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FCC seeks comments on interpretation of TCPA definition of autodialer following 9th Circuit decision
On October 3, the FCC’s Consumer and Governmental Affairs Bureau released a notice seeking comment on the interpretation of the TCPA in light of a recent 9th Circuit decision, which broadened the definition of an automatic telephone dialing system (autodialer) under the TCPA. As previously covered in InfoBytes, on September 20, the 9th Circuit held that the TCPA’s definition of an autodialer includes equipment with the capacity to store numbers to be called and to automatically dial such numbers whether or not those numbers have been generated by a random or sequential number generator. The court, however, declared the statutory definition of an autodialer to be “ambiguous on its face” and, thus, it looked to the context and structure of the TCPA in reaching its conclusion regarding the scope of the definition.
The FCC issued the notice “to supplement the record developed in response” to a prior notice issued last May, which sought comments on the interpretation of the TCPA following the D.C. Circuit’s decision in ACA International v. FCC. (See previous InfoBytes coverage on the May 2018 notice here.) Specifically, the FCC seeks comments on the following issues relevant to developing an interpretation of the TCPA’s definition of autodialer: (i) To the extent the definition of an autodialer is ambiguous, how should the FCC exercise its discretion to interpret such ambiguities? (ii) Does the 9th Circuit’s interpretation mean that any device with the capacity to dial stored numbers automatically qualifies as an autodialer? (iii) What devices have the capacity to store numbers, and do smartphones have such capacity? and (iv) What devices that have the capacity to dial stored numbers also have the capacity to automatically dial such numbers and do smartphones have such capacity?
Comments are due October 17 with reply comments due October 24.
On September 27, the U.S. District Court for the Northern District of Illinois denied certification of two proposed classes in a TCPA action against a national mortgage servicer, concluding that plaintiff had failed to meet his burden of demonstrating, under FRCP 23(b)(3), that common issues of fact or law predominated over any questions affecting only individual members. According to the opinion, plaintiff alleged the mortgage servicer contacted consumer phones, without express consent, using an automatic telephone dialing system (autodialer) in violation of the TCPA. One of the four named plaintiffs sought to represent two classes of consumers who were contacted by the servicer two or more times between October 2010 and November 2014: (i) those who received calls or texts and told the servicer to cease contact; and (ii) those who received calls and told the servicer it had called the wrong number.
The court found the issue of consent was decisive in this action, relying on authority holding that individual issues of consent predominate where a defendant “provides specific evidence that a significant number of putative class members consented to contact . . . .” The opinion notes that mortgage servicer’s policies contained a process for flagging accounts that withdrew consent to be contacted and if an account was flagged, the autodialer would not initiate calls to that number. The mortgage servicer argued that many consumers gave permission, retracted it, and gave the permission to be contacted again. The court found the servicer had “put forth specific evidence establishing that a significant percentage of the putative class consented to receiving calls.” The court reviewed expert reports by both parties and ultimately concluded that the method for determining class members suggested by the plaintiff and the plaintiff’s expert did not “adequately identify a common way to address the individual variations of consent and revocation that occurred in this case.” The court determined that it would need to conduct an individualized consent inquiry for accountholders in each putative class.
On September 24, the U.S. District Court for the Middle District of Florida held that a hotel calling system, which required human intervention before a call was placed, does not qualify as an automatic telephone dialing system (autodialer) under the TCPA. The plaintiff filed the putative class action complaint alleging the hotel chain used an autodialer to call her cell phone without her consent. The hotel moved for summary judgment, arguing that the system did not qualify as an autodialer under the TCPA because it required a hotel agent to click “Make Call” before the system dialed the number. The court agreed, concluding that the defining characteristic of an autodialer is “the capacity to dial numbers without human intervention,” which the court noted remains unchanged even in light of the D.C. Circuit decision in ACA International v. FCC (covered by a Buckley Sandler Special Alert here). Because the calling system would not initiate an outbound call without an agent clicking the “Make Call” button, the court determined the plaintiff’s TCPA claim failed and granted summary judgment for the hotel chain.
On September 20, the U.S. Court of Appeals for the 9th Circuit vacated the district court’s order granting summary judgment in a TCPA action, in light of the recent D.C. Circuit opinion in ACA International v. FCC (covered by a Buckley Sandler Special Alert). The case arises from a plaintiff’s allegations that a California gym violated the TCPA by sending three text messages to the plaintiff’s cell phone. In October 2014, the district court granted summary judgment for the gym, holding that the automatic text messaging system used by the gym was not an “automatic telephone dialing system” (autodialer) under the TCPA because it lacked the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator.” In 2016, the 9th Circuit stayed the appeal of the district court’s ruling pending the ACA International decision, which was issued in March of this year. In ACA International, the D.C. Circuit struck down the FCC’s definition of an autodialer, reasoning that the FCC’s definition “unreasonably, and impermissibly” included all smartphones while inadequately describing the functions that made a device an autodialer.
