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Industry Groups Urge FCC to Clarify ATDS After ACA Int’l

On May 3, 2018, a broad range of 18 industry groups led by the U.S. Chamber of Commerce petitioned the FCC to take much-needed action to curb abusive TCPA litigation stemming from prior FCC and court interpretations of the definition of an automatic telephone dialing system (“ATDS”). The petition naturally followed from the D.C. Circuit’s decision in ACA Int’l v. Fed. Commc’ns Comm’n, 885 F.3d 687 (D.C. Cir. 2018) to vacate the FCC’s ATDS interpretation contained in the 2015 FCC Declaratory Ruling and Order (“2015 TCPA Order”) as unreasonable, arbitrary and capricious. The petitioners seek clarity on the definition of an ATDS so businesses can better understand how they can effectively communicate with their customers without fear of liability under Section 227(b) of the TCPA.

The petition explained the landscape of the TCPA created from ATDS interpretations that have departed from the statute’s plain text and congressional intent. Instead of targeting abusive robocallers and scam telemarketers, the TCPA has been used as a weapon against legitimate businesses attempting to lawfully communicate with their customers. As a result of this unpredictable landscape, TCPA lawsuits show no signs of slowing down, as filings increased from 2,127 in the 17 months prior to the 2015 TCPA Order to 3,121 in the 17 months after the 2015 TCPA Order. The uncapped statutory damages have resulted in “a boondoggle for plaintiffs’ lawyers.” As highlighted by the petition, this “is not in the public interest, and it undermines the rule of law.”

The D.C. Circuit’s decision has presented an opportunity for the FCC to “restore rationality.” The petitioners ask the FCC to (1) “confirm that to be an ATDS, equipment must use a random or sequential generator to store or produce numbers and dial those numbers without intervention” and (2) “find that only calls made using actual ATDS capabilities are subject to the TCPA’s restrictions.” These straightforward requests seek to establish a commonsense interpretation of ATDS that conforms to the statutory language and congressional intent.

The petition’s first request is based on the plain language of the statute. It asks that the FCC clarify that an ATDS must not only be able to generate numbers in either a random or sequential order, but also have the ability to store or produce those numbers using that same random or sequential generator. This clarification would reject the 2003 TCPA Order by following the statutory language of Section 227 of the TCPA.

The petition requests that the FCC “make clear that both functions must be actually—not theoretically—present and active in a device at the time the call is made.” Thus, devices “that require alteration to add autodialing capability are not ATDS.” That would exclude such devices as smart phones, which require installing an app or altering the software code to add autodialing capabilities.

The petition also urged the FCC “to clarify that the absence of human intervention is what makes an automatic telephone dialing system automatic.” Previously, the FCC has found that “[h]ow the human intervention element applies to a particular piece of equipment is specific to each individual piece of equipment, based on how the equipment functions and depends on human intervention, and is therefore a case-by-case determination.” 2015 TCPA Order ¶ 17. To date, the FCC has declined to provide additional clarity on this issue. The petition requests that the FCC “make clear that if human intervention is required in generating the list of numbers to call or in making the call, then the equipment in use is not an ATDS.” Not only would this create clear guidance for businesses, but it would heed the D.C. Circuit’s suggestion that the absence of human intervention is “important” and a “logical conclusion” to qualify as an ATDS.

The petition’s second request—that the FCC should find that only calls made using actual ATDS capabilities are subject to the TCPA—was previewed by the D.C. Circuit. This construction, first raised by Commissioner O’Rielly in his 2015 TCPA Order dissent, would “substantially diminish the practical significance of the [FCC’s] expansive understanding of ‘capacity’ in the autodialer definition.” As noted by the petition, “this interpretation would ensure that devices that are capable of gaining autodialer functions, such as smartphones, are only subject to the TCPA when used as autodialers.”

The FCC’s previous overly broad interpretation of ATDS is widely seen as having created only confusion. While the D.C. Circuit’s vacatur of the 2015 Order’s ATDS rulings was a much-needed first step in restoring sanity to the TCPA, further clarity is still needed so businesses can engage in consumer-benefiting communications without the threat of litigation.

We expect the FCC to seek public comment on this petition either on its own, or as part of a broader review of the TCPA ecosystem in light of the D.C. Circuit’s ACAopinion. We will continue to provide updates as this matter progresses.

©2019 Drinker Biddle & Reath LLP. All Rights Reserved


About this Author

Daniel E. Brewer, Attorney, Drinker Biddle, Philadelphia, Commercial Litigation

Daniel E. Brewer has experience in a variety of complex commercial matters, including consumer class actions, complex business disputes, products liability, shareholder derivative actions and other corporate governance matters. In the course of his practice, Daniel handles many aspects of civil litigation, ranging from pre-litigation counseling, to discovery and dispositive motion practice, to trial advocacy and post-trial proceedings. He represents companies and individuals in a broad range of industries, including banking, telecommunications,...

Laura Phillips, Drinker Biddle Law Firm, Washington DC, Communications Law Attorney

Laura H. Phillips is a partner in and chair of the firm's Government & Regulatory Affairs Practice Group and a member of the Telecommunications & Mass Media Team.  She has over 25 years of experience working in nearly every aspect of the telecommunications market.

Laura counsels wireless and wired technology entrepreneurs and represents these clients on issues related to the development of new technologies, including devoting substantive attention to the development of spectrum auctions, network...