TCPA Tracker - September 2020

Recent News

On September 9, 2020 the FCC released a draft Second Report and Order for consideration ahead of their open meeting scheduled for September 30, 2020. The Second Report and Order further implements the TRACED Act and encourages the use of caller ID authentication technology.  Most notably, the Second Report and Order requires service providers to upgrade the non-IP portions of their networks to IP by June 30, 2021 (or develop an alternative call authentication solution), extends the STIR/SHAKEN call authentication framework to intermediate providers and grants a two-year extension to small voice service providers, on the condition that they implement a reasonable call mitigation program in the interim.

Regarding non-IP portions of the network, the Second Report and Order would require voice service providers to either upgrade their non-IP networks to IP and implement STIR/SHAKEN, or to develop a non-IP caller ID authentication solution.  Voice service providers may satisfy the alternative requirement by participating, directly or through an intermediary, in industry standards development toward developing a non-IP alternative.  Intermediate providers would be required to implement the STIR/SHAKEN caller ID authentication framework in the IP portions of their networks by June 30, 2021.  The Second Order and Report would also establish extensions of the June 30, 2021 caller ID authentication implementation deadline for small voice service providers, voice service providers that are currently incapable of obtaining a ​“certificate” necessary to implement STIR/SHAKEN, services scheduled for discontinuance, and non-IP networks. Concerning TRACED Act requirements, the Second Report and Order would establish a process by which providers that make early progress on caller ID authentication implementation can obtain an exemption from the June 30, 2021 deadline, and prohibit voice service providers from adding any line item charges to the bills of consumer or small business customer subscribers for caller ID authentication technology.

Call Blocking Safe Harbors to Become Effective October 14, 2020 
On July 16, 2020, the FCC concurrently adopted a Third Report and Order, an Order on Reconsideration, and a Fourth Further Notice of Proposed Rulemaking. The Commission published the Third Report and Order (85 FR 5604) in the Federal Register on September 14, 2020.  As a result, the safe harbors for call blocking based on reasonable analytics and for blocking of bad-actor providers become effective October 14.  For more information on these safe harbors, see our July 2020 TCPA Tracker.

FCC Petitions Tracker

Kelley Drye’s Communications group prepares a comprehensive summary of pending petitions and FCC actions relating to the scope and interpretation of the TCPA.

Number of Petitions Pending

• 29 petitions pending
• 1 petition for reconsideration of the rules to implement the government debt collection exemption
• 1 application for review of the decision to deny a request for an exemption of the prior express consent requirement of the TCPA for ​“mortgage servicing calls”
• 1 request for reconsideration of the 10/14/16 waiver of the prior express written consent rule granted to 7 petitioners

• None

• On September 18, 2020, the FCC’s Consumer and Governmental Affairs Bureau issued a Public Notice seeking comment on a request for clarification filed by the National Association of Chain Drug Stores (“NACDS”). NACDS requests clarification that communications from pharmacies related to COVID-19 vaccines, once available, and flu vaccines during the pandemic fall within the Telephone Consumer Protection Act’s ​“emergency purposes” exception to the statute’s prior express consent requirement. Comments are due September 25, 2020, and reply comments are due October 2, 2020

• Akin Gump Petition for Declaratory Ruling
• On September 21, 2020, the FCC’s Consumer and Governmental Affairs Bureau (CGB) issued a Declaratory Ruling clarifying the division of liability between a fax broadcaster and an advertiser where the fax broadcaster engages in deception or fraud against the advertiser.  In response to a petition for clarification filed by a law firm, the CGB ruled that ​“a fax broadcaster is solely liable for TCPA violations when it engages in deception or fraud against the advertiser (including when a fax broadcaster violates its contract with the advertiser in a manner that is deceptive or fraudulent).”
• The Bureau concluded that its ruling would deter fax broadcasters – who generally are absolved of liability for TCPA violations absent a ​“high degree of involvement” in an unlawful fax – from sending unwanted faxes to consumers, thereby furthering the goals of the TCPA.  The Bureau concluded that if a fax broadcaster engages in deceit or fraud, it is the ​“sender” of the fax because it is acting contrary to the interests of the advertiser and thus not acting ​“on behalf of” the advertiser.  The Bureau described several situations where a fax broadcaster may have exclusive liability, including when the fax broadcaster ​“falsely represent[s] that the broadcaster has consumer consent for certain faxes” and when the fax broadcaster’s misconduct ​“leaves the advertiser unable to control the fax campaign or prevent TCPA violations.”  Such misconduct, the Bureau ruled, could come from violations of a fax broadcaster’s contractual commitments to the advertiser.  Applying principles of agency, the Bureau concluded that in these situations the fax broadcaster is not acting on behalf of the advertiser and thus is solely liable for its actions. 

