The Insights Association joined a recent FCC petition to clarify the most impactful piece of the TCPA: what constitutes an autodialer.

On May 3, the U.S. Chamber of Commerce led a petition to the Federal Communications Commission (FCC) to “expeditiously issue a declaratory ruling to clarify” the definition of an autodialer under the Telephone Consumer Protection Act (TCPA). The Insights Association joined the petition, along with 15 other major national trade associations. In light of the DC Circuit's recent decision rejecting much of the FCC's 2015 TCPA rules, the petition asked that the FCC (1) confirm that to be an autodialer (known as an automatic telephone dialing system or ATDS), “equipment must use a random or sequential number generator to store or produce numbers and dial those numbers without human intervention, and (2) find that only calls made using actual ATDS capabilities are subject to the TCPA’s restrictions.”

The Circuit Court decision started the long-awaited TCPA dominos to fall. This petition is one of the first, and most important.

(The FCC is also now seeking public comments on this petition, among others.)

As explained in the petition, “The TCPA landscape is dysfunctional and in need of clarity from the FCC. The statute, originally intended to target a specific abusive telemarketing practice, has been expanded by courts and the FCC, turning it into a breeding ground for frivolous lawsuits against legitimate businesses trying to communicate with their customers. As a result, TCPA litigation has skyrocketed, harming businesses large and small, with no clear benefit to consumers. Recent regulatory efforts, like the 2015 Omnibus Order, have not helped—they made matters worse. That Order distorted the TCPA’s plain meaning and clear definition of ‘ATDS,’ expanding it to potentially include devices such as smartphones and tablets.”

“The D.C. Circuit recognized the serious flaws in the 2015 Omnibus Order and recently vacated its ATDS interpretation as unreasonable, arbitrary and capricious. In that opinion, the court provided a logical roadmap for how the Commission should interpret ATDS,” and the petitioners argued for the FCC to follow that roadmap.

“First, the Commission should confirm that to be an ATDS, equipment must use a random or sequential number generator to store or produce numbers and dial those numbers without human intervention. This straightforward interpretation flows from the functions of an ATDS outlined in the TCPA. The Commission should also make clear that these functions must be actually—not theoretically—present and active in a device at the time the call is made. The FCC should also clarify that if human intervention is required in generating a list of numbers to call or in making a call, then the equipment in use is not automatic and therefore not an ATDS. Adopting this interpretation follows the statutory text and would provide clarity to businesses seeking to reach their customers.”

“Next, the Commission should find that only calls made using actual ATDS capabilities are subject to the TCPA’s restrictions. The D.C. Circuit noted that the FCC’s expansive interpretation of ATDS could be addressed by reinterpreting the statutory phrase ‘make any call . . . using [an ATDS],’ to mean that a device’s ATDS capabilities must actually be used to place a call for TCPA’s restrictions to attach. This interpretation, first espoused by Commissioner O’Rielly, would diminish the significance of the Commission’s expansive understanding of capacity, comport with the ordinary meaning of the statute, and limit TCPA liability.”

Broad support for TCPA reform

The petition was supported by trade associations representing “legitimate businesses and organizations, large and small, covering nearly every aspect of the economy. They seek to send time-critical communications to their customers and members promptly and efficiently. Moreover, the Petitioners’ members are operating in good-faith when trying to contact consumers but have been subject to abusive class action litigation by plaintiffs’ attorneys asserting an unreasonably expansive interpretation of ATDS. Ultimately, these lawsuits are harming consumers and the public at large. They are chilling helpful, time-sensitive communications with customers, while leaving fewer resources for businesses to innovate and create jobs. We have consistently urged the FCC to rationalize the dysfunctional TCPA regime, which no longer reflects the statute’s purpose or text. We urge the FCC to take prompt action on the ATDS issue in light of the D.C. Circuit’s recent opinion vacating the 2015 Omnibus Order’s treatment of the issue, and adopt the court’s roadmap for interpreting this issue.”

The Insights Association angle

“Representing more than 4,000 members across the United States, the Insights Association is the leading nonprofit trade association for the market research and data analytics industry, and the leader in establishing industry best practices and enforcing professional standards. The Insights Association’s membership includes both research and analytics companies and organizations, as well as the researchers and analytics professionals and research and analytics departments inside of non-research companies and organizations. Marketing researchers are an essential link between businesses and consumers, and between political leaders and constituents; they provide important insights about consumer and constituent preferences through surveys, analytics, and other qualitative and quantitative research. On behalf of their clients—including the government, media, political campaigns, and commercial and non-profit entities—researchers design studies and collect and analyze data from small but statistically-balanced samples of the public. Researchers seek to determine the public’s opinion and behavior regarding products, services, issues, candidates, and other topics in order to help develop new products, improve services, and inform public policy. The TCPA makes it exceptionally challenging, and legally hazardous, for telephone survey researchers to connect with the 67.6 percent of American households who are essentially only reachable on their wireless phones, which is why we intervened in the court challenge to the 2015 FCC rules.”

