United States Court of Appeals, District of Columbia Circuit
October 19, 2016
Petitions for Review of an Order of the Federal
Dvoretzky argued the cause for petitioners ACA International,
et al. With him on the joint briefs were Helgi C. Walker,
Monica S. Desai, Amy L. Brown, Jonathan Jacob Nadler,
Christopher J. Wright, Jennifer P. Bagg, Elizabeth Austin
Bonner, Robert A. Long, Yaron Dori, Brian Melendez, Tonia
Ouellette Klausner, Keith E. Eggleton, Kate Comerford
Steven P. Lehotsky, and Warren Postman. Lindsay S. See
entered an appearance.
Charles R. Messer, pro se, was on the brief for amicus curiae
Charles R. Messer in support of ACA International's
Werner argued the cause for petitioner Rite Aid Hdqtrs. Corp.
With him on the briefs was Brian Weimer.
C. Mugavero, Steven A. Augustino, Jonathan E. Paikin,
Jonathan G. Cedarbaum, Blaine C. Kimrey, and Bryan K. Clark
were on the joint briefs for intervenors MRS BPO LLC, et al.
in support of petitioners.
Bell, II was on the brief for amicus curiae The National
Association of Chain Drug Stores, Inc. in support of
petitioner Rite Aid Hdqtrs. Corp.
Russell Frisby, Jr., Harvey L. Reiter, Aryeh Fishman, Michael
Murray, and Jay Morrison were on the brief for amici curiae
American Gas Association, et al. in support of petitioners.
Charles H. Kennedy was on the brief for amici curiae The
American Bankers Association, Credit Union National
Association and The Independent Community Bankers of America
in support of petitioners.
B. Clubok, Susan E. Engel, and Devin S. Anderson were on the
brief for amicus curiae The Internet Association in support
R. Palmore and Seth W. Lloyd were on the brief for amici
curiae Retail Litigation Center, Inc., National Retail
Federation, and National Restaurant Association in support of
N. Tramont and Russell P. Hanser were on the brief for amicus
curiae CTIA-The Wireless Association in support of
J. Troutman was on the brief for amici curiae American
Financial Services Association, Consumer Mortgage Coalition,
and Mortgage Bankers Association in support of petitioners.
Jan T. Chilton and Kerry W. Frarnich entered appearances.
Gallegos was on the brief for amicus curiae Communication
Innovators in support of petitioners.
M. Noveck, Counsel, Federal Communications Commission, argued
the cause for respondents. With him on the brief were William
J. Baer, Assistant Attorney General, U.S. Department of
Justice, Kristen C. Limarzi, Steven J. Mintz, Attorneys,
Jonathan B. Sallet, General Counsel, Federal Communications
Commission, David M. Gossett, Deputy General Counsel, and
Jacob M. Lewis, Associate General Counsel.
L. Briskin and Julie Nepveu were on the brief for amici
curiae National Consumer Law Center, et al. in support of the
Federal Communications Commission 2015 Omnibus Declaratory
Ruling and Order.
Rotenberg and Alan Butler were on the brief for amici curiae
Electronic Privacy Information Center (EPIC) and Six Consumer
Privacy Organizations in support of respondents.
Before: Srinivasan and Pillard, Circuit Judges, and Edwards,
Senior Circuit Judge.
SRINIVASAN, CIRCUIT JUDGE.
robocalls are an all-too-familiar phenomenon. For years,
consumers have complained to the Federal Communications
Commission about automated telemarketing calls and text
messages that they did not seek and cannot seem to stop.
sought to address consumers' concerns with undesired
robocalls in the Telephone Consumer Protection Act of 1991.
The TCPA generally prohibits the use of certain kinds of
automated dialing equipment to call wireless telephone
numbers absent advance consent. The Act vests the Commission
with authority to implement those restrictions.
case, a number of regulated entities seek review of a 2015
order in which the Commission sought to clarify various
aspects of the TCPA's general bar against using automated
dialing devices to make uninvited calls. The challenges
encompass four issues addressed by the agency's order:
(i) which sorts of automated dialing equipment are subject to
the TCPA's restrictions on unconsented calls; (ii) when a
caller obtains a party's consent, does a call nonetheless
violate the Act if, unbeknownst to the caller, the consenting
party's wireless number has been reassigned to a
different person who has not given consent; (iii) how may a
consenting party revoke her consent; and (iv) did the
Commission too narrowly fashion an exemption from the
TCPA's consent requirement for certain healthcare-related
uphold the Commission's approach to revocation of
consent, under which a party may revoke her consent through
any reasonable means clearly expressing a desire to receive
no further messages from the caller. We also sustain the
scope of the agency's exemption for time-sensitive
aside, however, the Commission's effort to clarify the
types of calling equipment that fall within the TCPA's
restrictions. The Commission's understanding would appear
to subject ordinary calls from any conventional smartphone to
the Act's coverage, an unreasonably expansive
interpretation of the statute. We also vacate the
agency's approach to calls made to a phone number
previously assigned to a person who had given consent but
since reassigned to another (nonconsenting) person. The
Commission concluded that calls in that situation violate the
TCPA, apart from a one-call safe harbor, regardless of
whether the caller has any awareness of the reassignment. We
determine that the agency's one-call safe harbor, at
least as defended in the order, is arbitrary and capricious.
