Autodialer Junction, What’s Your Function? D.C. Circuit Reverses FCC’s Internally Inconsistent Interpretations of ATDS Functionality
The D.C. Circuit’s reversal of the Federal Communications Commission’s (“FCC” or “Commission”) pronouncements as to “the precise functions that a device must have capacity to perform for it to be considered an ATDS,” will likely prove to be the most consequential aspect of the court’s opinion in the ACA International appeal. ACA Int’l v. FCC, No. 15-1211, 2018 U.S. App. LEXIS 6535 at *9 (D.C. Cir. Mar. 16, 2018) (“ACA Int’l”). The decision gives the FCC a blank slate to take a fresh look at this issue, and there is potential for big changes on the horizon.
As defined by Congress, an automatic telephone dialing system (“ATDS”) is equipment that has the “capacity” to perform the following functions: “store or produce telephone numbers to be called, using a random or sequential number generator,” and “to dial such numbers.” 47 U.S.C. § 227(a)(1). Between 2003 and 2015, the FCC made numerous rulings regarding the types of equipment that had the functions of an ATDS, chief of which was the predictive dialer, a device described by the FCC as equipment that “when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database.” See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, Report and Order, 18 FCC Rcd 14014 at 77 (2003) (“2003 TCPA Ruling”).
The Commission first ruled in 2003 that predictive dialers had the capacity to perform the requisite functions of an ATDS, including: (1) “dial[ing] numbers without human intervention,” (2) dialing “thousands of numbers in a short period of time,” (3) dialing numbers “from a database,” and (4) “stor[ing] or produc[ing] telephone numbers to be called.” Id. at 78-79. Notably, the former three functions are not part of Congress’s definition of an ATDS, and the latter touched upon only one of the two requisite functions actually enumerated under the statute. Missing from the FCC’s ruling was any mention of making calls “using a random or sequential number generator,” even though the Commission maintained that this was an essential function of an ATDS. Ibid. The FCC reaffirmed its ruling in 2008, and then again in the 2015 TCPA Omnibus. See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Request of ACA International for Clarification and Declaratory Ruling, CG Docket No. 02-278, FCC Docket No. 07-232, 23 FCC Rcd 559 (2008) (“2008 TCPA Ruling”); In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 30 FCC Rcd. 7961, 7970, 2015 FCC LEXIS 1586 ¶¶ 6-7 (2015) (“2015 TCPA Ruling”).
When faced with the issue of ATDS functionality, most courts simply followed the FCC rulings and treated predictive dialers, as well as other technologies that call from set lists or a database of numbers, as an ATDS. See, e.g., Meyer v. Portfolio Recovery Assocs., LLC, 707 F3d 1036 (9th Cir. 2012); Walker v. Transworld Sys., Inc., No. 8:14–cv-588–T-30MAP, 2015 U.S. Dist LEXIS 17982 (M.D. Fla. Feb. 13, 2015); Griffith v. Consumer Portfolio Serv., Inc., 838 F. Supp. 2d 723 (N.D. Ill. 2011). A few bucked the trend, however, and held faithfully to the text of the statute in finding that a predictive dialer is not an ATDS because it does not have the capacity to generate random or sequential numbers to be called. See Marks v. Crunch San Diego, LLC, 55 F. Supp. 3d 1288 (S.D. Cal. 2014); see also Dominguez v. Yahoo, Inc., 629 F. App’x 369, 372-73 (3d Cir. 2015) (“we agree with the District Court’s definition of ‘random or sequential’ number generation (i.e., the phrase refers to the numbers themselves rather than the manner in which they are dialed) and its holding that the statutory definition does in fact include such a requirement”). However, to the extent courts declined to hold a specific device was an ATDS, it was typically based on the “human intervention” aspect of the FCC’s rulings. See, e.g., Strauss v. The CBE Group, Inc., 173 F. Supp. 3d 1302 (S.D. Fla. 2016); Luna v. Shac, LLC, 122 F. Supp. 3d 936 (N.D. Cal. 2015); Schlusselberg v. Receivables Performance Mgmt., LLC, No. 15–7572 (FLW), 2017 U.S. Dist. LEXIS 100710 (D.N.J. June 29, 2017).
