Million-Dollar Settlement of Billion-Dollar Claim Found Reasonable in Light of Due Process Problems Posed By Disproportionate Damages

Another court has observed that a billion-dollar aggregate liability under the TCPA likely would violate due process, adopting the Eighth Circuit’s reasoning that such a “shockingly large amount” of statutory damages would be “so severe and oppressive as to be wholly disproportionate[] to the offense and obviously unreasonable.”

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TRACED Act Creates New FCC Implementation Timelines

As predicted, amendments to the TCPA – in the form of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (the “TRACED Act”) – were signed into law by the President of the United States on December 30, 2019. The Chairman of the Federal Communications Commission (FCC) applauded this milestone on Twitter, commenting: “[T]he TRACED Act was signed into law, giving the FCC and law enforcement greater authority to go after scammers.” As the saying goes, with great power comes great responsibility: the enactment started the countdown for a long list of actions that the FCC is required to take during 2020 and beyond. This will add to the already active TCPA dockets at the FCC.

We share below the timeline for these actions to help our readers anticipate and prepare for the regulatory activities that will ensue. We summarized the content of these required FCC actions previously at this post.
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Legislation Looking Likely on a Number of TCPA “Hot-Button” Issues

Senate Bill 151, now called “the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act” (the “TRACED Act”), has been reconciled with the House of Representatives’ bipartisan bill House Bill 3375 and was passed in the House on December 4, 2019. This revised amendment has been returned to the Senate for a final vote and is expected to become final legislation “if not this week, then next week,” according to the bill’s sponsor, Representative John Thune. Thus, the prospects for passage of TCPA legislation currently look quite positive.

As drafted, the legislation will kick off a number of activities by the FCC, and may, as a practical matter, require the agency to take prompt actions on long-awaited rulings on critical statutory definitions. We highlight below some of the most notable revisions in the TRACED Act made since July 2019.

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Court Finds That Some Soundboard Calls Can Qualify As “Prerecorded Voice” Calls, At Least When They Do Not “Interact With the Customer Except In Preprogrammed And Meaningless Ways”

As we previously discussed, the need for clarification as to the TCPA’s treatment of outbound calls made using soundboard technology (“soundboard calls”) is particularly manifest in light of two pending petitions before the FCC and the Supreme Court’s refusal to review the FTC’s decision to treat soundboard calls as robocalls subject to the Telemarketing Sales Rules. [See here and here].  Plaintiffs have sought to exploit the uncertainty; a spate of lawsuits contend that soundboard calls are prerecorded calls prohibited by the TCPA if made without prior consent.  Recently, the Western District of Oklahoma attempted to set a standard for the permissibility of these calls, but the decision may only engender more uncertainty. While professing that soundboard calls are not “categorically prohibited,” the court’s ruling fails to provide a roadmap for what types of soundboard calls would be permissible, beyond stating that a “soundboard call which did not interact with the customer except in preprogrammed not to mention meaningless ways” violated the TCPA.

Soundboard technology allows call center agents to interact with consumers on a real-time basis using a combination of audio clips and the agent’s own voice.  Because a live agent selects the audio clips to play based on the statements made by the called party, companies using or offering the technology have argued that these calls feature a degree of human interaction that means they should not be considered “prerecorded calls” subject to the consent requirements of the TCPA.

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As Courts Grapple With The Severability of The Federal Debt-Collection Exemption, SCOTUS Is Asked to Resolve The Issue

The 2016 amendments to the TCPA—which created an exemption for calls that are made “solely to collect a debt owed to or guaranteed by the United States”—have inadvertently reshaped the way that TCPA claims are litigated. While early decisions in Indiana, Alabama, and Florida rejected claims under the FCC’s proposed implementing rules because they never became effective, more recent decisions have focused on whether the exemption, and by extension the entire statute, violates the First Amendment.  The first of those was the Fourth Circuit’s decision in American Association of Political Consultants v. FCC, which was soon followed by the Ninth Circuit and the Southern District of Florida.

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From the Four Corners of the Pleading: Plaintiffs Cannot Rely On Factual Allegations Outside the Pleadings To Defeat a Motion to Dismiss

The Northern District of Texas recently dismissed a TCPA claim because “the Complaint nowhere alleges that he was called or texted using an ATDS.” The Court’s opinion emphasized that simply asserting that “the text messages were ‘automated’” was not sufficient to state a TCPA claim, and that plaintiffs cannot casually add new factual allegations in their oppositions to a motion to dismiss.

