "from the start," and
"interpreted what the statute has always meant in its
absence." As a legal determination, it applied retroactively,
as judicial decisions tend to do (barring some independent reason
for its inapplicability, such as due process
concerns).
The Sixth Circuit also found Appellee's second argument
unpersuasive. It agreed that due process concerns—i.e., a
lack of fair notice—sometimes prevents courts from applying a
judicial decision retroactively, and therefore might result in a
judgment of no liability under the TCPA for a debt collector who
wrongly relied on the government-debt collection in placing
prerecorded messages to collect government-debt between 2015 and
2020. That, however, is a function of a "centuries-old rule
that the government cannot subject someone to punishment without
fair notice," and not a function of the government's
regulation of speech. Because a "speech-neutral fair-notice
defense" does not raise the issue of government regulation of
speech, it does not rise to the level of speech restriction that
might violate the First Amendment.
Thus, the Sixth Circuit reversed.
Lindenbaum brings the Sixth Circuit into accord with
the majority of district courts who have
answered the question of whether the TCPA remained valid
after AAPC. Now just two decisions, Creasy and Hussain, hold the TCPA void between 2015 and
2020.
Lindenbaum v. Realgy, LLC, No. 20-4252, 2021 WL 4097320
(6th Cir. Sept. 9, 2021)
Ninth Circuit Reverses TCPA Dismissal and Clarifies
Regulatory Application to Cell Phones
In Loyhayem v. Fraser Financial and Insurance Services,
Inc., the Ninth Circuit reversed a lower court's dismissal
of a TCPA action predicated on a job-recruitment
"robocall." The Court held that the lower court misread
the TCPA and accompanying regulations because it misapprehended the
type of consent that the TCPA requires when placing such calls to
cell phones. "For robocalls involving advertising and
telemarketing, [Section 64.1200](a)(2) requires prior
express written consent, whereas the calls
covered by paragraph (a)(1) require prior express consent, which
may be given orally or in writing."
Plaintiff in Loyhayem alleged that he received a
job recruitment call from defendant that was made both using an
ATDS and an artificial or pre-recorded voice, without his express
consent. Defendant moved to dismiss, which the district court
granted, holding that "the TCPA and the relevant implementing
regulation, 47 C.F.R. § 64.1200, do not prohibit making
job-recruitment robocalls to a cellular telephone
number." The lower court "read the Act as
prohibiting robocalls to cell phones only when the calls include an
'advertisement' or constitute 'telemarketing,' as
those terms have been defined by the [FCC]." Because
plaintiff "admitted that the job-recruitment call" did
not contain advertising nor telemarketing, the lower court
"concluded that he had not adequately pleaded a violation of
the TCPA."
Plaintiff appealed and the Ninth Circuit reversed. The Ninth
Circuit reviewed the text of the TCPA, and found that the
"applicable statutory provision prohibits in plain terms
'any call,' regardless of content, that is made to a cell
phone using an automatic telephone dialing system or an artificial
or pre-recorded voice, unless the call is made either for emergency
purposes or with the prior express consent[.]" The court
recognized that plaintiff had adequately alleged both that the call
was not made for emergency purposes and that he provided no consent
to be contacted by defendant.
With respect to the pertinent regulation, the Ninth Circuit found
that the lower court "read paragraph (a)(2) [of the
regulation] as effectively removing robocalls to cell phones from
the scope of the TCPA's coverage unless the calls involve
advertising or telemarketing," which was incorrect. The
Ninth Circuit held that while plaintiff "did not allege that
the call he received involved advertising or telemarketing,"
that "simply means the heightened written consent requirement
imposed by paragraph (a)(2) does not apply."
The Court clarified that Plaintiff's case "is still
governed by paragraph (a)(1), which requires that prior express
consent have been given either orally or in writing." Because
plaintiff adequately alleged that he did not provide consent,
dismissal was unwarranted. The Ninth Circuit reversed.
Loyhayem v. Fraser Fin. & Ins. Servs., Inc., 7 F.4th
1232 (9th Cir. 2021).
District Courts Continue to Find Footnote 7
in Duguid Unpersuasive
We have previously discussed lower courts treatment
of Facebook v. Duguid's Footnote 7. The Western
District of Washington and Southern District of Ohio have joined
the District of South Carolina and Northern District of California to hold
that to qualify as an ATDS, a device that uses a number generator
to randomly dial stored numbers must also generate random or
sequential numbers to be dialed. The court held that
defendant's "use of its system to send advertisement text
messages to consumers who entered their phone numbers into a form
on its website simply does not implicate the problems"
Congress intended to address when it passed the TCPA.