“In the TCPA, Congress targeted specific telemarketing practices and spam activities but the statute’s reach has been improperly expanded many times.”

According to the petition, “Congress enacted the TCPA in 1991 to stop an abusive form of cold-call telemarketing and fax-blast spamming: dialing random or sequential numbers,” and the FCC has “recognized repeatedly that the TCPA should accommodate businesses’ legitimate interests in communicating with consumers.” However, FCC rules implementing the TCPA, bolstered by a lot of court decisions, have over the years “fostered a whirlwind of litigation not against abusive callers and scammers, but against legitimate businesses attempting to lawfully communicate” with consumers and customers (and voters). Court and FCC interpretations “have strayed far from the statute’s text, Congressional intent, and common sense. The TCPA has turned into a breeding ground for frivolous lawsuits brought by serial plaintiffs and their lawyers who have made lucrative businesses out of targeting legitimate U.S. companies. The focus of these lawsuits often is not on unscrupulous scam telemarketers. Instead, plaintiffs pursue marginal or technical violations in the hope of large judgments.”

In the process, the petition noted, “The TCPA has become a major obstacle for American businesses seeking to communicate with consumers. Ultimately, consumers are hurt the most, as the costs of these lawsuits lead to increased prices for goods and services.”

“The TCPA,” said the petition, “has become a major obstacle for American businesses seeking to communicate with consumers. Ultimately, consumers are hurt the most, as the costs of these lawsuits lead to increased prices for goods and services.”

Moreover, “even if these lawsuits are frivolous, they still take time and money to defend. More litigation means more resources a company must divert from its core functions. Further, for small businesses the threat of a TCPA lawsuit with its uncapped statutory damages can spur questions of bankruptcy and place crippling distress on an owner. The result has been a boondoggle for plaintiffs’ lawyers.”

“The status quo is not in the public interest,” the petitioners asserted, and the combination of "regulatory uncertainty" and "enormous settlements that benefit plaintiffs' lawyers" simply “undermines the rule of law” rather than benefiting consumers or the U.S. economy.

The FCC’s 2015 “Omnibus Order” distorted the TCPA’s plain meaning and clear definition of an autodialer.

“Confusion” about what exactly constituted an autodialer under the TCPA “generated litigation” for years. “Seeking to limit such lawsuits, multiple petitioners asked the FCC to provide common sense guidance on modern technologies and their distinction from the kind of random/sequential number generating systems targeted by the TCPA” in its drafting back in 1991. “In addition, a number of courts encouraged the Commission to address the issue. But despite the pleas for clarity,” the FCC issued rules in 2015 that “made matters worse by expanding the Commission’s interpretation of what constitutes an ATDS.”

“The FCC adopted an extremely broad interpretation of the term “capacity” as used in the Act’s definition of ATDS. The unreasonably expansive reading included not only devices that can generate random or sequential numbers but also those that cannot. For example, it swept in devices that, though they do not currently autodial, could be modified to do so in the future. Numerous commenters advocated a more reasonable approach. According to then-Commissioner Pai, the FCC’s interpretation was not only bad policy, it was “flatly inconsistent with the TCPA.” As he observed, “[t]he statute lays out two things that an automatic telephone dialing system must be able to do or, to use the statutory term, must have the ‘capacity’ to do. If a piece of equipment cannot do those two things—if it cannot store or produce telephone numbers to be called using a random or sequential number generator and if it cannot dial such numbers—then how can it possibly meet the statutory definition.”

The 2015 “Omnibus Order’s distortion of the statute subjected vast swaths of communications to potential liability, despite” the 1991 House Energy & Commerce Committee report stating that “lawmakers did not intend to interfere with ‘expected or desired communications between businesses and their customers.” (H.R. Rep. 102-317, at 17 (1991))

With “vastly expanded potential liability,” it should be no surprise that “TCPA litigation increased 46 percent after the Omnibus Order, with class actions comprising approximately one-third of those filings.”

The Circuit Court decision "vacated" the 2015 Omnibus Order’s ATDS interpretation as unreasonable, arbitrary and capricious.