Because the ACA International decision set aside the FCC’s definition, the 9th Circuit performed its own review of the statutory definition of an autodialer in the TCPA. Through this review, the court concluded that the TCPA defined an autodialer as “equipment which has the capacity—(i) to store numbers to be called, or (ii) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person).” Because the text system used by the gym stores numbers and dials them automatically to send the messages to the stored list of phone numbers, the 9th Circuit held there is a genuine issue of material fact as to whether the system qualified as an “autodialer” and remanded the case to district court for further proceedings.
Court approves $8.5 million class action settlement with global money service for alleged TCPA violations
On August 31, the U.S. District Court for the Northern District of Illinois approved an $8.5 million class action settlement resolving allegations that a global money service violated the Telephone Consumer Protection Act (TCPA) by sending unsolicited text messages to class members. While the court approved the full settlement amount, it only awarded 5 percent of the fund to the class counsel, as opposed to the 35 percent requested, noting counsel’s “disquieting conduct” related to a class objector and lack of billing records supporting the “substantial work” counsel claimed to have performed on the case (reportedly more than 2.5 times the hours spent by defense counsel). Of the $8.5 million required to be paid by the company, the court modified the agreement to provide class member claims over $7.5 million. The court determined that the settlement “provides fair actual cash value to the class,” as the company had potential defenses to the pending litigation; there was legal uncertainty as to whether the telecommunications equipment used by the company was actually an “automatic telephone dialing system” under the TCPA; and the inherent expense in litigation and proceeding to trial for the class.
On August 2, the U.S. District Court for the District of New Jersey denied a mortgage company’s motions to dismiss in two putative class actions (opinions available here and here) alleging violations of the Telephone Consumer Protection Act (TCPA) for unsolicited phone calls. In both cases, the mortgage company requested the court dismiss the action or, in the alternative, stay the proceedings pending guidance from the FCC regarding what constitutes an automatic telephone dialing system (autodialer) in light of the D.C. Circuit decision in ACA International v. FCC. (Covered by a Buckley Sandler Special Alert; InfoBytes coverage on the FCC’s notice seeking comment on what constitutes an autodialer, available here.) In each of the actions, consumers allege the company violated the TCPA by placing unsolicited calls to their phones using an autodialer. In denying both motions, the judge rejected the company’s argument, in one case, that it was not using “a random or sequential number generator” because the preloaded numbers belonged to the company’s customers rather than members of the public, reasoning that just because the population of numbers which may be dialed are pre-selected does not make the calling system, the next number being dialed, less random. Moreover, in the second case, the judge rejected the company’s assertion that written consent was not needed because the calls were placed to a number of customers with existing debt. The court noted the calls were regarding refinancing services and “calls to customers soliciting refinance are ‘telemarketing’ calls for a new product requiring prior express written consent under the TCPA.” As for the requests to stay the proceedings, the court held in both cases that it is unnecessary to stay the case because “whatever guidance the FCC may issue in the future will not alter the statutory definition of an [autodialer]” or previous unchanged FCC guidance pursuant to which the court decided the motions to dismiss.
On June 26, the U.S. Court of Appeals for the 3rd Circuit affirmed summary judgment for a global internet media company holding that the plaintiff failed to show the equipment the company used fell within the definition of “automatic telephone dialing system” (autodialer) based the recent holding by the D.C. Circuit in ACA International v. FCC. (Covered by a Buckley Sandler Special Alert.) The decision results from a lawsuit filed by a consumer alleging the company’s email SMS service, which sent a text message every time a user received an email, was an “autodialer” and violated the TCPA. The consumer had not signed up for the service, but had purchased a cellphone with a reassigned number and the previous owner had elected to use the SMS service. Ultimately, the consumer received almost 28,000 text messages over 17 months. In 2014, the district court granted summary judgment for the company concluding that the email service did not qualify as an autodialer. In light of the FCC’s 2015 Declaratory Ruling—which concluded that an autodialer is not limited to its current functions but also its potential functions—the 3rd Circuit vacated the lower court’s judgment. On remand, the lower court again granted summary judgment in favor of the company.
In reaching the latest decision, the 3rd Circuit interpreted the definition of an autodialer as it would prior to the 2015 Declaratory Ruling in light of the D.C. Circuit’s recent holding, which struck down the part of the FCC’s 2015 Ruling expanding the definition to potential capacity. The appellate court held that the consumer failed to show that the email SMS service had the present capacity to function as an autodialer.
On May 14, the U.S. District Court for the District of Arizona granted an internet domain provider’s motion for summary judgment, holding that the platform used by the company to send text message advertisements did not qualify as an “autodialer” under the Telephone Consumer Protection Act (TCPA). The plaintiff filed a putative class action in 2016 asserting that the company, without his consent, sent him a single text message offering a discount on new products in violation of the TCPA. The company filed for summary judgment arguing that the platform it uses to send messages is not an “autodialer.” Citing to the recent D.C. Circuit decision in ACA International v. the FCC (covered by a Buckley Sandler Special Alert) which narrowed the FCC’s 2015 interpretation of “autodialer”, the Court agreed with the company. The Court held that the text was not sent automatically or without human intervention because the company had to “log into the system, create a message, schedule a time to send it, and perhaps most importantly, enter a code to authorize its ultimate transmission.”
