Blink and You’ll Miss It: TCPA Implications of Appointment of New FCC Chairman

Eversheds Sutherland (US) LLP

Sutherland Asbill & Brennan LLP

With all the pomp, circumstance, and general political commotion surrounding the inauguration of President Donald J. Trump on January 20, 2017, it was easy to overlook one of his first acts in office: the appointment of Ajit Pai as the new Chairman of the Federal Communications Commission (FCC). Pai, whose appointment requires no Congressional confirmation because he already sits on the Commission, replaces former Chairman Tom Wheeler, who stepped down from the Commission, leaving a 2-1 majority in favor of Republicans. 

As we have discussed in prior legal alerts, TCPA RIP? and Dialing-In: TCPA Hot Issues for 2017, the shift in power at the FCC will likely have significant implications for the Telephone Consumer Protection Act (TCPA). Commissioner Pai’s colorful—and rather blistering—dissent to the FCC’s July 2015 Omnibus TCPA Order (the Order) provides insight on the possible direction the newly configured FCC could take on certain TCPA hot-button issues. 

In his dissent, now-Chairman Pai did not mince words, echoing the feelings of many companies and defense counsel when he noted that the “Order will make abuse of the TCPA much, much easier. And the primary beneficiaries will be trial lawyers, not the American public.” Chairman Pai’s overarching issue with the Order was its failure to target telemarketing, which he sees as the primary goal of the TCPA. Instead, the Order expanded the reach of the TCPA in ways Chairman Pai found to be anti-consumer and anti-business. He lodged three specific objections to the Order.

First, Chairman Pai noted that the “Order dramatically expands the TCPA’s reach” by interpreting “automatic telephone dialing system” (ATDS) in such a way as to capture all technology with the “capacity” to dial automatically. He characterized this interpretation as “transform[ing] the TCPA from a statutory rifle-shot targeting specific companies … into an unpredictable shotgun blast covering virtually all communications devices.”

Second, Chairman Pai criticized the Order’s ruling on “prior express consent.” The Order effectively instituted a one-and-done approach to consent, allowing for TCPA liability if a caller made more than one call to a recipient who did not provide consent. Under this approach, if a number is reassigned after consent is given, consent no longer exists, and the new subscriber can file a suit after the second call. What is troubling for callers is that the recipient of the call has no obligation to inform the caller of the reassigned status of the number. Coupled without a “good faith” harbor for the caller, this allows for recipients to accept countless calls from an unwitting caller and then file a TCPA lawsuit. Chairman Pai referred to this approach as “a veritable quagmire of self-contradiction and misplaced incentives.”

Third, he criticized the Order’s “carve-out for the prison payphone industry … [which] lets that industry repeatedly make prerecorded voice calls to consumers in order to ‘set up a billing relationship’ for future services.” While this is a narrow exception, Chairman Pai slammed it as “provid[ing] a roadmap for those seeking a lawful way to avoid our telemarketing rules.”

The Trump Administration will need to appoint two additional Commissioners to the FCC, one Republican and one Democrat, which will give the Republicans a 3-2 majority. In addition, a challenge to the FCC’s 2015 Order is currently pending before the D.C. Court of Appeals, following oral argument in late 2015. These developments will all make for an unpredictable year for those affected by the TCPA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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