“Numerous petitioners” argued “that the regime was unreasonable, impractical, and inconsistent with the statute’s text. The D.C. Circuit vacated portions of the Omnibus Order in ACA Int’l v. FCC, including the Commission’s interpretation of ATDS, holding that the interpretation of capacity was ‘utterly unreasonable,’ ‘incompatible with’ the statute’s goals, and ‘impermissibly’ expansive. The court held that FCC’s interpretation that a device’s capacity could include ‘features that can be added to the equipment's overall functionality through software changes or updates’ had ‘the apparent effect of embracing any and all smartphones.’ The court found that such an interpretation was so unreasonable that it was ‘considerably beyond the agency’s zone of delegated authority.’ It also found that the Commission had offered an inconsistent and ‘inadequa[te]’ explanation of what features constitute an ATDS, ‘fall[ing] short of reasoned decisionmaking.’ “

The Petitioners, including the Insights Association (we were Intervenors in the lawsuit against the 2015 TCPA rules), applauded “the D.C. Circuit’s determination that the FCC had exceeded its authority in expanding the definition of ATDS” and urged the FCC “to use the D.C. Circuit’s decision as an opportunity to rationalize the dysfunctional TCPA landscape. The FCC should expeditiously resolve legal uncertainty and bring common sense back to the statute by adopting a construction of what constitutes an ATDS that conforms to the statutory language and congressional intent. Petitioners urge the Commission to promptly: (1) confirm that to be an ATDS, equipment must use a random or sequential number generator to store or produce numbers and dial those numbers without human intervention, and (2) find that only calls made using actual ATDS capabilities are subject to the TCPA’s restrictions.”

While there will undoubtedly “be additional issues that the FCC is called on to address,” the autodialer issue “merits speedy resolution, and is a critical first step to restoring a common-sense approach to the TCPA. This will provide businesses with certainty about the equipment they may use to communicate with customers and curtail frivolous TCPA litigation. Further, holding that dialing equipment subject to the TCPA is limited as specified” by the original 1991 TCPA law would, as then-Commissioner Pai put it in this 2015 dissent, “respect the precise contours of the statute that Congress enacted.

The FCC "should confirm that to be an ATDS, equipment must use a random or sequential number generator to store or produce numbers and dial those numbers without human intervention."

The petition said the FCC should "immediately clarify that in order to be an ATDS subject to Section 227(b)’s restrictions, dialing equipment must possess the functions referred to in the statutory definition: storing or producing numbers to be called, using a random or sequential number generator, and dialing those numbers. The TCPA defines an ATDS as a device that has the capacity to ‘store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.’ A device must be able to generate numbers in either random order or in sequential order to satisfy the definition. Otherwise, the device cannot do anything ‘using a random or sequential number generator.’ Next, it must be able to store or produce those numbers called using that random or sequential number generator. This ability to store or produce telephone numbers to be called, alone, is insufficient; the clause ‘using a random or sequential number generator’ modifies this phrase, requiring that the phone numbers stored or produced be generated using a random or sequential number generator. Finally, the device must be able to dial those numbers.”

The FCC, said the petition, “should not deviate from this straightforward language. Devices that cannot perform these functions cannot meet the statutory definition of an ATDS. Clarifying this definition (and rejecting earlier expansions that sweep all predictive dialers into the category of “ATDS”) is critical to restoring Congress’ intent for what constitutes an ATDS. Such a clarification would help businesses and other legitimate callers by confirming that both elements must be satisfied for a device to constitute an ATDS.”

(That earlier expansion of the autodialer definition to encompass predictive dialers came in the FCC’s 2003 TCPA Order, where the agency found that while some predictive dialers cannot be programmed to generate random or sequential phone numbers, they still satisfy the statutory definition of an autodialer. And yet, the Circuit Court decision acknowledged that “at least some predictive dialers, as explained, have no capacity to generate random or sequential numbers.”)

“To further remove any confusion,” the petition said, the FCC also needs to “make clear that both functions must be actually—not theoretically—present and active in a device at the time the call is made. The statute uses the present tense to limit the use of equipment that ‘has the capacity’ to perform the ATDS function and makes no reference to potential or theoretical capabilities. Chairman Pai found this ‘present capacity’ or ‘present ability’ approach was compelled by the text and purpose of the statute, the Commission’s earlier approaches to the TCPA, as well as common sense. This approach provides a clear, bright-line rule for callers. Callers do not need to worry about whether their calling equipment could perhaps one day be used as an ATDS. Instead, they can focus on what their devices currently do.”

Did the FCC even have the authority to go beyond the “clear statutory language” of the TCPA? The petitions insisted not. “As Chairman Pai noted, the TCPA’s restrictions are limited in their applicability to specific equipment; ‘if the FCC wishes to take action against newer technologies beyond the TCPA’s bailiwick, it must get express authorization from Congress—not make up the law as it goes along.’ Thus, as the D.C. Circuit noted, ‘[t]he Commission’s capacious understanding of a device’s ‘capacity’ lies considerably beyond the agency’s zone of delegated authority for purposes of the Chevron framework.’ “

As the FCC clarifies “which devices qualify as an ATDS,” the petition said, the FCC “should hold that devices that require alteration to add autodialing capability are not ATDS. Rather, the capability must be inherent or built into the device for it to constitute an ATDS. To illustrate, smartphones require downloading an app or changing software code to gain autodialing capabilities. Those capabilities are not built in. By contrast, other calling equipment can become an autodialer simply by clicking a button on a drop-down menu. That function is already part of the device and requires a simple change in setting rather an alteration of the device. Devices with these inherent capabilities are an ATDS when these capabilities are in use. Adopting this distinction would significantly narrow the range of devices considered ATDS, excluding smartphones, and comport with the statutory language.”