• Ryerson Petition for Declaratory Ruling
• On September 4, 2020, the FCC’s Consumer and Governmental Affairs Bureau (CGB) issued a Declaratory Ruling finding that digital messages sent by the Petitioners, Joseph T. Ryerson & Son, Inc. did not violate the Junk Fax Prevention Act, a TCPA amendment prohibiting any person from sending ​“an unsolicited advertisement to a telephone facsimile machine.” In 2015, Ryerson asked the CGB to clarify how this statute applies to messages initiated and received in digital form, asserting that ​“such transmissions are more closely analogous to an email than a traditional fax.”  
• The CGB granted the petition, citing the Amerifactors Declaratory Ruling, decided in 2019, which states that ​“an online fax service that effectively receives faxes ​‘sent as email over the Internet’ and is not itself ​‘equipment which has the capacity . . . to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper’ is not a ​‘telephone facsimile machine’ and thus falls outside the scope of the statutory prohibition.”  As the equipment referenced in the Amerifactors petition was markedly similar to that used by Ryerson, the Bureau concluded that Ryerson’s petition was governed by the same analysis.  As the Bureau explains, ​“transmissions that are effectively email do not implicate the consumer harms Congress sought to address in the TCPA, such as tying up phone/fax lines and the unnecessary use of paper and toner/ink from automatic printing.”  The CGB also addressed commenters who argued that the messages in question constituted ​“efaxes” and should therefore be subject to the TCPA.  According the CGB, ​“The Westfax Declaratory Ruling clearly distinguishes faxes that begin as faxes from those that do not; the TCPA applies only to documents that begin as faxes…here, it is undisputed that the document in question was not initially sent as a fax, but was always a digital electronic file.”
• Order Denying Reconsideration of TCPA Waiver Order
• On August 27, 2020, the FCC’s Consumer and Government Affairs Bureau (CGB) issued an Order on Reconsideration, denying Lori Wakefield’s Petition for Reconsideration.  In her petition, Wakefield asked the CGB to reconsider the 2019 TCPA Waiver Order; an order that granted limited retroactive waivers of the 2012 prior-express-written-consent requirements to ViSalus and one other petitioner ​“in light of confusion about the rules and consistent with the Commission’s prior grant of similar waivers.”  Wakefield asserts that ViSalus should not have been included in the waiver due to statements the company made in recent TCPA class action suit regarding telemarking calls.  According to Wakefield, ​“the evidence presented at trial regarding ViSalus’s calling practices makes clear that . . . ViSalus was not under any genuine confusion about the scope or applicability of the Commission’s rules” and, speaking as a member of that class action suit, ​“she had not provided ViSalus with any consent to call her at all.”
• The CGB denied the petition on procedural grounds. Wakefield did not participate in the original proceedings, therefore, her petition must ​“state with particularity the manner in which the person’s interests are adversely affected by the action taken” and ​“show good reason why it was not possible for him to participate in the earlier stages of the proceeding.”  The Bureau concluded that Wakefield’s petition does neither.  The 2019 TCPA Waiver Order only applies to calls for which ViSalus had written consent.  Because Wakefield maintains she did not give ViSalus consent to call her, the calls she received were not subject to the waiver, and as such she could not have been adversely affected by the waiver.  Wakefield states that she did not participate in the original proceeding because she was ​“uncertain that she was an ​‘interested person’ entitled to comment on ViSalus’s Petition,” an explanation that does not adequately address the possibility of her participation.  The CGB concludes ​“Because we find that Wakefield fails to satisfy the threshold showing for reconsideration, we deny the Petition and decline to address the remaining arguments.” The Bureau encouraged parties in the future to participate in proceedings that may affect them or risk being unable to satisfy the strict standards for participation only on reconsideration.

