Welcome to Splitsville.

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As courts continue to address the definition of automated telephone dialing system (“ATDS”) within the Telephone Consumer Protection Act (“TCPA”) it was only a matter of time before we started seeing intra-district splits.  Last Friday, in a ruling deeply overshadowed by the Marks ruling,  the Hon. Kevin McNulty issued a ruling in the District New Jersey that is deeply and directly at odds with two earlier decisions entered by the Hon. Jerome B. Simandle of that same district. See the Grand Duchess’ article on those cases here.  The case is Fleming v. Associated Credit Servs., Civ. No. 16-3382 (KM) (MAH), 2018 U.S. Lexis 163120 (D. N.J. Sept. 21, 2018) and it marks the first time a predictive dialer has been squarely held to not be an ATDS subject to the TCPA in New Jersey.

The Fleming ruling actually tracks Pinkus quite closely. Before it can do so, however, the court first must deal with the impact of Dominguez— a case that seemingly required fidelity to the TCPA’s statutory definition, but maybe not. Indeed, Judge Simandle has twice held, in essence, that Dominguez actually compels fidelity to the FCC’s 2003 and 2008 Predictive Dialer Rulings and not to the statute’s mandate of random or sequential number generation. The Fleming court, however, quickly determined that Dominguez did not address the issue of whether the 2003 and 2008 Predictive Dialer Rulings remain viable at all. See Felming at * 20 (“The Third Circuit did not really deal with it [the viability of the FCC’s earlier Orders] at all.”) As such it found itself a blank slate to write upon, and write it did.

After noting the inconsistency of district court opinions on the matter, the Fleming court aligned itself with Pinkus and holds directly that the 2003 and 2008 Rulings were, in fact, overruled by ACA Int’l:

While recognizing the disparate views in the case law, I am convinced by the reasoning in Pinkus and similar decisions. I hold that when the D.C. Circuit vacated the 2015 FCC Declaratory Ruling it also necessarily set aside the parts of the previous 2003 and 2008 FCC Orders that ruled that a predictive dialer was impermissible under the TCPA.

Fleming at *22

As the Fleming court sees the matter–in a thoughtful analysis that I am truncating badly– ACA Int’l is “permeated with the notion that the 2015 Ruling is an elaboration of the earlier 2003 and 2008 Orders, and that the appeal of the 2015 Ruling may encompass its reaffirmation of the earlier Orders, even though those Orders had not themselves been appealed.”  Fleming at *24. As such, the court expressly adopts the holding of Pinkus and determines: “ACA Int’l necessarily invalidated the 2003 Order and 2008 Declaratory Ruling insofar as they provide, as did the 2015 Declaratory Ruling, that a predictive dialer qualifies as an ATDS even if it does not have the capacity to generate phone numbers randomly or sequentially and then to dial them.” Fleming at *25-26.

So far so good. But after the walloping Marks just gave TCPAland after likewise determining that the 2003 and 2008 Orders were overruled by ACA Int’l, the match is far from over.  Luckily for defendants, however, the Court reads the statutory language for what it says and does not try to re-write it as some would suggest Marks did:

Does a system that dials numbers from a list that was not randomly or sequentially generated when the list was created qualify as an ATDS? With only the statutory text to guide me, I am convinced that the answer is no.

Fleming at * 26.

The Court’s analysis is actually refreshingly straightforward. First, the court states its decision that “[t]he phrase “using a random or sequential number generator,” I believe, applies to the manner in which the numbers make their way onto the list—not to the manner in which the numbers are dialed once they are on the list.” Fleming at 26. This is an important call back to Judge Simandle’s contrary rulings in which that court determined that dialing numbers sequentially or randomly from a list was sufficient to meet the statutory definition. Notably, however, the Fleming court does not expressly call out Judge Simandle’s earlier rulings or specifically distinguish either of them. Classy move.

After reviewing the evidence and determining, not surprisingly, that there was no evidence the numbers called were randomly or sequentially generated, the court concludes that Defendant is entitled to summary judgment:

I therefore find that ACS’s LiveVox HCI system, as presented in this case, is merely a predictive dialer and not an ATDS under the TCPA.

Fleming at *29.

How sweet is that?

It is important to note, however, that the LiveVox product at issue in Fleming was not actually a predictive dialer at all. Instead it was the LiveVox HCI product, which TCPAland dwellers will recognize has been commonly and repeatedly upheld as a “manual” dialing application, rather than as a predictive dialer. That said, the core of the ruling remains deeply pertinent to users of true predictive dialers– the “mere” use of such a dialer does not trigger TCPA coverage; at least not in the eyes of the Fleming court.

Also, in an added bonus unrelated to ATDS issues, an important component of the ruling that is likely to be overlooked is the court’s focus on receipt of messages as a predicate for Article III standing. See Fleming at *13.  There is a pretty serious split of authority as to whether or not a call is actionable even if it does not actually ring through. See, for the Defense perspective, Watkins, 2017 U.S. Dist. LEXIS 84503, at *8 n.2 (Plaintiff may only recover damages for calls that “he, and not an answering machine, answered”); Juarez v. Citibank, N.A., No. 16-cv-01984, 2016 U.S. Dist. LEXIS 118483, at *7 (N.D. Cal. Sept. 1, 2016) (a violation of the TCPA “[does not] necessarily give rise to Article III standing–for example calls made to a neglected phone that go unnoticed or calls that are dropped before they connect may violate the TCPA but not cause any concrete injury”); Lemieux v. Lender Processing Center, No. 16-cv-1859-BAS(DHB), 2017 U.S. Dist. LEXIS 47139, at *11 (S.D. Cal. Mar. 29, 2017) (agreeing that “a bare allegation of a violation of the TCPA could be an insufficient allegation of injury to establish standing, such as when a telephone call is unheard or unanswered … .”).  Fleming appears to join this “calls must be received to afford standing camp.”

Fleming is a fun ruling that seems to properly apply the TCPA’s statutory definition of ATDS and also, properly, holds that ACA Int’l reversed the FCC’s handiwork in 2003 and 2008. It also treats Dominguez as agnostic on the issue of whether the 2003 and 2008 Predictive Dialer rulings remain viable, which is probably an accurate assessment. Notably, however, the court does not address Marks, which was handed down only the day before the decision. And with a solid split of authority within the D. NJ, it remains to be seen what line of cases future rulings within that district will follow. Always fun.

NOTE: I made a few edits to this article a the behest of LiveVox. Specifically, although the Court found that LiveVox’ product was a predictive dialer, it was actually LiveVox’s HCI product that was at issue in the case.

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Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

Last week insideARM reported that Judge Thomas Wheeler in the Court of Federal Claims ruled against the Department of Education (ED), enjoining ED from cancelling its solicitation for large debt collection contractors. It is still unclear what will happen next, although in our “insideARM Perspective” on September 17 we took a stab at identifying some of the possibilities.

Meanwhile, ED is proceeding with business among its remaining (mostly small) contractors. Sources tell insideARM that ED will start measuring agencies against each other starting on October 1, 2018.

First, a little background on ED’s measurement of private debt collection contractors

Years ago, ED reported quarterly performance results and rankings, until the reporting process hit a year-long snag in 2012. Results were published in January 2013, and then pretty much petered out after that. Other than gross collections, no performance data or rankings have been announced for several years.

When last reported, rankings were determined by a weighted average of contractors’ performance in total dollars collected, total accounts serviced, and total administrative resolutions. ED awarded 70 points to the top performer in the dollars collected category. Twenty points were awarded to the top performer in the total accounts serviced category, while the top performer in administrative resolutions received 10 points. Agencies were scored against the top performers in each category. The scores determined the bonuses each company would receive for a quarter and for the fiscal year.

For the fiscal fourth quarter 2012, Pioneer Credit Recovery was the top scoring collection agency in the unrestricted (large) category with a score of 97.25. FMS Investment Corp. was next, with 94.63, then ConServe (93.77) and NCO Group (92.34). In the three months ended June 30, 2012, all contractors together brought in a total of $669.4 million.

