Joint Petitioners and Supporting Intervenors File Reply Briefs in Consolidated Appeal of FCC’s TCPA Order

On February 16th, the joint Petitioners, supporting Intervenors, and Rite Aid Hdqrtrs. Corp. (“Rite Aid”) each filed a reply brief in support of the consolidated appeal of the FCC’s July 10, 2015 Declaratory Ruling and Order. Each brief addresses the deficiencies of the FCC’s response filed on January 15th, which was first reported here. The main arguments are summarized below.

Joint Petitioners’ Reply

The Petitioners begin by reiterating that “the Order ensures that callers cannot avoid liability when making legitimate calls that Congress allowed: ones made without an ATDS or with prior consent.” Petitioners’ Br. at 2. They argue that that it is unlawful in its: (1) interpretation of the ATDS definition, (2) treatment of reassigned numbers, and (3) ruling regarding revocation of consent.

The Petitioners argue that interpreting “capacity” to include “potential abilities” is flawed because capacity “refers to what something can do, not what it could do if altered.” Id. at 7. Indeed, having the definition turn on what equipment may do if “modified in non-‘theoretical,’ non-‘attenuated’ ways,” without also explaining what might make modifications “theoretical” or “attenuated,” is unlawfully vague. Id. at 19-20. This reading “ignores the ATDS provision’s targeted purpose, and absurdly and unconstitutionally covers every modern phone.” Id. at 9. The Petitioners also challenge the FCC’s arguments that the mere “ability to dial from a prepared list of numbers” is enough for a piece of equipment to qualify as an ATDS. Id. at 13. They contend that “[a]n automatic dialer . . . must be able to generate random or sequential numbers to use that random or sequential number generator to store or to produce numbers to be called, and to dial those numbers, all without human intervention.” Id.

The Petitioners next contend that a “called party” must be interpreted as an “expected recipient,” because “[t]his interpretation tracks the natural meaning of ‘called party,’ protects the consent defense, guarantees that those who wish to receive messages may do so, and avoids unconstitutionally punishing innocent callers.” Id. at 22. The FCC’s contrary interpretation “renders the [TCPA’s] explicit protection for invited calls worthless by holding innocent callers liable for calls to reassigned numbers.” Id. at 23. Because “calls frequently go unanswered – generally for reasons that have nothing to do with reassignment[,]” the FCC’s one call safe harbor provisions fails to give calls an “‘opportunity to take reasonable steps to discovery reassignments and cease . . . calling before liability attaches.’” Id. at 27.

Finally, the Petitioners argue that “[b]y refusing to establish (or allow callers to establish) standardized revocation procedures, the Commission made it all but impossible for callers to process revocations – thereby encouraging them to stop calls altogether, even to those who continue to consent – while offering no additional protection to consumers.” Id. at 29. The FCC’s position is “arbitrary and capricious . . . [since] it makes compliance impracticable. . . .” Id. at 28.

Joint Intervenor’s Reply

The Intervenors argue that the FCC’s brief “failed to recognize how the Order’s requirements will impair their ability to effectively communicate messages that customers desire to receive.” Intervenors’ Br. at 1. They state that: (1) the Order’s definition of ATDS is inconsistent with the TCPA’s text, history, and purpose, (2) the FCC’s interpretation of “called party” is inconsistent with the TCPA, and (3) allowing consumers to revoke consent by “any reasonable means” is arbitrary and capricious.
In arguing against the FCC’s focus on “potential” capacities, the Intervenors note that the statutory definition “states in clear and certain terms that an ATDS includes only equipment that ‘has the capacity – (A) to store or produce telephone numbers to be called, using a ran or sequential number generator; and (B) to dial such numbers.’” Id. at 3, 4 (“By choosing the formulation ‘has the capacity,’ Congress made clear that it intended to limit the statute’s reach to a device’s present capacity.”). They state that “[t]he effect of the FCC’s broad reading is to potentially cover a range of devices that Congress never considered, including the modern smartphone, that pose none of the harms that the TCPA was designed to address, thereby curtailing legitimate business activity.” Id. at 10. “Accordingly, it is impossible for callers to know what constitutes an ATDS and what does not.” Id. at 11.

The Intervenors next argue that the FCC’s interpretation of “called party” exposes callers to an unworkable and unavoidable risk of liability due to the prevalence of reassigned numbers. Id. at 12-13, 15 (“In the end, there is nothing a caller can do to ensure that the consent it obtained is still valid at the time the call is made.”). They also note that a one-call safe harbor provision does not solve that problem because “one call – especially a call that is not answered or where the recipient refuses to inform the call of the mistake – cannot result in the caller obtaining ‘constructive knowledge’ of the number’s reassignment when that call is not answered or where the recipient refuses to inform the caller of the mistake.” Id. at 16.

Finally, the Intervenors contend that the FCC’s brief does not genuinely address the burdens placed on businesses by consumers being allowed to revoke consent by “any reasonable means” instead of through a uniform revocation process. Id. at 17.

Rite Aid Hdqrtrs. Corp.’s Reply

Rite Aid begins by emphasizing that the FCC has “bent a generic call statute to impose a confusing patchwork of regulations on healthcare communications that are protected and promoted by federal law and policy to the detriment of providers, patients, and public health.” Rite Aid’s Br. at 1. Rite Aid challenges the FCC’s contention that “it is free under the TCPA to layer additional regulations on communications regulated under HIPAA . . . . [since] HIPAA strikes a careful balance between the privacy needs of patients and ensuring the flow of information necessary to promote high quality healthcare and protect the public’s health and well-being.” Id. at 1-2. Under HIPAA, “[c]overed entities (which include retail pharmacies) may undertake a host of health-related communications without authorization because they are not ‘marketing’ – and there not ‘telemarketing’ when made by phone[,] . . . [b]ut the Commission restricted these communications to wireless lines to those that are ‘exigent’ and serve a ‘healthcare-treatment purpose[]’” without defining either of these critical terms. Id. at 3.

In doing so, the FCC “never explained why all HIPAA-protected communications are not ‘healthcare-treatment purpose’ calls and not ‘telemarketing’ or why such communications to wireline and wireless numbers should be regulated differently.” Id. at 6. Nor can it, as “[t]hese critical conclusions find no support in the Commission’s expert judgment, the record, the TCPA, its own policy pronouncements, or common sense.” Id.

Next Steps in the Appeal

The parties’ joint appendix is due on February 19th and final briefs are due on February 24th. The date for oral argument has yet to be scheduled. We will continue to monitor the docket and report on any significant developments.

John S. Yi

About the Author: John S. Yi

John Yi represents clients in civil and criminal litigations in federal court, as well as investigations and enforcement actions by the Federal Trade Commission (FTC), the U.S. Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and other federal and state regulatory bodies. For clients in health care and other sectors, he handles a full array of antitrust issues. John has helped secure merger clearances from federal regulators and defended clients’ interests in suits alleging a variety of anticompetitive conduct. He has assisted companies with internal investigations and compliance strategies. John also has experience handling all aspects of civil litigation, including discovery, settlement, dispositive motions, trial advocacy and appellate work. John also defends a number of class action cases with a wide variety of claims, including issues arising under federal and state antitrust laws, the Telephone Consumer Protection Act (TCPA) and the Fair Credit Reporting Act (FCRA).

Michael P. Daly

About the Author: Michael P. Daly

Mike Daly has spent two decades defending, counseling and championing clients that interact with consumers. His practice focuses on defending class actions, handling critical motions and appeals, and maximizing the defensibility of marketing and enforceability of contracts. Clients large and small have trusted him to protect their businesses, budgets and brands in complex cases across the country.

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