The Circuit Court decision provides the perfect opportunity, according to the petition, for the FCC “to clarify that the absence of human intervention is what makes an automatic telephone dialing system automatic,” an issue upon which the FCC has been inconsistent. The agency stated in 2003 “that the basic function of an ATDS is to dial numbers without human intervention, but later acknowledged [in 2015] that a device might qualify as an ATDS even if it cannot dial numbers without human intervention. The Commission has stated that the impact of human intervention is a ‘case-by-case determination’ based on ‘how the equipment functions and depends on human intervention.’ The FCC declined to provide additional clarity, leaving callers without guidance.”

If “human intervention is required in generating the list of numbers to call or in making the call,” the petition said, then the FCC must clarify that “the equipment in use is not an ATDS. This comports with the commonsense understanding of the word ‘automatic,’ and the FCC’s original understanding of that word. It also heeds the D.C. Circuit’s suggestion that the absence of human intervention is important; a logical conclusion, it found, ‘given that ‘auto’ in autodialer—or equivalently, ‘automatic’ in ‘automatic telephone dialing system’—would seem to envision nonmanual dialing of telephone numbers.’ Importantly, it creates a clear rule for businesses to follow and courts to enforce, instead of a vague, case-by-case analysis of each piece of dialing equipment.”

The FCC "should find that only calls made usual actual ATDS capabilities are subject to the TCPA's restrictions."

The FCC’s 2015 rules, according to the petition, “applied the TCPA’s prohibitions to any call using a device that could be an ATDS, regardless of whether the call was made using ATDS capabilities. In striking down this interpretation, the D.C. Circuit outlined an alternative approach, first raised by Commissioner O’Rielly in his Omnibus Order dissent, that was not raised by the petitioners: reinterpreting the phrase ‘make any call . . . using [an ATDS]’ as used in the statute. The court suggested that the TCPA’s text requires a caller to use the statutorily defined functions of an ATDS to make a call for liability to attach. It also noted that adopting this construction would ‘substantially diminish the practical significance of the Commission’s expansive understanding of ‘capacity’ in the autodialer definition.’ Indeed, a device’s potential capabilities would not be relevant to determining whether it is an ATDS, because the inquiry will focus only on the functions actually used to make the call or calls in question. 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 petition urged the FCC to “adopt the D.C. Circuit’s roadmap and clarify that the TCPA is only implicated by the use of actual ATDS capabilities in making calls. As the court suggested, the TCPA’s prohibitions should apply only to calls using ATDS capabilities. Here, a proper interpretation of the TCPA requires the calling equipment ‘use’ ATDS capabilities to make the call. Otherwise, the meaning of ‘using’ would be vastly expanded and untethered from Congress’ goals. Adopting this straightforward reading would ensure that liability attaches only when ATDS capabilities are used to make a call, rather than sweeping in calls made using smartphones, tablets, and other devices that conceivably could be modified to support autodialing via an ATDS. Businesses need this clear guidance, and it would help them avoid unnecessary litigation over whether they used an ATDS when placing calls to their customers. Consistent with the Court’s suggestion and the plain text of the statute, the Commission should adopt this interpretation.”

Conclusion: The petitioners request clarity

The petitioners requested "that, in light of the D.C. Circuit’s decision and roadmap, the Commission expeditiously issue a declaratory ruling clarifying the meaning of ‘automatic telephone dialing system’ as used in the TCPA. Such a declaratory ruling should (1) make clear that to be an ATDS, equipment must use a random or sequential number generator to store or produce numbers and dial those numbers without human intervention, and (2) find that only calls made using actual ATDS capabilities are subject to the TCPA’s restrictions.”

Prior FCC interpretations of what constitutes an autodialer, the petition said, "have created confusion and uncertainty and have expanded that term well beyond Congress’ intent. As a result, businesses and other organizations are limiting the consumer-benefitting communications they send, while TCPA litigation has exploded, benefiting serial plaintiffs and lawyers at the expense of American businesses and consumers. The D.C. Circuit’s vacatur of the Omnibus Order’s treatment of ATDS presents an opportunity to restore rationality to this aspect of the TCPA. Defining the elements of an ATDS in accordance with the statute’s clear definition is an important first step in this effort, and would ensure that legitimate businesses can contact their consumers without fearing a lawsuit under Section 227(b) of the TCPA."