Back to today

For reference, FMS Investment Corp. (FMS) was the lead plaintiff in the latest round of litigation that ended in a ruling against ED. ConServe had taken the lead in the two prior rounds. Like FMS and ConServe, Pioneer did not receive a new contract award. However, unlike FMS and ConServe, Pioneer is operating under a 2017 Award Term Extension (ATE), so they are one of only two large debt collection agencies to still be working for ED (the other company is Alltran Education, which used to be Enterprise Recovery Systems, which also received an ATE in 2017).

Sources tell insideARM that the new measurement system (CPME, or contractor performance monitoring & evaluation) will incorporate things like number of complaints and time on hold, as well as accounts resolved and cash collected. The measurement will begin on October 1st for accounts placed as of that date (so nothing that’s happened in the recent past will count). Sources said their understanding is that those in the top 70% would continue to receive placements, while others will be in danger of being dropped.

One major difference in this round is that ED has told the contractors that no competitive data will be shared. So, the department will measure performance, but nobody but ED will know who stands where.

Supposedly, all contractors will receive the same number of accounts, in theory, to put everyone on a level playing field. However, at least one small contractor tells insideARM that ED is now asking questions about capacity — which they thought was odd. On a related note, one of the claims made by FMS and its co-plaintiffs in the most recent round of litigation was that ED said the small contractors had plenty of capacity to deal with the current and expected volume, yet the Administrative Record in the case reflected no data or projections about future capacity.

Also, 1.7 million accounts that have been housed at the small contractors without a payment for at least 12 months have just been recalled, and will be re-placed. One source wondered whether this wasn’t a strategy to improve the denominator for measurement purposes, which would bolster ED’s claim that the small contractors are doing well and have plenty of capacity to properly handle all of the accounts.

Meanwhile, sources also tell insideARM that the small contractors have been opening new offices and/or buying offices from the previous large contractors, and/or subcontracting to the large companies (however, the contract limits subcontracting to a maximum of 20% of the business). So it seems there are efforts being made to ramp up to handle additional volume.

The latest performance data

Federal Student Aid (FSA) just released its gross recovery data by private collection agency for the third quarter of Fiscal Year 2018 (again, these are gross numbers, with no weighting for other factors). The data shows – among other things – a decrease in overall collections over the past year.

insideARM Perspective

On the surface, the above data reveals the following:

• On average, a fully ramped up large PCA appears to collect around 3-3.3% of its portfolio per quarter.
• On average, a fully ramped up small PCA appears to collect around 2-2.5% of its portfolio per quarter.
• For the last year, there has been a wide range of capacity, or at least inventory, among the smalls. The small with the least inventory has about 10% of the small with the most; while the large with the least inventory has about 65% of the large with the most. It’s unclear whether this says anything about actual capacity, vis a vis claims about the smalls’ capacity to handle the volume.
• The total inventory held by PCAs has increased by 34% over the last 4 quarters, however total recoveries have declined by 29%.
• A year ago, the ratio of total recoveries by large:small was 63:37. In the latest reported quarter, it was 50:50.

As it relates to recovery rates, it is quite difficult to nail down accurate apples-to-apples comparisons. 

One reason is because there is effectively a 9-month lag time from the time a company receives a placement to the time it can show real recoveries, primarily because rehabs — the largest share of recoveries — take that much time to show up on the reports. 

Another reason is timing and number of placements, and the age of default. For the period highlighted above, small PCAs have been receiving new accounts, while the large PCAs have not. Aside from Pioneer and ERS, the last new placements to large PCAs were in December 2016 (and even then, they only received 8,000 accounts, which is about 1/4 or 1/5 of what they would typically receive), with latest default dates of March 2016. The new accounts have default dates as late as June 2018; their resolution rates will be much higher.

Note: I did not count Pioneer and ERS in the above calculations, as they were primarily in the ramp up period. 

