December 18, 2018

December 18, 2018

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December 17, 2018

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Answering the BIG Question: Did Marks Just Ruin the FCC’s TCPA Reform Efforts?

It has been an interesting time in TCPAland since ACA Int’l was decided in March. We’ve seen a number of decisions going different ways with respect to the continued viability of the 2003 and 2008 Predictive Dialer rulings. And, until yesterday, it seemed like the viability of past FCC rulings and the scope and language of its anticipated future ruling following the TCPA Public Notice would forever carry the ATDS day. After all, once the FCC rules on the definition of ATDS, all of today’s conflicting decisions will be relegated to mere legal curiosities. Specimens in the “Once Relevant” museum, alongside pogs and Starting Lineup figurines.

So while it was neat to keep score–it seemed like the current morass of ATDS rulings were mere holdover entertainment until the FCC’s new TCPA Omnibus II was unveiled.  That ruling, it seemed certain, would afford the TCPA a little ATDS bedrock and–at long last–the bickering in TCPAland would come to an end.

Following Marks, however, complete and uniform deference to the FCC’s intensely-anticipated TCPA declaratory ruling is no longer a sure bet.  Indeed, its a fantasy.  That’s not to say courts should disregard the FCC’s new-and-more-conservative-than-ever TCPA ruling most observers expect (and expect soon), but Marks *cough* marks a major departure point for TCPA jurisprudence and one that is sure to have an impact long after the FCC has had its say.

First, some historical perspective on the uniqueness of Marks. Since 2009 there have been over 50 cases holding that predictive dialers qualify as an automated telephone dialing device (“ATDS”) under the TCPA. No surprise there, really. The FCC has twice (some say three times) directly held that predictive dialers are subject to the TCPA because it says so. But until a month ago zero of those cases had held that dialers calling lists of stored numbers automatically qualify under the TCPA’s statutory definition. Instead, all of those cases had held that  predictive dialers were subject to the TCPA owing to deference to the 2003 and 2008 FCC Predictive Dialer Rulings. And, conversely, virtually every case that had declined to follow the 2003 and 2008 FCC rulings had held that predictive dialers and other dialers that call from a list do not qualify as an ATDS because they do not use a random or sequential number generator. That meant that the FCC’s past (and future) rulings on the issue held monumental–if not dispositive–sway.

But, as fate would have it, Marks would not be the first case to completely write the words “random and sequential” out of the statute for convenience sake. That dubious honor belongs to Heard v. Nationstar Mortg. LLC Case No.: 2:16-cv-00694-MHH, 2018 U.S. Dist. LEXIS 143175 (N.D. Ala. Aug. 23, 2018). In Heard the Court determined that the ATDS definition was vague–which is weird since the definition is so so not vague–and determined that the mere fact that debt collectors do not use random dialers must, somehow, mean that the ATDS applies to predictive dialers. (No really, that was the analysis.) And while Marks held that the FCC’s earlier predictive dialer rulings were vacated–setting up one of the greatest legal head fakes in history BTW– Heard was not so bold and, instead, merely chose to disregard the Orders for purposes of its analysis. So it became the first court to apply the TCPA’s ATDS definition to predictive dialers without leveraging the 2003 and 2008 FCC Orders, and I wrote a long and very often read article to commemorate the weirdness of the event. 

Heard was a curiosity but in no way a threat to the FCC’s power to re-consider and orderly administer the TCPA’s ATDS definition. In the first place it was a district court ruling, and in the second its results-driven analysis didn’t make a whole lot of sense. It was head-scratcher of a one-off ruling that only an extreme “true beleiver” would even bothering citing to in a brief.  Not the sort of analysis that would drive any reasonable court to disregard the FCC’s upcoming ATDS ruling.

But Marks demands to be taken seriously. It is a published Circuit Court of Appeal decision binding–at least for now–on all district courts within the Ninth Circuit’s expansive and populous footprint. And that begs the question. Might courts–at least in the Ninth Circuit and potentially outside of it–continue to follow Marks even if the FCC issues guidance to the effect that a dialer must store numbers generated using a random or sequential number generator to qualify under the TCPA?

The short answer is that they shouldn’t. But that doesn’t mean they won’t.

To understand the big picture here you need to understand this thing called the Hobbs Act. What a weird statute. The Hobbs Act essentially makes FCC rulings made under the Telecommunications Act binding and unshakable precedent across the country. No district courts–and not even Circuit Courts of Appeal outside of narrow circumstances–can issue orders contrary to the FCC’s TCPA rulings.  This is not the case with all agencies, BTW. So the Hobbs Act makes the FCC a steroid-popping super agency whose TCPA rulings cannot be tinkered with by the grubby little hands of regular courts. See, most famously, Mais v. Gulf Coast Collection Bureau, Inc., 768 F.3d 1110, 1119 (11th Cir. 2014).

Notably, the mandates of the Hobbs Act are quite different from Chevron deference–that’s the rule that courts apply to regular agency rulings. Chevron requires courts to defer to reasonable solutions to the complex problems caused by the vague statutes Congress keeps enacting (if you’ve ever voted to send a non-lawyer to Congress you’re part of the problem, but I digress. ) Again, however, the FCC is no regular agency so Chevron doesn’t matter and a Court should never even get to the point that it has to decide whether or not to defer to the FCC–it must obey the FCC.

As the Fourth Circuit Court of Appeals recently wrote:

When Chevron meets Hobbs, consideration of the merits must yield to jurisdictional constraints. An Article III court’s obligation to ensure its jurisdiction to resolve a controversy precedes any analysis of the merits … [A]rguing that the district court can put off considering its jurisdiction until after step one of Chevron … turns that traditional approach on its head. Indeed, a district court simply cannot reach the Chevron question without “rubbing up against the Hobbs Act’s jurisdictional bar.

Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 2018 WL 1021225, at *2–4 (4th Cir. 2018)

Well that all sort of makes sense in most instances. But don’t district courts also have to follow the rulings entered by Circuit Courts of Appeal? Well… yes they do. And it is a very unusual circumstance where, as here, an agency is set to act with binding force in an area where a Circuit Court of Appeal just issued its own binding ruling on the reach of a federal statute.  Indeed, this situation is so unusual that I can’t seem to find any examples of it. (Have some? Send to me and I’ll credit you for the research.)

But several cases have addressed the issue in the context of regular-old Chevron deference and the rulings are–not surprisingly–split. Some take the position that an action of an agency cannot overrule a circuit court of appeal ruling interpreting the same statute. See Bankers Trust New York Corp. v. US, 225 F. 3d 1368, 1375 (Fed. Cir. 2000)(applying stare decisis requiring adherence to precedential decisions rather than to agency action entitled to Chevron deference.)  Indeed the Eighth Circuit Court of Appeal has flatly stated: “Chevron does not stand for the proposition that administrative agencies may reject, with impunity, the controlling precedent of a superior judicial body.” PS Guard Services, Inc. v. NLRB, 942 F.2d 519 (8th Cir.1991). But other courts have taken the position that deference to the agency justifies departing from established precedent at least where necessary to assure uniformity. See Aguirre v. INS, 79 F. 3d 315, 317-318 (2nd Cir. 1996).

So if this was a regular Chevron deference situation, Plaintiffs would have a straight-faced argument that courts in the Ninth Circuit should keep right on applying Marks, no matter what the FCC does. After all, Marks looked at the language of the statute and made its own decision as to what the TCPA regulates based upon its own reading of legislative history and Congressional intent–a straightforward issue of statutory-interpretation that courts make all the time and a panel of circuit court judges are well-qualified to make for themselves. District courts in the Ninth Circuit would be well-supported, therefore, if they elected to continue applying Marks.

But what about that pesky Hobbs Act?

