James P. Berg, partner PIB Law

Chad Fuller, partner Troutman Sanders LLP

Stuart M. Richter, partner Katten Muchin Rosenman LLP

Deborah Solmor, Chief Compliance Officer & Deputy General Counsel,

Career Education Corporation

The Telephone Consumer Protection Act

The FCC July 10, 2015 Declaratory Ruling

Appeals are underway - 11 companies joined a consolidated appeal to attack key

parts of the ruling as unlawful (ACA Int’l v FCC) and the D.C. Circuit Court of

Appeals heard Oral Argument on October 19, 2016.

The appeal focuses on three main issues:

1. The definition of ATDS;

2. Who the called party is for purposes of calls to cell phones and reassigned

numbers; and

3. Revocation of consent to call a cell phone.

1

Oral Argument Before the DC Court of Appeals

Each side allotted 20 minutes but arguments lasted for more than 3

hours

Each of the three judges expressed skepticism at some part of the

FCC’s position

It is unclear whether the D.C. Circuit would send issues back to the

FCC for revisions or make some sort of substantive ruling

2

The TCPA defines an ATDS as:

"equipment which has the capacity

(A) to store or produce telephone numbers to be called, using a random or

sequential number generator; and

(B) to dial such numbers."

47 U.S.C. § 227(a)(1)

The key feature of an ATDS is the capacity to dial numbers without “human

intervention.”

Automatic Telephone Dialing Systems

3

Human Intervention

Some Courts hold that any system where a call or message is triggered by human

intervention is not an ATDS. See, e.g., Luna v. Shac, LLC, 122 F.Supp.3d 936

(N.D.Cal. Aug. 19, 2015)

Other Courts reject a “but-for” type of analysis. See, e.g., Sherman v. Yahoo!

Inc., 150 F.Supp.3d 1213 (S.D.Cal. Dec. 14, 2015)

The FCC has declared that “how 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.”

In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot.

Act of 1991, 30 FCC Rcd. 7961, 7977 (2015).

One Response to FCC’s Human Intervention Standard

Pozo v. Stellar Recovery Collection Agency, (Case No. 8:15-cv-929-T-AEP)

(M.D. Fla. Sept. 2, 2016)

A clicker application known as HCI (Human Call Initiator) held not to be an

automatic telephone dialing system (ATDS)

Even under the standards of the FCC’s July 2015 Declaratory Ruling, the Court

stated the application was not an ATDS because, among other reasons, the

system lacked the potential capacity to autodial because the system “required

its representatives to manually dial all calls” so it lacked the capacity to make

any calls without human intervention.

Takeaway from DC Circuit Oral Argument: What is an ATDS?

6

Judges seemed to grasp the issue related to “capacity” and what

it means to store or produce numbers to be called

Judges appeared concerned about concept that a smartphone

could be an ATDS

Takeaway from DC Circuit Oral Argument: Wrong Party Calls

7

Judges expressed concern with one free call/text

rule – what if you text someone and he or she

doesn’t respond – how could that be “constructive

notice” of number reassignment

Takeaway from DC Circuit Oral Argument: Revocation of Consent

8

ACA argued revocation must be “reasonable”

One judge accused the FCC attorney of not

understanding how a business works when he

suggested that any method of communication of

revocation was reasonable

Article III Standing and the TCPA

Spokeo v. Robins, 136 S.Ct. 1540 (2016)

Decided under Fair Credit Reporting Act but applies equally to

TCPA claims

9

Congress cannot erase Article III standing requirements by

granting the right to sue to a plaintiff who has not suffered

“concrete and particularized” harm

Spokeo Standing Requirements

Anton Ewing v. SQM US, Inc., 2016 U.S. Dist. LEXIS 143272 (S.D. Cal. Sept. 29, 2016)

• The Ewing court reasoned that the plaintiff’s bare procedural violation—i.e., that he

“incurred a specific charge for Defendant’s call to his cellular telephone”—was not an injury

traceable to Defendant’s alleged usage of an ATDS in violation of the TCPA, and therefore

the plaintiff lacked standing.

Elisa R. Romero v. Dept Stores Nat’l Bank, 2016 U.S. Dist. LEXIS 110889 (S.D. Cal.

Aug. 5, 2016) (same judge as Ewing)

• Plaintiff does not offer any evidence of a concrete injury caused by the use of an

ATDS, as opposed to a manually dialed call.

• Each alleged violation is a separate claim, meaning Plaintiff must establish standing

for each violation, which means that Plaintiff must establish an injury in fact caused by each

individual call.

• One singular call, viewed in isolation and without consideration of the purpose of the

call, does not cause any injury that is traceable to the conduct for which the TCPA created a

private right of action, namely the use of an ATDS to call a cell phone.10

Spokeo Standing Requirements

Gerardo Aranda v. Caribbean Cruise Line, 2016 WL 4439935 (N.D. Ill. Aug. 23, 2016)

• It does not matter whether plaintiffs lack additional tangible harms like loss of cell

phone battery life, actual annoyance, and financial losses; Congress has identified that such

unsolicited telephonic contact constitutes an intangible, concrete harm, and plaintiffs have

alleged such concrete harms that they, themselves suffered. Their injuries are concrete and

particularized, traceable to defendants' conduct, and judicially redressable.