I suspect the large PCAs that have been excluded from a contract will continue to offer arguments in support of their claims that the significant and complex process of collecting defaulted federal student debt requires both large and small companies to do the job effectively.

However, a lot of the damage has been done. My sources tell me that the large PCAs who just won the court decision have already shed over 1,500 jobs in the last year, are preparing to lose another 1,000 in the coming month, and by April 2019 will have lost a total of 3,000 fully-trained staff working on FSA contracts.

There are too many devils in the details here to cover everything in one article. The story will continue. 

NATIONAL CITY, Calif. —  LoanWise announced today that it has achieved Historically Underutilized Business Zone (HUBZone) certification through the U.S. Small Business Administration (SBA). The HUBZone program helps small businesses in urban and rural communities gain preferential access to Federal procurement opportunities. The program was enacted into law as part of the Small Business Reauthorization Act of 1997.

Due to Federal programs encouraging small business utilization and HUBZone participation in procurements, LoanWise is just one of many HUBZone-certified small businesses with the capacity to collect Federal student loans.  There are currently thirty-two (32) small businesses listed at www.sam.gov as HUBZone-certified under the NAICS code for debt collection (561440).

The largest single Federal client for private collection agencies (PCAs) remains The U.S. Department of Education (ED). LoanWise has remained a subcontractor on the ED PCA contracts since 2008, performing for multiple PCAs in that time. LoanWise attributes its multiple successes as an ED subcontractor to continued top-of-the-line training, excellent employee benefits, and generous compliance and production bonuses.  The company is also certified as a woman-owned small business (WOSB). The San Diego labor market is an up-and-coming one for Federal subcontractors, and LoanWise has the capacity to add additional Federal subcontracts to its client roster.

“We are pleased that the SBA has seen fit to grant us this designation,” said Carol Patry, owner of the company, continuing, “We are anxious to provide additional employment opportunities to people in our area as we help PCAs absorb additional volumes from Federal agencies.”

LoanWise is a member of the Fed Cetera Network, a business development organization under 48 CFR 52.219-9.  As a small business, LoanWise qualifies for the SBA’s All Small Mentor Protégé Program (ASMPP).  Fed Cetera will hold a teleseminar at 11AM EST on October 4, 2018, on the ASMPP program.  Here is where you can sign up to attend. 

Federal HUBZones are designated as such based on U.S. census data when an area has statistically proven economic needs, typically within depressed urban or rural communities. The U.S. Small Business Administration (SBA) certifies firms as HUBZone small businesses if they meet all of the eligibility requirements. For starters, the firm must be owned at least 51% by American citizens, with few exceptions.  The firm’s principal office must be located with a HUBzone, and more than 35% of the firm’s employees must live in a HUBZone. These requirements are just the beginning of establishing a business as a HUBZone-certified concern.

NORRISTOWN, Pa. — ORH Counselors today announced it has achieved Service-Disabled Veteran-Owned Small Business (SDVOSB) certification through the U.S. Department of Veterans Affairs (VA), Center for Verification and Evaluation (CVE) and has been added to the VA’s Vendor Information Pages (VIP). 

The VA’s Vets First Verification Program is a result of The Veterans Benefits, Health Care, and Information Technology Act of 2006 (Public Law 109-461). The CVE verifies SDVOSBs/VOSBs according to the tenets found in Title 38 Code of Federal Regulations (CFR) Part 74 that address Veteran eligibility, ownership, and control. In order to qualify for participation in the Veterans First Contracting Program, eligible SDVOSBs/VOSBs must first be verified.

Due to Federal programs encouraging small business utilization and SDVOSB participation in procurements, ORH is just one of many SDVOSB small businesses with the capacity to collect Federal student loans.  There are currently forty-five (45) small businesses listed at www.sam.gov as SDVOSBs under the NAICS code for debt collection (561440).