Cases of Note

Facebook Finds Friends at Supreme Court in Duguid v. Facebook 

As previously reported, the United States Supreme Court is poised to address the definition of an ATDS under the TCPA next Term in the case Duguid v. Facebook.  On September 4, Facebook and the United States filed their briefs, both advocating for a narrow interpretation of an ATDS. Both Appellant Facebook and Respondent United States use historical context surrounding the passage of the TCPA as well as grammatical rules of sentence construction to advocate for that position. In July, the Supreme Court agreed to consider the question of whether the definition of an ATDS under the TCPA encompasses any device that can ​“store” and ​“automatically dial” telephone numbers, even if the device does not ​“use a random or sequential number generator.” As we have reported, that question has widened into a Circuit split – see our prior summaries discussing decisions from the Second, Third, Seventh, Ninth Circuit, and Eleventh Circuits.

In its brief, Appellant Facebook argues for a narrower interpretation of ATDS that limits applicability of the statute’s restrictions to equipment that uses random- or sequential-number-generation. Facebook highlights the context within which the TCPA was passed, including telemarketing practices of the late-1980s and early 1990s that informed Congress’s intent with the TCPA.  Facebook also confirms the success that the TCPA had in curbing abusive telemarketing practices arising out of the use of random- and sequential-number-generators.  Facebook goes onto link the FCC’s ​“vacillating” on the definition of an ATDS as coinciding with a drastic increase in TCPA litigation based on an expanded interpretation of what constitutes an ATDS.

Facebook relies on grammatical principles and sources to argue that the statutory text limits an ATDS to technology that uses a random- or sequential-number-generator. It posits that the statutory language ​“using a random or sequential number generator” is an adverbial phrase that modifies both the verbs ​“store” and ​“produce.” In Facebook’s assessment, any other definition would require ​“statutory surgery.” To reinforce that argument, Facebook gives the example of a sign in a college dorm laundromat: in the sentence, ​“it [is] ​‘a violation of dorm rules to wash or dry your clothes using your roommates’ access card,’ no one would think that college students were prohibited from washing their clothes.” Facebook then bolsters this interpretation by reference to the legislative history of the TCPA and the specific threat that sequential dialing technology posed.  Finally, Facebook warns of the ​“catastrophic” consequences that would follow from including every stored-number system in the definition of an ATDS. As nearly every mobile phone today has the capacity to store numbers and dial them, such interpretation risks turning every cell phone user into a potential TCPA defendant.

In its brief, Respondent the United States notes at the outset that, by the early 2000s, telemarketing practices had changed: telemarketers had begun using predictive dialers that reached consumers using stored, pre-programmed numbers. In light of Congress’s intent in enacting the TCPA, the FCC concluded that these technologies fit the TCPA’s definition of an ATDS – however, the government concedes that the FCC’s expanded interpretation at times conflicted with other portions of its guidance, and was struck down in 2018 by the Federal Circuit in ACA International v. FCC. Unbound to the FCC’s guidance, the United States agrees with Facebook that the plain text of the TCPA limits the definition of an ATDS to random- or sequential-number-generators. The government’s grammatical analysis focuses on the comma that precedes the adverbial phrase, pointing to past Supreme Court decisions and canons of statutory interpretation that advise such a comma is evidence that the phrase is meant to modify all antecedents (in this case, both the verbs ​“store” and ​“modify”). 

On September 11, multiple amicus curiae parties filed in support of Facebook’s interpretation.  Facebook received support for its interpretation from the U.S. Chamber of Commerce, PACE, Salesforce and other parties representing the banking and healthcare industries.  These parties general argued that the Ninth Circuit’s ruling rewrites the TCPA and, in the words of the U.S. Chamber’s brief, ​“captures nearly every modern calling device, from the equipment that organizations use to make these communications to the smartphone in your pocket.”  This approach, supporters argue, places callers in an ​“impossible situation” and violates the First Amendment.   
Following an extension of time for the merits briefs of all parties, Respondent Duguid’s brief is due October 16, 2020, and oral argument is scheduled for Tuesday, December 8, 2020. A decision can be expected to be published sometime between the argument and when the term recesses in late June/July 2021.

