TCPA Tracker June 2022 | Kelley Drye & Warren LLP

Recent News 

FCC Adopts Order Hindering Internationally Originated Robocalls

In its May 19, 2022 meeting, the FCC adopted its order imposing significant restrictions on the ability of service providers to interconnect with the Public Switched Telephone Network (PSTN) to transmit robocalls that are originated outside the United States. The FCC’s order creates a new classification of service providers, which the FCC describes as “Gateway Providers,” that are a point of entry for robocalls, and requires these Gateway Providers to take a more active role in preventing robocalls.

Gateway Providers are U.S.-based intermediate service providers that receive calls directly from a foreign originating provider or foreign intermediate provider at its U.S.-based facilities, which then transmit calls downstream to another U.S.-based intermediate provider or terminating voice service provider.  The FCC defined “U.S.-based,” as a provider that has facilities located in the U.S., including any point of presence capable of picking up the call. Importantly, given the significant applicable penalties for violating the FCC’s rules, these definitions apply on a call by call basis.  These rules are intended to impose restrictions on entities that are not common carriers, now subjecting companies to regulation that may not have previously been regulated by a state public service commission or the FCC.

Under the FCC’s Order, Gateway Providers will be required to register with the FCC’s Robocall Mitigation database, file a Robocall Mitigation plan with the FCC, and certify that they are adhering to those practices. The FCC’s Order further requires Gateway Providers to implement STIR/SHAKEN passing caller ID authentication to the next provider in the call path (effective January 2023), and apply their other robocall mitigation procedures on all foreign-originated calls.  Gateway Providers will also be required to do the following:

  • Confirm that any foreign-originated call that uses a U.S. telephone number (i.e. VoIP or cellular number) is originated from the service provider associated with that provider;
  • Respond to traceback requests within 24 hours;
  • “know your customer,” which requires providers to take measures that have the effect of actually restricting the ability of new and renewing customers to originate illegal traffic through diligent inquiries.

Perhaps more significantly, the FCC’s Order prohibits other domestic service providers from accepting calls destined to U.S.-based telephone numbers from any entity that is not an authorized “Gateway Provider” registered in the Robocall Mitigation Database. The Order further requires that common carriers, intermediate providers and Gateway Providers block telephone calls that are destined to telephone numbers on a do-not-originate (DNO) list, which includes numbers that should never be used to originate calls, and other numbers designated by the FCC. However, the FCC reaffirmed its position that carriers are not required to block calls that may be robocalls based on analytics.  Notably the FCC has sought further comment on whether service providers should be required to block calls pending an investigation into whether calls are suspect robocalls, and whether an intermediate provider should be required to block all calls from a Gateway Provider that the FCC has determined to be a bad actor.

The FCC has also proposed to amend its rules to impose significant fines on companies that fail to block calls when required or appropriately certify in the Robocall Mitigation Database.  The FCC has proposed, subject to further comment, a fine of $22,021 per violation, with each call constituting a separate violation. So a provider that fails to block 1000 calls would be subject to a $22,021,000 fine.

Chairwoman Rosenworcel noted that about two-thirds of all robocalls now originate from outside the U.S. The actions taken by the Commission at this past meeting are a significant step in reducing the ability of foreign entities to profit from illegal robocalls.

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

New Petitions Filed

  • On February 25, 2022, the Association of Credit and Collection Professionals filed an ex parte  letter request that the FCC seek additional comment to refresh the FCC’s record on whether Ringless Voice Mails (“RVM”) would be classified as “calls” under the TCPA.  The ex parte  notes that there is no pending petition, and the last comments were submitted to the Commission in 2017.  

Upcoming Comments

Decisions Released

  • On May 19, 2022 the FCC adopted new rules to stop illegal robocalls that originate overseas from entering U.S. networks.  The new rules on gateway providers – the on-ramps for international call traffic – institute stringent compliance requirements to ensure that these providers comply with STIR/SHAKEN caller ID authentication protocols and require that they take additional measures to validate the identity of the providers whose traffic they are routing.
  • As of May 24, 2022, the FCC is considering an order that will deny All About the Message’s 2017 Petition for Declaratory Ruling regarding ringless voicemails.  The order is described as ruling that ringless voicemails are calls that require prior express consent when sent to cellular telephone numbers.

Click here to see the full FCC Petitions Tracker.

Cases of Note

District Court Finds that Cell Phones Can Be Subject to DNC Rules but Still Dismisses Pro Se ATDS Claim Due to Insufficient Facts
 
In November 2021, we discussed a decision out of the Northern District of Texas that dismissed an alleged violation of the Automated Telephone Dialing System (“ATDS”) provision of the TCPA due to insufficient facts but allowed the pro se Plaintiff to file an amended complaint to attempt to cure his pleading deficiencies. On February 24, 2022 the Court partially dismissed Plaintiff’s amended complaint, including rejecting Plaintiff’s ATDS claim as a matter of law. 
 