The largest single Federal client for private collection agencies (PCAs) remains The U.S. Department of Education (ED).  ORH is currently implementing its first subcontract in suburban Philadelphia, a metropolitan area long known for its abundance of agents with past experience on Federal task orders. ORH has the capacity to add additional Federal subcontracts to its client roster.

“ORH Counselors is pleased to be able to offer Federal contractors the ability to count subcontracts given to us toward their Federal SDVOSB spending goals,” stated CEO Keith Baker, continuing, “We have confidence our resources and capital are sufficient to meet the needs of additional Federal clients.”

To be eligible as a SDVOSB, the following criteria must be met.

• The Service Disabled Veteran (SDV) must have a service-connected disability as determined by the VA or Department of Defense (DoD).
• The business must be small under its primary NAICS code.
• One or more SDVs must hold the highest officer position, must unconditionally own 51% of the business, and must control its management, long-term decision making, and daily operations.
• SDV ownership must be direct ownership.

ORH is a member of the Fed Cetera Network, a business development organization under 48 CFR 52.219-9.    

ARLINGTON, Va. — Numeracle™, Inc., the pioneer of robocall blocking and labeling visibility in the calling ecosystem, and NobelBiz™, leading innovator in the contact center technology industry, announced today at the 2018 PACE Washington Summit, a collaborative engagement between the two companies to provide trusted local caller ID management solutions delivering enhanced brand protection and improved campaign performance.

The Numeracle and NobelBiz intelligent local caller ID solution combines patented outbound calling technology with advanced data analysis on call delivery metrics to increase customer engagement by establishing a trusted local presence. By presenting a geographically familiar number to the calling party, this fully-compliant solution increases contact rates and call backs while also improving brand reputation by ensuring incoming calls to consumers are not incorrectly displayed as FRAUD or SCAM.

Local caller IDs are registered across the network to improve successful call delivery by verifying the calling party’s identity as a trusted entity and minimizing the likelihood of an incorrect or fraudulent label being displayed to the consumer. Through the addition of risk rating analysis from Numeracle, NobelBiz’s patented automated number rotation is now able to identify and remove numbers flagged by robocall detection technologies as ‘high risk’ in order to preserve the favorable calling reputation of the call originator.

By applying feedback from carrier analytics partners on changes likely to affect the status of a calling party’s number, Numeracle and NobelBiz are able to offer personalized insights into corrective strategies and mitigation techniques to enable improved reputation management and brand preservation. By utilizing best practices to improve call delivery while preserving customer satisfaction, this offering enables the call originator to minimize risk while maximizing return. 

“NobelBiz is excited to join together with Numeracle to offer enhanced local caller ID solutions to improve brand reputation and customer connectivity in the age of call blocking and labeling. Through our combined offering we’re not only able to deliver improvements to productivity and the achievement of success metrics, we’re also able to employ vital industry feedback to maintain and improve that performance in accordance with best industry practices,” said Ted Fortezzo, Executive Vice President, NobelBiz.

“The coming together of our two companies represents our combined vision to build greater customer engagement through the establishment of trust,” said Peter Licata, President, Numeracle. “Numeracle and NobelBiz are a natural fit for an innovative partnership to combine the ROI of local caller ID strategy with the visibility, control and reach to successfully navigate the evolving complexities of the new calling ecosystem.”

To discover how Numeracle and NobelBiz can help you to convert more calls while protecting your brand, please visit http://nobelbiz.com/contact or www.numeracle.com/contact to get in touch.

About Numeracle

Numeracle, established to take action against the growing problem of unwanted and illegal robocalls, provides a single point of discovery into the new calling ecosystem to uncover a number’s entire journey from call origination to destination. By working together with carriers, analytics companies, device manufacturers, and the developers of call blocking and labeling apps, Numeracle provides visibility across all major stakeholders and delivers actionable control to the originators of legal and wanted calls. To learn more about our mission to return trust and transparency to the voice channel, please visit www.numeracle.com.