Facebook, Inc. v. Noah Duguid, et al, Case No. 19-511 (2020)
Following FCC Amerifactors Decision District Court Rules that EFaxes Don’t Qualify For TCPA Protection 

On August 24, 2020, a United States District Court in the Western District of Tennessee entered an order modifying a class definition to exclude recipients of efaxes – that is, a facsimile transmission that is converted to a digital message, sent to the recipient as an email attachment rather than delivered as a hard copy printout. In Advanced Rehab & Medical, P.C. v. Amedisys Holding, LLC, Defendant moved the court to modify the definition of a putative class action on the basis that the court should grant deference to a December 9, 2019 ruling by the Consumer and Governmental Affairs Bureau of the FCC in the matter of Amerifactors Financial Group, LLC that efaxes are not regulated by the TCPA.[1]

The TCPA prohibits any person from using a ​“telephone facsimile machine,” computer, or other device to send an unsolicited advertisement. A telephone facsimile machine is defined with reference to equipment that sends electronic signals over a telephone line. When those provisions of the TCPA were drafted, the efax had not yet been invented and all faxes were automatically printed out by the recipient’s machine upon receipt. Since 2019, the FCC has taken the position that efaxes are not regulated by the TCPA. In Amerifactors, it issued a declaratory ruling stating that the TCPA’s language limiting the fax prohibitions to faxes sent with a telephone facsimile machine removed efaxes from the scope of the TCPA.  On the basis of that decision, Defendant in Amedisys asked the court to grant deference to the FCC’s Amerifactors ruling and amend a certified class definition in a fax-based TCPA case to expressly exclude efax recipients from the class.

The court granted Defendant’s motion. Because the FCC’s Amerifactors decision was a reasonable construction of the TCPA’s statutory definition of ​“telephone facsimile machine,” the court found that it warranted deference and modified the class definition to exclude efax recipients. Plaintiffs have filed a petition seeking leave to appeal with the Sixth Circuit.[2]

Advanced Rehab & Medical, P.C. v. Amedisys Holding, LLC, No. 1:17-cv-01149, 2020 WL 4937790 (W.D. Tenn. Aug. 24, 2020).

No Incentives For Class Plaintiffs in Eleventh Circuit 

Last week, a panel from the Eleventh Circuit in Johnson v. NPAS Solutions, LLC, No. 18-12344 (11th Cir.) reversed in part, and vacated in part, a class action settlement that would have resolved allegations that NPAS violated the TCPA by using an ATDS to place calls to his cell phone without his consent. 

The class settlement was approved over the objection of Jenna Dickenson by the United States District Court for the Southern District of Florida.  Dickenson appealed the final approval order, arguing that: (1) the District Court erred when it required class members to file objections to the settlement and attorneys’ fees application before class counsel’s deadline to file their fee application; (2) the $6,000 incentive award to the named Plaintiff contravened two Supreme Court cases from the 1880s; and (3) the District Court’s analysis was not sufficient to provide meaningful appellate review.  The Eleventh Circuit agreed with Dickenson on all three points.

The panel’s decision regarding the timing of objections and the sufficiency of the analysis is consistent with other decisions around the country.  The decision with respect to Plaintiff’s incentive award, however, is an extreme departure from what has become commonplace in federal class action practice.  Dickenson argued that the Supreme Court’s decisions in Trustees v. Greenough, 105 U.S. 527 (1882), and Central Railroad & Banking Co. v. Pettus, 113 U.S. 116 (1885), prohibit inventive awards like the one awarded to Plaintiff by the District Court, and the Eleventh Circuit agreed.

The panel described Greenough and Pettus as ​“the seminal cases” establishing the rule that attorneys’ fees can be paid from a common fund, but explained that these cases also limit on the types of awards that attorneys and litigants may recover:  ​“A plaintiff suing on behalf of a class can be reimbursed from attorneys’ fees and expenses incurred in carrying on the litigation, but he cannot be paid a salary or be reimbursed for his personal expenses.”  The panel reasoned ​“that the modern-day incentive award for a class representative is roughly analogous to a salary” and payment for personal services.  Such incentive awards, according to the panel, ​“present even more pronounced risks” than the payment at issue in Greenough because they are also intended ​“to promote litigation by providing a prize to be won (i.e., as bounty).”  The panel concluded that “[w]hether [Plaintiff’s] incentive award constitutes a salary, a bounty, or both, we think it clear that Supreme Court precedent prohibits it.”