Thus far, two Circuit Courts of Appeal have weighed in on this issue and the Texas federal court adopted their reasoning in rejecting the ATDS claim.  On January 19, the Ninth Circuit’s Meier v. Allied Interstate LLC decision—albeit unpublished—rejected the argument that to qualify as an ATDS, a dialing system “need only have the capacity to store numbers to be called and to dial such numbers automatically.”  Meier v. Allied Interstate LLC, No. 20-55286, 2022 WL 171933, at *1 (9th Cir. Jan. 19, 2022).  The Ninth Circuit found that to qualify as an ATDS, it was not enough to “store[ ] pre-produced lists of telephone numbers in the order in which they are uploaded.”  Id. 
 
In a more recent case, the Eighth Circuit expressed a similar opinion, stating that “[l]ike other courts, [the Eighth Circuit] do[es] not believe [that the Supreme Court believed that] systems that randomly select from non-random phone numbers are Autodialers.” Beal v. Outfield Brew House, LLC, 29 F.4th 391, 396 (8th Cir. 2022).  The Eighth Circuit found that because the software at issue “does not generate phone numbers to be called, it does not ‘produce telephone numbers to be called’ for purposes of § 227(a)(1) of the TCPA.”  Beal, 29 F.4th at 394.    
 
Turning back to Hunsinger, the Amended Complaint asserted claims based on eight allegedly unsolicited marketing phone calls and six text messages from Defendant.  Plaintiff alleged these communications violated the TCPA based on: (i) use of an ATDS “to place telephone calls, and send text messages” to Plaintiff’s cellular phone without his consent, (ii) violation of 47 C.F.R. § 64.1200(c)(2) and § 64.1200(d) relating to the Do-No-Call (“DNC”) registry and Defendant’s DNC policies, and (iii) violations of a state statute providing a right of action for violations of the TCPA.
 
As an initial matter, the Court dismissed Plaintiff’s ATDS claim for failure to state a claim, citing to the Ninth Circuit’s recent Meier decision in its analysis.  Plaintiff alleged Defendant “used an ATDS system that uses a random or sequential number generator,” that Defendant contacted Plaintiff “about buying his real property,” and that companies like Defendant “use up to date modern technology and skip tracing tools,” as well as “modern technology that allows it to send up to 500 text messages at once for $1.00.”  The Court held that such allegations were insufficient to survive a motion to dismiss because they did not support “a reasonable inference that [Defendant] used an ATDS with the capacity to randomly or sequentially store or produce telephone numbers.”  That narrow interpretation of ATDS is consistent with the US Supreme Court’s decision in Duguid v. Facebook (discussed here).
 
With respect to the DNC claim, the Court found that Plaintiff’s cell phone was covered by the DNC provisions of the TCPA.  FCC regulations mandate that entities making telemarketing calls must maintain a DNC list. Defendant argued that these DNC lists need only contain “residential telephones,” which do not include mobile phones.  The Court disagreed, finding that cell phones can qualify as residential telephones when they are “primarily used for personal, family, and household use.”  The Court found that Plaintiff had sufficiently alleged that his cellular phone was used for such purposes and that the Court could “draw the reasonable inference” that the cellular phone was a “residential telephone” for the purposes of the regulations.  Thus, the Court denied Defendant’s motion to dismiss the DNC provisions.
 
Finally, with regard to the state law claim for relief predicated upon TCPA violations, the Court granted Defendant’s motion to dismiss “to the extent that it relies on an underlying violation of” the ATDS statutory provision, but otherwise denied the motion to dismiss Plaintiff’s state law claim.
 
Hunsinger v. Alpha Cash Buyers, LLC, No. 3:21-CV-1598-D, 2022 WL 562761 (N.D. Tex. Feb. 24, 2022).
  
California District Court Finds that Calling a ‘Business Number’ Can Potentially Violate the TCPA
 
A California federal district court recently denied a Defendant’s Motion for Reconsideration where Defendant requested that the Court revisit its order denying Defendant’s motion to dismiss.  The Court previously found that Defendant could have violated the TCPA by contacting Plaintiff’s phone number, even if Plaintiff used that number for business purposes.  The TCPA’s do-not-call provisions “protect ‘residential telephone subscribers,’ not businesses.”
 
The Court found that the amended complaint contained “factual allegations in support of Defendant’s direct liability beyond the bare assertion that Defendant sent the text messages.”  Plaintiff alleged that Defendant, Senior Life Insurance Company, had sent multiple text messages to his cell phone which “advertised ‘Financed Leads,’ contained a link to [a] webinar provided by Defendant, and [attempted] ‘to promote or sell Defendant’s services.’”
 