A.D. v. Credit One Bank, 2016 WL 4417077 (N.D. Ill. Aug. 19, 2016) (same judge as

Aranda)

• [The TCPA] directly forbids activities that by their nature infringe the privacy-related

interests that Congress sought to protect by enacting the TCPA. There is no gap —there are

not some kinds of violations of section 227 that do not result in the harm Congress intended

to curb, namely, the receipt of unsolicited telemarketing calls that by their nature invade the

privacy and disturb the solitude of their recipients.

11

The Professional TCPA Plaintiff

Courts Dismissing Claims

• Stoops v. Wells Fargo, 2016 WL 3566266 (W.D. Pa, June 24, 2016)

(Professional Plaintiff lacked constitutional and prudential standing)

• Telephone Science Corporation v. Asset Recovery Solutions, LLC, 2016

WL 4179150 (N.D. Ill August 8, 2016) (Professional Plaintiff had constitutional

but lacked statutory standing under TCPA)

• Kinder v. Allied Interstate, Inc., 2010 WL 2993958 (Super Ct. Cal. August 2,

2010) (unpublished decision) (upholding dismissal of claims against 75

defendants when vexatious litigant failed to post $1.5 million security bond)

12

The Professional TCPA Plaintiff

Courts Finding Standing

• Fitzhenry v. ADT Corp., 2014 WL 6663379, at *5 (S.D. Fla. Nov. 3, 2014)

(plaintiff who acquired several different numbers to get a higher volume of

auto-dialed calls had standing based on allegations he received “unwanted”

telemarketing calls)

• Martin v. Comcast Corp., 2013 WL 6229934, at *2 (N.D. Ill. Nov. 26, 2013)

(refusing to dismiss claims “merely because [plaintiff] files lots of these cases”)

• Martin v. Bureau of Collection Recovery, 2011 WL 2311869, at *4 (N.D. Ill.

June 13, 2011) (“Characterizing Plaintiff as a ‘professional plaintiff’ does not

boost [Defendant’s] argument in this discovery motion or any arguments in

response to Plaintiff’s motion for class certification”)

13

Challenging Standing: A Double Edged Sword

Its not always about whether a Plaintiff can sue, but where.

• Medallin v. Ikea, No. 15-55174 (9th Cir. January 13, 2017)(not for publication)

Ninth Circuit reversed district court order decertifying class based on lack of

standing and ordered dismissal of Zip Code case without prejudice at Plaintiff’s

request.

• Mocek v. AllSaints USA, No. 1:16-cv-08484 (N.D. Ill.) Defendant removed

FACTA case and then sought dismissal based on lack of standing. District

court remanded case and assessed over $50,000 in fees.

The TCPA provides for Concurrent Jurisdiction.

14

Future TCPA Trends: Makeup of the FCC

• The FCC is directed by five commissioners appointed by the president of the United

States and confirmed by the U.S. Senate for five-year terms, except when filling an

unexpired term. The president designates one of the commissioners to serve as

chairman. Only three commissioners may be members of the same political party, and

none can have a financial interest in any commission-related business.

• Democratic Chairman Tom Wheeler has announced his intention to resign on Jan. 20,

2017.

• The Senate has failed to reconfirm Democratic Commissioner Jessica Rosenworcel for

another term.

15

Future TCPA Trends: Makeup of the FCC

• President Trump will likely tap Ajit Pai as his pick to lead the FCC in the new

administration, elevating the sitting GOP commissioner to the top spot overseeing the

nation's communications industry, according to four industry sources familiar with

decision.

• Pai could take the new role immediately and wouldn't require approval by the Senate

because he was already confirmed to serve at the agency.

• There will likely be an immediate shift in power. That may have a dramatic impact on

key aspects of the July FCC ruling if the DC circuit upholds the ACA challenges and

returns the issues back to the FCC.

16

Future TCPA Trends: Potential Legislation

• The TCPA is popular with consumers and serves an important purpose, but there is

bipartisan support for amendments:

“We all share the goal of preventing harmful phone calls, but it is increasingly clear that the

law is outdated and in many cases, counterproductive. The attempts to strengthen the

TCPA rules have actually resulted in a decline in legitimate, informational calls that

consumers want and need.”

House Energy and Commerce Committee’s Subcommittee on Communications and

Technology hearing: “Modernizing the Telephone Consumer Protection Act” (Sept. 22,

2016) Subcommittee Chairman Rep. Greg Walden (R-OR).

• Legislative Initiatives with a republican controlled congress could include:

- A $500,000 cap on statutory damages

- Updates to reflect changes in technology17

Future TCPA Trends: Industry Compliance

18

• Monitoring lead aggregators’ compliance with prior express written

consent

• Scrubbing technology

• Technology to block marketing calls