About NobelBiz

NobelBiz is the leading innovator in the contact center technology industry. The company has grown to serve contact centers globally, providing world-class voice, cloud contact center and business intelligence solutions. NobelBiz transforms contact centers into higher-performing intelligent contact centers and helps take companies from ‘isolated cost center’ to ‘company-wide intelligence generator’ for customer service, sales, marketing, product development, and more. Visit www.nobelbiz.com to engage with us on our intelligent call center solutions.

Earlier this month, the Middle District of Georgia (M.D. Georgia) reviewed whether a debt collector can avoid Fair Debt Collection Practices Act (FDCPA) liability by relying on the information provided by the creditor as a stand-alone defense — as opposed to through the bona fide error defense. In Foster v. Franklin Collection Services, Inc., Case No. 5:17-cv-8 (M.D. Ga. Sep. 13, 2018), the court declined to recognize such a stand-alone defense.

Factual and Procedural Background

Plaintiff incurred a medical debt for treatment at RedMed Urgent & Family Clinic (“RedMed”). Plaintiff indicated on her intake form that she had insurance. RedMed placed plaintiff’s account for collection with Franklin Collection Services, Inc. (Franklin).

Franklin sent plaintiff a letter stating she had a balance due and included the 1692g validation notice. Within the validation period, plaintiff called RedMed — not Franklin — disputing the debt, stating that her insurance made an error and that it would reprocess the claim.

While the contract between Franklin and RedMed states that RedMed has a continuing obligation to provide any new or additional information with respect to accounts placed with Franklin, Franklin never received information about plaintiff’s call regarding the insurance issue. Without knowledge of the dispute or the insurance issue, Franklin sent a second collection letter to plaintiff a few months later, listing the same amount owed as the first letter.

Plaintiff filed an FDCPA lawsuit against Franklin alleging, among other things, that Franklin attempted to collect a debt that plaintiff did not owe. Franklin filed a motion for summary judgment on the issue, arguing that it is entitled to a defense — separate from the bona fide error defense — due to its reliance on the information provided by RedMed. 

The Decision

During briefing, the court asked Franklin to either provide additional briefing of how the issue fits within the bona fide error defense or to forego the bona fide error defense. Franklin chose the latter, arguing that a “right to rely” defense was established in Ducarest v. Alco Collections, Inc., 931 F.Supp. 459 (M.D. La. 1996). 

The court disagreed with Franklin and found that there is no stand-alone “right to rely” defense within the Eleventh Circuit because the FDCPA is a strict liability statute. The court relied on an Eleventh Circuit Court of Appeals case, Owen v. I.C. System, Inc., 629 F.3d 1263 (11th Cir. 2011). In Owen, the Eleventh Circuit found that debt collectors are liable even if FDCPA violations are not knowing or unintentional. The court stated that the only exception to this rule is the bona fide error defense, which Franklin relinquished and therefore the court did not analyze.

Based on this, the court denied Franklin’s motion for summary judgment on this particular issue.

insideARM Perspective

The Circuit Courts of Appeal appear to be divided regarding just how much a debt collector can rely on information provided by the creditor.

In the Foster case described above, the debt collector had no way of knowing that the amount they were collecting was not owed. The creditor never contacted Franklin with a change of information. Nor did the consumer ever contact Franklin with her dispute as required by 1692g, which was stated in the letter received by the consumer. Yet, outside of the bona fide error defense, the debt collector is none-the-less liable according to M.D. Georgia under 1962e. 

On the other hand, the Seventh Circuit held that the 1692g verification requirement extends only to the debt collector’s records, not the creditor’s. In Walton v. EOS CCA, the Seventh Circuit held that a debt collector need only verify that they are collecting on the amount the creditor provided and that requiring a debt collector to investigate the validity of the amount owed would be “burdensome and significantly beyond the [FDCPA’s] purpose.”

Mashing these two rulings together, we get inconsistent guidance for debt collectors about when and how they can rely on the information provided by the creditor. Let’s assume that plaintiff in the above case did dispute the debt directly with Franklin. If this was the 7th Circuit, Franklin would only be required to verify that it was collecting the amount the creditor placed with it. Yet, despite this, Franklin would still be liable in the Eleventh Circuit — save for the bona fide error defense — even if all of its information matched what the creditor provided.

