6 Observations From D.C. Circuit Oral Argument in Appeal of FCC’s 2015 TCPA Order

By: Martin Cunniff

Playing to a packed house that was standing room only, the D.C. Circuit recently held oral argument in ACA International et al. v. FCC (No 15-1211 and consolidated cases).  Taking place on October 19, 2016, oral argument was originally scheduled for twenty minutes a side, but in an unusual turn of events, the hearing ran for over two-and-a-half hours with vigorous questioning from all three of the judges on the panel. 

A little background: the ACA International case is a challenge to the FCC’s omnibus declaratory ruling issued July 10, 2015 that addressed twenty-one separate requests for TCPA-related action. In broad strokes, the issues on appeal are: a) whether the Commission interpreted the term “automatic telephone dialing system” (“ATDS”) in a way that unlawfully turns on the equipment’s potential rather than present abilities; b) whether “called party” means the intended recipient or the actual telephone subscriber when determining if the caller has prior consent to contact the party; and, c) whether the FCC’s new regime for handling consumers’ revocation of consent is unworkable.

The panel consists of Judges Sri Srinivasan, Cornelia Pillard, and Harry Edwards.  Judges Srinivasan and Pillard were appointed by President Obama and took the bench in 2013 while Judge Edwards was appointed by President Carter in 1980.  As D.C. Circuit panels go, this one is fairly liberal, likely pro-consumer but, in any event, very smart. 

Six observations follow about the case that I gleaned from the oral argument.  One caveat is that trying to predict the ultimate decision of an appellate court based on the questioning at oral argument is a fool’s game that has made many an appellate lawyer look imprudent.  So please, no wagering! 

1)                     The Court will likely engage in a thorough analysis of the TCPA Order.  The D.C. Circuit, like most appellate courts, will usually give federal agencies great deference when it comes to the agency’s rulemaking.  Every now and then, however, courts will see the need to dig in and make sure the statute at issue is being interpreted and applied correctly.  Thinking of it in nautical terms, courts usually only jump in when the ship is way off course.  Events here seem to suggest that a “deep dive” will take place: the judges allowed over two-and-a-half hours of oral argument; the judges had obviously studied the briefs and key materials extensively; the questioning was thorough and thoughtful rather than for show; and the judges expressed concern about the rapid pace of technological innovation in telecommunications equipment and services. 

2)                     The Court will likely confront the issues head-on.  Appellate courts love to take the proverbial “path of least resistance” when deciding a case, i.e., dispose of the case on procedural grounds or narrow issues.  Here, the depth and breadth of the questioning suggests that the D.C. Circuit will attack the issues head-on and give the FCC and industry much-needed guidance.  That is not to say, however, that the court may send some issues back to the FCC to decide – albeit with some guidance on the statutory interpretation to be used. 

3)                     The definition of “ATDS” is a mess that will likely go back to the FCC for refinement.  The most vigorous questioning concerned the definition of ATDS especially questioning suggesting that a consumer’s innocent use of a smartphone could qualify as use of an ATDS.  FCC counsel struggled valiantly with this issue but never seemed to appease the panel.  In fact, at times Judge Edwards seemingly wanted to go further than the industry’s position and overturn twenty-five years of settled understanding that the TCPA is implicated when an ATDS is used even if used in a non-automatic mode.  Although unlikely to happen, his questioning exemplifies the deep concern, and at times, befuddlement with the FCC’s Order on this issue. 

4)                     “Called party” will likely be ruled to mean actual subscriber and not intended recipient.  The judges’ questioning showed concern over the workability of the FCC’s safe harbor on reassigned numbers (that a caller gets one call before being deemed to have constructive knowledge that the number has been reassigned). The judges expressed skepticism that one call can actually provide knowledge of reassignment since if the line is busy or not answered on the one call there’s no information to be gleaned as to its status.  Although the judges perhaps viewed the one-call safe harbor as a bit harsh, the judges’ questioning was often framed in terms of a trade-off or cost/benefit analysis between the callers and the called, and such analysis is usually deemed to be within the purview of an agency’s expertise. 

5)                      The means by which a consumer can give revocation of consent will likely be streamlined by the court but not dramatically changed.  The FCC concluded that customers might revoke consent through any individualized means they choose, so long as that method is “reasonable” under the “totality of the facts and circumstances.”  Industry is understandably worried about the workability of such a rule for companies that have thousands of employees.  The example often given is the notification to a pizza deliveryman to stop communications.  The court seemed sympathetic to the problem but also wary of creating traps or hoops for consumers who did want to revoke consent. 

6)                      The court’s decision will likely try to rationalize the TCPA with technological changes while trying to avoid creating loopholes for industry.  The general tenor of the questioning exuded sympathy for industry in having to work with a fairly unwieldy statute in the TCPA.  This sympathy, however, is tempered by wariness that the court may be led into unintended consequences that could allow an explosion in unwanted calls and texts.  Expect the final decision to weigh these concerns by giving legal guidance to the FCC on the parameters and import of the TCPA but allowing the Commission to ultimately determine the practical implications of the Act. 

The recording of the Oral Argument can be found here: https://www.cadc.uscourts.gov/recordings/recordings2017.nsf/DCF7D286EBE49FC185258051005ED50F/$file/15-1211.mp3