As covered by InfoBytes, the FCC’s Consumer and Governmental Affairs Bureau released a notice seeking comment on the interpretation of the Telephone Consumer Protection Act (TCPA) in light of the recent D.C. Circuit decision in ACA International.
On May 14, the FCC’s Consumer and Governmental Affairs Bureau released a notice seeking comment on the interpretation of the Telephone Consumer Protection Act (TCPA) in light of the recent D.C. Circuit decision in ACA International v. FCC. (Covered by a Buckley Sandler Special Alert.) The notice requests, among other things, comment on what constitutes an “automatic telephone dialing system” (autodialer) due to the court setting aside the FCC’s 2015 interpretation of an autodialer as “unreasonably expansive.” Specifically, the FCC requests comment on how to interpret the term “capacity” under the TCPA’s definition of an autodialer (“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”) and requests comment on the functions a device must be able to perform to qualify as an autodialer, including how “automatic” the dialing mechanism must be. Additionally, the notice seeks comment on (i) how to treat reassigned wireless numbers under the TCPA; (ii) how a party may revoke prior express consent to receive robocalls; and (iii) three pending petitions for reconsideration, including the 2016 Broadnet Declaratory Ruling and the 2016 Federal Debt Collection Rules. Comments are due by June 13 and reply comments are due by June 28.
On May 3, the U.S. Chamber of Commerce, the American Bankers Association, and over a dozen more trade associations petitioned the FCC seeking a declaratory ruling on the definition of an autodialer under the TCPA, previously covered by InfoBytes here.
On May 2, the U.S. District Court for the Eastern District of New York granted in part and denied in part a mortgage loan owner and mortgage loan servicer’s motion to dismiss a consumer’s lawsuit alleging various violations of TILA, RESPA, FDCPA, TCPA and certain New York state laws. The court’s decision explains that the mortgage loan owner first initiated foreclosure proceedings against the consumer in 2009, but in August 2013 that action was dismissed and the parties executed a modification agreement. The consumer argues in the amended complaint that the mortgage debt is time-barred based on the six year statute of limitations to enforce the mortgage note, starting the clock with the 2009 foreclosure filing. The consumer alleges that after the statute of limitations expired, the mortgage servicer contacted the consumer by mail and by telephone to collect the mortgage debt, totaling over 600 calls placed by an autodialer and up to four threatening collection letters per month since 2015. The court, however, agreed with the mortgage companies that the execution of the 2013 modification agreement restarted the statute of limitations and therefore, the consumer’s alleged violations of New York state laws and the FDCPA failed because the mortgage debt was not time-barred. The court also held that the consumer failed to plead sufficient facts to support the alleged violations of TILA, RESPA, and New York’s General Business Law. In contrast, the court denied the mortgage servicer’s motion to dismiss the consumer’s claim under the TCPA, holding that the mortgage application signed by the consumer did not clearly consent to contact by an autodialer on his cell phone.
- Valerie L. Hletko to discuss "Forecasting litigation and settlement trends in the mortgage servicing and fair lending context" at the American Conference Institute National Forum on Residential Mortgage Regulatory Enforcement & Litigation
- Michelle L. Rogers and Jonice Gray Tucker to discuss “Building a govt affairs program; Government investigations” at the TechGC National Summit
- Tina Tchen to deliver keynote address at the American Bar Foundation Montgomery Summer Research Diversity Fellowship 30th Anniversary Celebration
- Douglas F. Gansler to discuss "Privacy, security and protection of your assets in contracts; Security exercises and tactical measures" at the TechGC National Summit
- H Joshua Kotin will discuss federal regulatory developments in mortgage lending and servicing at the Mortgage Bankers Association of Arkansas Fall Conference
- Kate Shrout to discuss "Conducting workplace investigations" at the TechGC National Summit
- Kathryn R. Goodman to discuss "HECM servicing policies and updates" at the National Reverse Mortgage Lenders Association Annual Meeting & Expo
- Fredrick S. Levin to discuss "Reverse mortgage litigation trends" at the National Reverse Mortgage Lenders Association Annual Meeting & Expo
- Melissa Klimkiewicz to speak at the "Digital marketing compliance roundtable" at the National Reverse Mortgage Lenders Association Annual Meeting & Expo
- Hank Asbill to discuss "The role of the media in white collar criminal investigations and the Mueller probe" at the American Bar Association White Collar Crime Town Hall
- John C. Redding to discuss "Regulatory compliance update" at PowerSports Finance
- Matthew P. Previn to discuss "Enforcement trends: Who is doing what and how?" at the Cambridge Forums Inc. Forum on Consumer Finance Litigation & Enforcement
- Jonice Gray Tucker to discuss "Protect yourself from a CFPB investigation" at the National Association of Settlement Purchasers Conference
- Tina Tchen to deliver keynote address at the American Bar Association Professional Success Summit
- Andrea K. Mitchell to discuss "Developments in fair lending law" at the Mortgage Bankers Association Summit on Diversity and Inclusion
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute
- Daniel P. Stipano to discuss "New CDD Rule: Pitfalls in compliance" at the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference