The Eight (8) Things YOU Need to Know About This Week’s Big Oral Argument on the ACA Appeal of the FCC’s TCPA Omnibus Ruling


Hello again TCPAlanders

Divya and I had the opportunity to attend the big oral argument before the DC Circuit Court of Appeal on Wednesday. This was a spectacle that did not disappoint. The advocacy was superb, the panel’s questions were telling and the exchanges with counsel were lively and, at times, exceptionally humorous.

While the advocates were amazing, the panel members were the real stars of the show. Judge Srinivasan’s keen ability to lay the issues bare was on full display as he sliced and diced the arguments with probing questions asked in his exacting manner.  Judge Edwards spoke with all of the gravitas expected of the chief judge of the nation’s most powerful circuit court of appeal and Judge Pillard spun the sort of colorful and insightful hypotheticals that only a former-tenured professor at Georgetown Law could manage.  The show was indeed spectacular—2.5 hours of supreme intellectual combat peppered with Judge Edwards’ fiery retorts and Judge Srinivasan’s wry pedantry. It was law nerd heaven.

More importantly—at least for an avid reader of tea leaves such as myself—the judges seemed to tip their hands with impunity. And yes, it all may have been an act—a rendition of three little bears with Edwards playing “too hot” and Pillard playing “too cold” while Srinivasan remained detached and neutral throughout—but there seemed to be more than one moment of genuine surprise, and perhaps even dismay, etched onto the face of panel-members as counsel presented their argument.  These telling displays are worth telling someone about. So here we are.

My top eight (8) take aways are these:

  1. How fast can you get a revocation provision into your consumer contracts? The Petitioners’ Opening Brief argued that the common law allows parties to contractually dictate the manner in which revocation can take place and challenged the FCC’s contrary ruling in the Omnibus as unfounded. Rather than take the issue head on, the Commission’s GC ran away from it in the Respondents’ Brief and claimed that that the Omnibus did not actually deprive the parties of their right to contractually agree on revocation to begin with: “[t]he Omnibus Ruling did not address the situation where a caller asks consumers to contractually agree to certain revocation procedures in a voluntary agreement…” Judge Edwards was all over this issue at the oral argument and none of the panel-members responded favorably to Counsel Novak’s effort to walk back that concession as it applied to “adhesive” consumer contracts. Petitioners’ counsel expressly asked—no matter what else the Court’s ruling might entail—that the Court expressly rule that parties remain free to contractually dictate revocation terms. I think the Court will oblige him.
  1. The “theoretical capacity” definition adopted by the Commission is going away. None of the panel members liked it, at times they did not seem to understand it, and Counsel Novak—try as he might—really could not defend it. It’s going away. There was no basis for it anyway.
  1. We still don’t know whether or not smartphones meet the new ATDS definition. My favorite exchange during the argument was when Counsel Novak argued that “Petitioners won’t take ‘yes’ for an answer on smart phones” and Judge Srinivasan retorted to the effect that “you haven’t said ‘yes’ you’ve said ‘we won’t tell you.’” Ouch. Then Counsel tried to explain that the FCC hasn’t answered the question directly because “no one has asked” to which Judge Edwards responded by lifting his smartphone over his head and challenging: “Well I’m asking— which is it?” While the question evoked laughter from the audience Counsel Novak wisely retreated from the exchange—noting his inability to speak for the Commissioners—and fell back on the Commission’s old line that it is “not concerned” with ordinary smart phone use.
  1. Predictive dialers are under consideration on this appeal. Sorry FCC—the panel members simply do not believe that their hands are tied with respect to earlier Commission rulings treating predictive dialers as automated telephone dialing systems. Indeed, everytime Counsel Novak suggested that such a challenge was “untimely” at least one chief judge—who will remain nameless—seemed to roll his eyes.
  1. The FCC’s argument as to why predictive dialers are autodialers was undressed and left out in the cold to shiver. While I will not go so far as to predict victory for industry on the use of predictive dialers—too many permutations there—the panel made mincemeat of the FCC’s proffered explanation. Indeed Counsel Novak seemed dizzy trying to explain it. First he argued that the phrase “using a random or sequential number generator” only modified “produce” but not “store”—meaning that any equipment that “stored” numbers as automatically an ATDS. But Judge Srinivasan was having none of that. So then Counsel argued that the phrase actually modified the word “call” meaning that any device using an automated calling sequence that occurred randomly or sequentially was an ATDS.  But that explanation rang hollow as the judges poked and prodded—how else can you dial from a list?— and, with his cupboard bare, Counsel Novak rushed on to another topic leaving everyone in the courtroom unsatisfied.
  1. Judge Edwards does not believe the TCPA prohibits manual calls using equipment with the present capacity to autodial. Since Satterfield TCPA litigants have had to live with the idea that the mode in which a call is placed does not answer the question of whether the system is an ATDS—rather it is the “capacity” of the device that determines the application of the TCPA. Hogwash says Judge Edwards—“that is not what the statute says; it is not what Congress intended.” And when Petitioners’ counsel seemed to concede away the issue Judge Edwards perked up: “Good heavens, that’s your strongest argument and you just conceded it away.” Judge Pillard too expressed her dismay that she might be subject to strict liability for using her cell phone just because it has the “capacity” to operate as an autodialer.
  1. The FCC’s one-call safeharbor is under intense scrutiny. None of the judges on the panel seemed content with the FCC’s effort to “deem” callers to be constructively notified that a phone number changed hands following the first post-reassignment attempt. Indeed Judge Pillard seemed shocked to learn that the one-call safeharbor evaporated regardless of whether or not the caller gathered any useful information during that first attempt. The oft-repeated example was a text message that was not responded to. How can a caller possibly infer that a number changed hands just because no response was received to a text? Judge Srinivasan seemed to reason that if a non-response to a text was not revocation—which Counsel Novak admitted—then that same non-response could not be sufficient to give notice of a reassignment. At one point Judge Srinivasan also suggested that the FCC might require callers to adopt certain standards and, in the event those standards are not employed, deem non-complying callers to have constructive knowledge of a reassignment. But, he stated, the Commission could not, for example, deem a caller “acting in highest good faith” to have constructive knowledge of a reassignment where it fully complies with those standards and yet still did not have any reason to believe that the phone number changed hands.
  1. According to the FCC wrong number lawsuits don’t actually happen and this whole “recycled cell phone” thing is no big deal. I struggled to maintain a poker face throughout the proceeding but here I groaned audibly, earning an elbow in the rib from my compatriot. Luckily the panel members seemed unimpressed with this argument and big deal or not, the FCC’s one call safeharbor is plainly under scrutiny. Notably, however, Judge Pillard did advance the TCPA’s version of a “birther” argument—there aren’t really 37 million cell phone numbers recycled in America every year. Time to start checking birth certificates.

More to come next week, whether you want it or not.

Dorsey & Whitney

Dorsey & Whitney

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