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New Petition Seeking FCC Clarification That Calls Using Soundboard Technology Are Not “Entirely Prerecorded Calls” Prohibited By the TCPA

The FCC’s TCPA docket now has two pending petitions for declaratory ruling on the question as to whether outbound telemarketing calls made through soundboard technology are prohibited communications if made without prior consent under the TCPA. As we predicted in April 2019, industries using soundboard technology to streamline their telemarketing operations are increasing their efforts before the FCC in seeking review of this very issue.

The FCC recently issued a Public Notice seeking comments on a Petition for Declaratory Ruling filed by Yodel Technologies, a Florida-based company providing other entities with outbound telemarketing services using soundboard technology. The Yodel Petition “fully supports” “a currently pending Petition for Emergency Declaratory Ruling filed by NorthStar Alarm Services, LLC, that sets forth a litany of persuasive reasons why the Commission should rule that use of soundboard technology does not violate the TCPA.” The Yodel Petition also “submits its own justifications” to assist the FCC in reaching this conclusion or, alternatively, in waiving application of any rules prohibiting soundboard technology prior to May 12, 2017.

According to Yodel, as “calls using recorded audio clips specifically selected and presented by a human operator in real-time,” soundboard technology should not be considered “prerecorded voice message.” Yodel argues that the FCC’s 1992 TCPA Report and Order implied that prerecorded voice message only refers to calls and messages that are entirely prerecorded. In support, it observes that the FCC has always been and has only been using examples of fully automated calls when discussing TCPA implementing rules in the past twenty-seven years.Yodel’s Petition emphasizes that a caller’s ability to “ascertain the propriety of proceeding with a message” is an important characteristic in distinguishing between live and prerecorded calls – a view supported by case law in the Ninth Circuit. As such, Yodel advocated that outbound calls using soundboard technology would not be prerecorded calls when live operators would remain “available to interact with every called party from inception.”

After the Supreme Court declined in April 2019 to review a challenge to a Federal Trade Commission decision treating outbound telemarketing calls made through soundboard technology as robocalls, a wave of litigation ensued. Many federal courts, including the Eleventh Circuit (with appellate jurisdiction over Florida), have not examined soundboard technology in the context of TCPA claims in the past. Others have not had a consistent view on soundboard technology. As Yodel put it, clarity is needed because of the “serious reliance interests at stake.”

Interested parties have until October 21, 2019 to submit comments to the FCC on the Petition. Reply comments are due on November 4, 2019. Drinker Biddle’s TCPA team will continue to monitor this docket and related developments.

FCC Amends Its Caller ID Rules to Broaden their Scope and Effect

The FCC on August 1 voted to adopt enhanced Truth in Caller ID rules that will subject a broader range of “spoofed” calls to new heftier statutory civil penalty and potentially criminal sanctions for willful and knowing violations of these FCC requirements. Companies using spoofing technology should have until early 2020 to assess their operations to ensure compliance prior to these amended rules taking effect.

At its Open Meeting, the FCC adopted a Report and Order (R&O) to amend the current Truth in Caller ID rules. The text of the adopted version of the R&O was released on August 5, 2019 and largely remains unchanged since the release of the draft Second R&O. It appears that the rules adopted build upon the framework the FCC proposed in its Notice of Proposed Rulemaking from in February 2019 (click here for our earlier summary of the Notice). Overall, the Second R&O mirrors most of the FCC’s original proposals. The differences we highlight below are relatively technical, reflecting the FCC’s attempt to grapple with and clarify the scope of rule changes in light of foreseeable business use cases that may cause problems that the RAY BAUM’S Act intended to prevent.

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TCPA Class Allegations Stricken Due to “Unique Defenses Peculiar to Plaintiff’s Case”

The Northern District of Illinois recently clarified that a “revocation class” that defines a putative class as those having made “a request to stop calling [their] number” does not satisfy Rule 23(b)(3)’s predominance requirement. This memorandum opinion again highlights the significance of individualized issues of consent in a TCPA class certification process. Continue reading   »

Comment Cycle Begins for the FCC’s Third Further Notice of Proposed Rulemaking on “Call Blocking by Default” Regime And SHAKEN/STIR Implementation Deadline

On June 24, 2019, the FCC’s adopted Declaratory Ruling and Third Further Notice of Proposed Rulemaking (“Third FNPRM”) was published in the Federal Register, triggering the commenting period deadlines. We previously discussed in detail the various components of the Third FNPRM here and here. Comments on this Third FNPRM are due by Wednesday, July 24, 2019, and reply comments are due by Friday, August 23, 2019. Drinker Biddle’s TCPA team will continue to monitor this docket and related developments as they become available.