In ACA Int’l, the D.C. Circuit examined the FCC’s prior rulings, and found they “offere[d] no meaningful guidance to affected parties in material respects on whether their equipment is subject to the statute’s autodialer restrictions.” ACA Int’l at 25. While the appeal was taken from the FCC’s 2015 TCPA Omnibus ruling, the D.C. Circuit expressly refused to confine its review to that ruling alone. Id. at 23-24 (stating that “we disagree” with the FCC’s contention that previous orders addressing predictive dialers are beyond the purview of the appeal). Instead, the court reviewed the FCC’s previous rulings respecting predictive dialers and found them inconsistent with the FCC’s 2015 TCPA Ruling, which had required the use of a random or sequential number generator to establish the ATDS definition was met. Id. at 25 (finding that “[i]n certain respects, the [2015 TCPA Ruling] order conveys that equipment needs to have the ability to generate random or sequential numbers that it can then dial.”). Since not all predictive dialers have the capacity to dial randomly or sequentially, the court found the 2015 TCPA Ruling to be internally inconsistent; on the one hand, the Ruling affirmed earlier rulings to the effect that predictive dialers were covered by the statute, but on the other it suggested that random and sequential number generation remained the hallmark of an ATDS. As the D.C. Circuit panel posed the question: “so which is it: does a device qualify as an ATDS only if it can generate random or sequential numbers to be dialed, or can it so qualify even if it lacks that capacity?” Id. at 27. That matter was left to the FCC to reconsider.
The D.C. Circuit also found inconsistencies in the pronouncements made by the FCC regarding the other functionalities of an ATDS. For example, the Commission had ruled that the “basic function” of an autodialer was dialing numbers without “human intervention,” but at the same time maintained a device might still qualify as an autodialer even if it could not dial numbers without human intervention. Id. at 28. The court remarked that “[t]hose side-by-side propositions are difficult to square.” Ibid. The D.C. Circuit also criticized the FCC’s finding that another “basic function” of an ATDS was to “dial thousands of numbers in a short period of time.” Ibid. The Commission’s guidance was again found lacking, as it failed to elaborate on whether this was a necessary, sufficient, or even relevant function of an autodialer, and failed to explain what would qualify as a “short period of time.” Ibid.
There was one final issue that, although not raised in the appeal, the D.C. Circuit nonetheless recognized as a critical part of the overall ATDS analysis: must autodialing functions actually be used to make a call in order to fall within the TCPA’s restrictions? Or does the statute apply to all calls made with a device having the “capacity” to perform those functions, even if those capabilities are not used to make the call? Id. at 29-31. Given the clear practical significance of this question, the court noted it overshadowed the issue of when a device has the “capacity” to perform autodialer functions (an issue we analyzed in the first part of this article). Ibid. While not taking a position one way or the other, the court did nudge the FCC to “revisit the issue in a future rulemaking or declaratory order.” Id. at 31.
Now that the D.C. Circuit has cleared the slate, it will be up to the FCC to revisit the scope of devices that will receive treatment as an ATDS under the TCPA. Given the new makeup of the FCC, chances are we could see some significant changes on the horizon. Then-Commissioner Pai’s dissent in the 2015 TCPA Omnibus provides a glimpse into what might be coming: “[W]e should read the TCPA to mean what it says: Equipment that cannot store, produce, or dial a random or sequential telephone number does not qualify as an automatic telephone dialing system because it does not have the capacity to store, produce, or dial a random or sequential telephone number.” 2015 TCPA Ruling at 117. And in the interim, cases such as Marks and Dominguez – both decided based on an analysis of the TCPA’s statutory language rather than adherence to the FCC’s now-overturned rulings – will provide helpful guidance in the fight over whether predictive dialers and similar technologies perform the requisite functions of an ATDS.