In Borden v. eFinancial, plaintiff filed his
complaint in September 2019, alleging that he was contacted by
defendant after filling out a form to receive insurance rates,
including his telephone number, though he stopped short of actually
submitting that form. Nonetheless, he began to receive text
messages from defendant. Following the Duguid
decision in April, 2021, plaintiff amended his complaint to allege
that defendant sent its text message advertisements using "a
sequential number generator to (1) determine the order in which to
pick phone numbers to be dialed from a stored list or database of
phone numbers and (2) populate the LeadID field that is assigned to
a phone number and used to identify phone numbers in its
database." Plaintiff did not allege that defendant
"generate[d ]random or sequential phone numbers and sends text
messages to those numbers."
Specifically, the Court found plaintiff's allegation that
" [defendant's] system uses a sequential number generator
to select which stored" numbers to dial and to populate a
certain field in said system to identify numbers in the
database. The court was careful to observe that plaintiff
"does not, however, allege that [defendant's] system
'generate[s] random or sequential phone numbers' to be
dialed[.]"
Plaintiff relied on footnote 7
of Duguid "for the proposition that it is
enough that an autodialer 'use a random number to determine the
order in which to pick numbers from a preproduced
list[.]" The Court disagreed, finding that
"[plaintiff's] argument relies on a selective reading of
one line within footnote 7 and ignores the greater context of that
footnote and the opinion." The Court further relied upon
the amicus brief cited by the Supreme Court in the footnote for
support, and found that the amicus brief "makes clear that the
preproduced list of phone numbers referenced in footnote 7 was
itself created through a random or sequential number generator,
thus differentiating it from the stored list of consumer-provided
phone numbers used by [defendant]."
Accordingly, the Court dismissed the complaint with prejudice,
finding that because plaintiff "expressly alleges that he
provided his phone number to [defendant] – and thus the text
messages at issue necessarily were not sent through an ATDS. Thus,
"amendment would be futile[.]"
....
The Southern District of Ohio reached as similar conclusion
in LaGuardia v. Designer Brands. There, plaintiffs
alleged violations of Section 227(b) (prohibiting use of an ATDS)
and Section 227(c) (soliciting an individual registered on the
Do-Not-Call Registry). Defendants had moved for summary judgment on
two grounds: (i) their text messaging system was not an ATDS under
Section 227(b), and (ii) an established business relationship with
plaintiffs precluded liability under Section 227(c).
Defendants relied on their expert's report that the device in
question did not have the capacities
that Duguid defined as an ATDS. Plaintiffs first
unsuccessfully sought to exclude that expert opinion. Next, it
argued that defendants' dialing system was an ATDS because it
would issue a unique sequential identification for every message it
sends, then would use that ID number to track responses. According
to the court, "Plaintiffs' focus is off," pointing
out that the definition of an ATDS "addresses the ability to
randomly or sequentially store or generate phone numbers, not
message identification numbers." The court was similarly
not convinced by plaintiffs' reliance on Footnote 7
of Facebook Inc. v. Duguid, observing that
"Plaintiffs contend that this dicta, which addresses a
hypothetical in an amicus brief, establishes
that [defendant's dialing system] is an ATDS because of its
ability to randomly generate ID numbers to use those numbers to
determine which phone numbers to send text messages to."
Further, the court held that despite defendants' evidence
demonstrating that it had some business relationship with
plaintiffs, summary judgment on liability under Section 227(c) was
inappropriate because defendants failed to establish that it
maintained an internal Do Not Call list, which the Court found was
required under relevant TCPA regulations.
As a result, the Court entered summary judgment for defendants
because their dialing system was not an ATDS but denied summary
judgment on the established business exception.
Borden v. eFinancial, LLC, No. C19-1430JLR, 2021 WL
3602479 (W.D. Wash. Aug. 13, 2021) (appeal
filed Sept. 2, 2021); LaGuardia, et al. v.
Designer Brands Inc., et al, No. 2:20-cv-2311, 2021 WL 4125471
(S.D. Ohio Sept. 9, 2021).
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