It seems a little odd that the same information a debt collector can rely on pursuant to its 1692g investigation is insufficient to shield it from liability except for when the bona fide error defense is invoked. The bona fide error defense is expensive to litigate and requires a debt collector to open its doors by providing its policies and procedures to plaintiffs’ attorneys, who are likely on the prowl for their next claim, whether or not it has any merit. Even if the debt collector succeeds with the bona fide error defense, the attorney’s fees provision of the FDCPA does not allow a debt collector acting in good faith to recover their fees.

This is an issue that a set of regulatory rules for debt collections could clarify. The rules could address the discrepancy of when and how a debt collector can rely on information from the creditor, and also provide some sort of legal relief outside of the arudous bona fide error process for debt collectors who are acting in good faith.

It has been an interesting time in TCPAland since ACA Int’l was decided in March. We’ve seen a number of decisions going different ways with respect to the continued viability of the 2003 and 2008 Predictive Dialer rulings. And while it was neat to keep score – and we did – it seemed like the current morass of ATDS rulings were mere holdover entertainment ahead of the real show– the FCC’s TCPA Omnibus II that will be unveiled soon (probably next month). That ruling, it seemed certain, would afford the TCPA a little ATDS bedrock and–at long last–end all the bickering in TCPAland.

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Following the Marks decision, however, complete and uniform deference to the FCC’s intensely-anticipated TCPA declaratory ruling is no longer a sure bet. Indeed, its a fantasy. That’s not to say courts should disregard the FCC’s new-and-more-conservative-than-ever TCPA ruling most observers expect, but Marks *cough* marks a major departure point for TCPA jurisprudence and one that is sure to have an impact long after the FCC has had its say.

First, some historical perspective on the uniqueness of Marks. Since 2009 there have been over 50 cases holding that predictive dialers qualify as an automated telephone dialing device (“ATDS”) under the TCPA. No surprise there, really. The FCC has twice (some say three times) directly held that predictive dialers are subject to the TCPA because it says so. But until a month ago zero of those cases held that dialers calling lists of stored numbers automatically qualify under the TCPA’s statutory definition. Instead, all of those cases had held that  predictive dialers were subject to the TCPA owing solely to deference to the 2003 and 2008 FCC Predictive Dialer Rulings mandated by the Hobbs Act. (More on that below). Obviously, therefore, the FCC’s past (and presumably its future) rulings on the definition of ATDS hold monumental–if not dispositive–sway.

But, as fate would have it, Marks would not be the first case to ignore both the FCC and the statutory language mandating  “random and sequential”generation. That dubious honor belongs to Heard v. Nationstar Mortg. LLC Case No.: 2:16-cv-00694-MHH, 2018 U.S. Dist. LEXIS 143175 (N.D. Ala. Aug. 23, 2018). In Heard the Court determined that the ATDS definition was vague–which is weird since the definition is so so not vague–and determined that the mere fact that debt collectors do not use random dialers must, somehow, mean that the ATDS applies to predictive dialers. (No really, that was the analysis.) And while Marks held that the FCC’s earlier predictive dialer rulings were vacated–setting up one of the greatest legal head fakes in history BTW– Heard was not so bold and, instead, merely chose to disregard the Orders for purposes of its analysis. So it became the first court to apply the TCPA’s ATDS definition to predictive dialers without leveraging the 2003 and 2008 FCC Orders, and I wrote a long and very often read article to commemorate the weirdness of the event. 

Heard was a curiosity but in no way a threat to the FCC’s power to reconsider the TCPA’s ATDS definition. In the first place it was a district court ruling, and in the second its results-driven analysis didn’t make a whole lot of sense. It was a head-scratcher-of-a-one-off ruling that only a “true beleiver” would bother citing to in a brief. Not the sort of analysis that would drive any reasonable court to disregard the FCC’s upcoming ATDS ruling.