Well, the Hobbs Act also dictates that the ACA Int’l ruling is binding across the country, so gauging district court willingness to defer to the D.C. Circuit Court of Appeal over conflicting circuit court precedent today might afford a pretty nice glance at what those same courts will do tomorrow. And here the scales tip heavily in favor of deference– indeed only two district court cases have held that ACA Int’l does not trump existing circuit court precedent. So that’s good. Unfortunately, both of those courts are within the Ninth Circuit.  See McMillion and Alarm.com. As Pooh would say: “Oh bother.”

Moreover, the Sixth Circuit’s decision in Sandusky Wellness Ctr., LLC v. Medco Health Sols., Inc. 788 F.3d 218 (6th Cir. 2015) set a bad example for district courts. There, the appellate court directly tackled the meaning of the term “advertisement” under the TCPA, declining to defer to the FCC’s 2006 ruling on the subject because it found the statutory definition unambiguous, without even mentioning the Hobbs Act’s jurisdictional bar. See Id. at 223. Hmmmm. Although Marks found that the language of the TCPA was ambiguous, it also made a decision for itself as to what the statute meant to say knowing full well that the FCC was set to rule on that same issue. Might a district court–when weighing whether or not to apply the Hobbs Act–conclude that if the Sixth Circuit didn’t have to yield in interpreting the TCPA then the Ninth Circuit won’t either and district courts under the weight of binding circuit court authority should defer to that existing and binding precedent? And when you factor in that an appeal from any district court ruling applying Marks over the FCC’s latest ruling would be appealed to–you got it–the Ninth Circuit, it starts to seem pretty likely that district courts out West won’t be abiding the FCC’s ruling, even if they really should be.

Eesh.

The bottom line is–I think–that the Fourth Circuit’s approach to the Hobbs Act is the correct one.  As was stated in Carlton & Harris Chiropractic, Inc., a future district court will lack jurisdiction to even consider an argument contrary to the FCC’s new ATDS formulation.  Assuming the district court takes that mandate seriously, it should disregard Marks entirely in favor of the FCC’s new ruling–the question of whosedefinition to apply should never even arise since it lacked jurisdiction to consider the FCC’s inviolate statements in the first instance.

Then again, if the district courts took the FCC’s primary jurisdiction seriously they would be yielding to it right now instead of issuing conflicting ruling by the barrel full, so…. yeah. Don’t hold your breath folks.

Whatever district courts do with Marks, a few things are now clear. First, Marks makes an appeal of any new TCPA ruling from the FCC to the D.C. Circuit Court of Appeal much more likely. While this would probably have happened anyway, after the D.C. Circuit Court of Appeal’s ruling in ACA Int’l an appeal back to that Court of Appeal on a narrow definition of the sort ACA Int’l had essentially already blessed would have been treated as a frivolous–if not criminal–waste of time. But Marks gives much more credence to the idea that a narrow statutory interpretation is not the only correct one. Second, Marks makes an ultimate showdown in the U.S .Supreme Court over the definition of ATDS much more likely. A circuit split is just a ruling away since no other circuit court of appeals is likely to track Marks’ aggressive path to TCPA expansion. Indeed, with Dominguez already holding contrary to Marks, an appeal to the Supremes may be a reality before the year is out. 

In the end, Marks is very unlikely to derail the FCC’s anticipated TCPA reform completely, but it is likely to complicate what should have been the streamlined and uniform  interpretation of law issued by the agency Congress trusted to interpret and implement the TCPA. Rather than uniformity and calm, however, we can now expect the FCC’s new ATDS ruling to be met with conflicting district court opinions, a trip back to the D.C. Circuit Court of Appeal and another TCPA visit to the U.S. Supreme Court. In other words, Marks assures more of the same in TCPAland for a long time to come. And that’s bad news for everybody.

Except maybe for guys running TCPA-related websites…

Copyright © 2018 Womble Bond Dickinson (US) LLP All Rights Reserved.

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About this Author

Eric Troutman, Womble Dickinson, TCPA Litigation Attorney
Attorney

Eric is one of the country’s prominent class action defense attorneys and is nationally-recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance.  He has served as lead defense counsel in more than 50 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems.

Eric has built a national litigation practice based upon...

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