Defendant argued that its conduct could not have violated the TCPA because Plaintiff “publicly listed his phone number as his business line and the text messages alleged were plainly intended for and directly related to his business use of that number.”  Plaintiff, on the other hand, submitted a declaration stating that the number Defendant contacted was his “personal cellular [] number, which [he] use[d] to make and receive a variety of calls, including but not limited to personal calls with family members and friends.”
 
While the Court rejected Defendant’s argument, the Court did acknowledge that the TCPA does not protect businesses, and even if a business number is inadvertently registered on the Do-Not-Call registry, there would still be no cause of action under the TCPA.  Even so, the Court found that, as alleged, contacting Plaintiff’s phone could violate the statute, confirming its previous holding that the Court was “unable to conclude as a matter of law that Plaintiff was not a residential telephone subscriber covered by the TCPA.”  Put differently, the Court needed a factual record in order to make a final decision on the allegations. 
 
While the Court acknowledged the fact that Plaintiff used his cell phone for business purposes, the Court held that “[d]etermining whether a wireless subscriber is a residential subscriber is ‘fact intensive’ …and requires case-by-case review for instances of mixed business/residential use,” (citing In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014, 14039 (2003)).  The Court observed that the theory that “any business use of a cellular telephone disqualifies the subscriber from the protection of the TCPA, even where the subscriber has offered competing evidence of residential use, is not supported by caselaw in this circuit or any appellate decision nationwide.”
 
Miholich v. Senior Life Insurance Company, No. 21-cv-1123-WQH-AGS, 2022 WL 1505865 (S.D. Cal. May 12, 2022). 
 
Ohio District Court Allows ATDS Claim to Proceed to Discovery
 
In a recent ruling, the Southern District of Ohio denied Defendants’ motion for judgment on the pleadings, holding that Plaintiff had alleged a plausible TCPA claim for use of an ATDS in his class action complaint, and that a single text message was a sufficient “injury in fact under the TCPA[.]”  By allowing the case to move forward and explicitly noting that a summary judgment motion could be filed following discovery on the ATDS issue, the Ohio district court joins the relative minority of courts to allow ATDS claims to proceed past the pleading stage (discussed here).
 
Plaintiff in Shank v. Givesurance Insurance Services, Inc., No. 3:19-CV-136, 2022 WL 561596 (S.D. Oh. Feb. 24, 2022), alleged that he received a telemarketing call from the Defendants, and shortly thereafter, an “automated text then appeared” asking him to contact one of the Defendants to “save money on [his] insurance policy.”  Plaintiff further alleged that he had not provided “any prior express written consent to call him,” and that “he and others ‘were harmed by these calls’ since they were ‘temporarily deprived’ of the ‘legitimate use of their phones’ during the telemarketing calls.”  Defendants argued that “Plaintiff’s claim under the TCPA fails as a matter of law . . . since the call made to him did not come from an ATDS.” 
 
The Court first addressed Article III standing, noting that the Sixth Circuit had “not yet addressed standing under the TCPA.”  The Court ultimately followed precedent from the Second, Fifth, Seventh, and Ninth Circuit Courts of Appeal in holding that “[a]lthough a single unsolicited text message ‘may be too minor an annoyance to be actionable at common law,’ it poses ‘the same kind of harm that common law courts recognize—a concrete harm that Congress has chosen to make legally cognizable.’”  A Circuit split remains since the Eleventh Circuit has found the opposite (discussed here). 
 
The Court next turned to the issue of whether Plaintiff had pled “‘sufficient factual matter’ that an ATDS was used to send the texts message to him making his claim under the TCPA ‘plausible’ and ‘more than merely possible.’”   The Court answered affirmatively, listing five of the Plaintiff’s factual allegations as collectively sufficient to state a plausible clam: “(1) ‘[T]he call to Plaintiff was made from SMS Code 555888; (2) an SMS code is evidence of the use of an ATDS, since they are ‘used to send out advertisements en masse;’ (3) [Defendants used] SimpleTexting [which] advertises its ability to do ‘mass text messaging;’ (4) the text message was ‘non-personalized,’ generic and part of a ‘nationwide telemarketing campaign;’ and (5) Plaintiff did not consent to receiving the text.”
 
The Court concluded that Plaintiff alleged a plausible claim under the TCPA, overruling Defendants’ motion for judgment on the pleadings. 
 
Shank v. Givesurance Insurance Services, Inc., No. 3:19-CV-136, 2022 WL 561596 (S.D. Oh. Feb. 24, 2022).

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