therefore grant the petitions for review in part and deny
them in part.
federal government's efforts to combat unwanted robocalls
have spanned nearly three decades, involving two federal
agencies and a number of congressional enactments. In the
Telemarketing and Consumer Fraud and Abuse Prevention Act of
1994, 15 U.S.C. § 6101 et seq., Congress
empowered the Federal Trade Commission to regulate the
telemarketing industry. The FTC's measures include a
general bar against calling any telephone number on the
"do- not-call registry" without consent or an
established business relationship. 16 C.F.R. §
310.4(b)(1)(iii)(B); see 15 U.S.C. § 6151(a).
This case does not concern the FTC's initiatives.
case instead concerns the Federal Communications
Commission's efforts to combat unwanted robocalls
pursuant to its authority under the TCPA. Some of the
Commission's restrictions on telemarketing calls mirror
measures established by the FTC. Compare 16 C.F.R.
§§ 310.4(b)(1)(iii)(B), 310.4(c), with 47
C.F.R. § 64.1200(c). But the agencies' initiatives
also differ in various respects. Of relevance here, only the
TCPA specifically restricts the use of an "automatic
telephone dialing system" to make calls. 47 U.S.C.
§ 227(b)(1)(A). Petitioners challenge the
Commission's interpretation and implementation of various
TCPA provisions pertaining to automated dialing equipment.
enacted the TCPA in 1991 based on findings that the "use
of the telephone to market goods and services to the home and
other businesses" had become "pervasive due to the
increased use of cost-effective telemarketing
techniques." 47 U.S.C. § 227 note, Pub. L. No.
102-243, § 2(1), 105 Stat. 2394, 2394. "Many
consumers, " Congress determined, "are outraged
over the proliferation of intrusive, nuisance calls to their
homes from telemarketers." Id. § 2(6)-(7).
TCPA restricts calls both "to any residential telephone
line" and to "any telephone number assigned to a .
. . cellular telephone service." 47 U.S.C. §
227(b)(1)(A)(iii), (B). This case solely concerns the latter
restrictions on telephone calls to wireless numbers.
in that regard, made it "unlawful . . . to make any call
(other than a call made for emergency purposes or made with
the prior express consent of the called party) using any
automatic telephone dialing system . . . to any telephone
number assigned to a . . . cellular telephone service, "
"unless such call is made solely to collect a debt owed
to or guaranteed by the United States." Id.
§ 227(b)(1)(A)(iii). The statute defines an
"automatic telephone dialing system" (ATDS, or
autodialer) 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." Id. § 227(a)(1).
short, the TCPA generally makes it unlawful to call a cell
phone using an ATDS. And an ATDS is equipment with the
"capacity" to perform each of two enumerated
functions: (i) storing or producing telephone numbers
"using a random or sequential number generator" and
(ii) dialing those numbers. The general prohibition on
autodialer calls to wireless numbers is subject to three
exceptions. The central exception for purposes of this case
is for calls made with "prior express consent."
There are also exceptions for emergency calls and calls made
to collect government debts.
TCPA vests the Commission with responsibility to promulgate
regulations implementing the Act's requirements.
Id. § 227(b)(2). The Act also grants the
Commission specific authority to fashion exemptions from the
general prohibition on autodialer calls to wireless numbers,
where the calls are "not charged to the called
party." Id. § 227(b)(2)(C). As Congress
explained, the FCC "should have the flexibility to
design different rules for those types of automated or
prerecorded calls that it finds are not considered a nuisance
or invasion of privacy." Id. § 227 note,
Pub. L. No. 102-243, § 2(13), 105 Stat. 2394, 2395.
the TCPA's enactment, the FCC has issued a series of
rulemakings and declaratory rulings addressing the Act's
reach. In 2003, for instance, the agency concluded that the
statute's restrictions on "mak[ing] any call"
using an ATDS encompass the sending of text messages.
See In re Rules and Regulations Implementing the
Telephone Consumer Protection Act of 1991 (2003 Order), 18
FCC Rcd. 14, 014, 14, 115 ¶ 165 (2003).
contains a private right of action permitting aggrieved
parties to recover at least $500 in damages for each call
made (or text message sent) in violation of the statute, and
up to treble damages for each "willful or
knowing" violation. 47 U.S.C. § 227(b)(3). There
is no cap on the amount of recoverable damages. The
Commission has noted a surge in TCPA lawsuits (including
class actions) in recent years, likely attributable in part
to the "skyrocketing growth of mobile phones." In
re Rules and Regulations Implementing the Telephone Consumer
Protection Act of 1991 (2015 Declaratory Ruling), 30 FCC Rcd.
7961, 7970 ¶¶ 6-7 (2015).
Declaratory Ruling and Order issued in 2015, the Commission
(with two Commissioners dissenting) addressed 21 separate
petitions for rulemaking or requests for clarification. In
this court, petitioners and intervenors seek review of four
aspects of the Commission's order.
the Commission sought to clarify which devices for making
calls qualify as an ATDS-i.e., equipment that "has the
capacity" to "store or produce telephone numbers to
be called, using a random or sequential number generator,
" and "to dial such numbers." 47 U.S.C. §
227(a)(1). With regard to whether equipment has the
"capacity" to perform the enumerated functions, the
Commission declined to define a device's
"capacity" in a manner confined to its
"present capacity." Instead, the agency construed a
device's "capacity" to encompass its
"potential functionalities" with modifications such
as software changes. 2015 Declaratory Ruling, 30 FCC Rcd. at
7974 ¶ 16.
Commission also addressed the precise functions that a device
must have the capacity to perform for it to be considered an
ATDS. The Commission reaffirmed prior orders deciding that
"predictive dialers"-equipment that can dial
automatically from a given list of telephone numbers using
algorithms to predict "when a sales agent will be
available"-qualify as autodialers. Id. at 7972
¶ 10 & n.39. The Commission further explained that a
"basic function" of an autodialer is to
"dial numbers without human intervention."
Id. at 7975 ¶ 17. At the same time, the
Commission also declined to "clarify that a dialer is
not an autodialer unless it has the capacity to dial numbers
without human intervention." Id. at 7976 ¶
the Commission spoke to whether, and when, a caller violates
the TCPA by calling a wireless number that has been
reassigned from a consenting party to another person without
the caller's knowledge. The Act specifically permits
autodialer calls "made with the prior express consent of
the called party." 47 U.S.C. § 227(b)(1)(A). If the
"called party" for those purposes refers to the
intended recipient of a call or message, a caller
would face no liability when using an ATDS to call a number
believed to belong to a consenting party, even if the number
in fact has been reassigned to another person who has not
Commission, though, determined that the term "called
party" refers not to "the intended recipient of a
call" but instead to "the current subscriber"
(i.e., the current, nonconsenting holder of a reassigned
number rather than a consenting party who previously held the
number). 2015 Declaratory Ruling, 30 FCC Rcd. at 7999 ¶
72. But the Commission did not hold a caller strictly liable
when unaware that the consenting party's number has been
reassigned to another person. Instead, the agency allowed
one-and only one-liability-free, post-reassignment call for
callers who lack "knowledge of [the] reassignment"
and possess "a reasonable basis to believe that they
have valid consent." Id. at 8000 ¶ 72.
the Commission clarified the ways in which a consenting party
can revoke her consent to receive autodialer calls. The
Commission decided that callers may not unilaterally
designate the acceptable means of revocation. It also
declined to prescribe its own set of mandatory revocation
procedures. Rather, it concluded that "a called party
may revoke consent at any time and through any reasonable
means"-whether orally or in writing-"that clearly
expresses a desire not to receive further messages."
Id. at 7989-90 ¶ 47; id. at 7996
and finally, the Commission exempted from the autodialer
provision's consent requirement certain calls to wireless
numbers "for which there is exigency and that have a
healthcare treatment purpose." Id. at 8031
¶ 146. It declined, however, to give the exemption the
reach desired by certain parties that are in the business of
healthcare-related marketing calls.
take up the challenges to those four aspects of the
Commission's 2015 ruling in the same order.
the Administrative Procedure Act, we assess whether the
Commission's challenged actions in its 2015 order were
"arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law." 5 U.S.C. §
706(2)(A). We review the lawfulness of the Commission's
interpretations of the TCPA using the two-step
Chevron framework. That inquiry calls for examining
whether "Congress has directly spoken to the precise
question at issue, " and, if not, whether "the
agency's answer is based on a permissible construction of
the statute." Chevron U.S.A. Inc. v. Nat'l Res.
Def. Council, Inc., 467 U.S. 837, 842-43 (1984).
lawful, the Commission's challenged actions must also
satisfy the Administrative Procedure Act's requirement
that they not be arbitrary or capricious.
Arbitrary-and-capricious review includes assuring that the
agency "engaged in reasoned decisionmaking."
Judulang v. Holder, 565 U.S. 42, 53 (2011). Review
of agency action for arbitrariness and capriciousness
sometimes entails essentially the same inquiry as review of
an agency's exercise of statutory interpretation under
Chevron's second step. See id. at 52
n.7; Agape Church, Inc. v. FCC, 738 F.3d 397, 410
(D.C. Cir. 2013).
those standards to petitioners' four sets of challenges
to the Commission's 2015 Declaratory Ruling, we set aside
the Commission's explanation of which devices qualify as
an ATDS, as well as its understanding of when a caller
violates the Act by calling a wireless number previously held
by a consenting party but reassigned to a person who has not
given consent. We sustain, however, the Commission's
ruling that a party can revoke consent through any reasonable
means clearly expressing a desire to ...