But Marks demands to be taken seriously. It is a published Circuit Court of Appeal decision binding–at least for now–on all district courts within the Ninth Circuit’s expansive and populous footprint. And that begs the question. Might courts–at least in the Ninth Circuit and potentially outside of it–continue to follow Marks even after the FCC issues guidance to the effect that a dialer must store numbers generated using a random or sequential number generator to qualify under the TCPA?

The short answer is that they shouldn’t. But that doesn’t mean they won’t.

To understand the big picture here you need to understand this thing called the Hobbs Act. What a weird statute. The Hobbs Act essentially makes FCC rulings made under the Telecommunications Act binding and unshakable precedent across the country. No district courts–and not even Circuit Courts of Appeal outside of narrow circumstances–can issue orders contrary to FCC TCPA rulings. This is not the case with all agencies, BTW. So the Hobbs Act converts the FCC into a sort of super agency whose TCPA rulings cannot be tinkered with by the grubby little hands of regular courts. See, most famously, Mais v. Gulf Coast Collection Bureau, Inc., 768 F.3d 1110, 1119 (11th Cir. 2014).

Notably, the mandates of the Hobbs Act are quite different from Chevron deference–that’s the rule that courts apply to regular agency rulings. Chevron requires courts to defer to reasonable solutions to the complex problems caused by the vague statutes Congress keeps enacting (if you’ve ever voted to send a non-lawyer to Congress you’re part of the problem, but I digress. ) Again, however, the FCC is no regular agency so Chevron doesn’t matter and a Court should never even get to the point that it has to decide whether or not to defer to the FCC–it must obey the FCC.

As the Fourth Circuit Court of Appeals recently wrote:

When Chevron meets Hobbs, consideration of the merits must yield to jurisdictional constraints. An Article III court’s obligation to ensure its jurisdiction to resolve a controversy precedes any analysis of the merits … [A]rguing that the district court can put off considering its jurisdiction until after step one of Chevron … turns that traditional approach on its head. Indeed, a district court simply cannot reach the Chevron question without “rubbing up against the Hobbs Act’s jurisdictional bar.

Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 2018 WL 1021225, at *2–4 (4th Cir. 2018)

Well that all sort of makes sense in most instances. But don’t district courts also have to follow the rulings entered by Circuit Courts of Appeal? Well… yes they do. And it is a very unusual circumstance where, as here, an agency is set to act with binding force in an area where a Circuit Court of Appeal just issued its own binding ruling on the reach of a federal statute. Indeed, this situation is so unusual that I can’t seem to find any examples of it. (Have some? Send to me and I’ll credit you for the research.)

But several cases have addressed the issue in the context of regular-old Chevron deference and the rulings are–not surprisingly–split. Some take the position that an action of an agency cannot overrule a circuit court of appeal ruling interpreting the same statute. See Bankers Trust New York Corp. v. US, 225 F. 3d 1368, 1375 (Fed. Cir. 2000) (applying stare decisis requiring adherence to precedential decisions rather than to agency action entitled to Chevron deference.)  Indeed the Eighth Circuit Court of Appeal has flatly stated: “Chevron does not stand for the proposition that administrative agencies may reject, with impunity, the controlling precedent of a superior judicial body.” PS Guard Services, Inc. v. NLRB, 942 F.2d 519 (8th Cir.1991). But other courts have taken the position that deference to the agency justifies departing from established precedent at least where necessary to assure uniformity. See Aguirre v. INS, 79 F. 3d 315, 317-318 (2nd Cir. 1996).

So if this was a regular Chevron deference situation, Plaintiffs would have a straight-faced argument that courts in the Ninth Circuit should keep right on applying Marks, no matter what the FCC does. After all, the Marks panellooked at the language of the statute and made its own decision as to what the TCPA regulates based upon its own reading of legislative history and Congressional intent–a straightforward issue of statutory-interpretation that courts are well-qualified to make for themselves (no matter how extraordinary the result). District courts in the Ninth Circuit would probably be well-supported, therefore, if they elected to continue applying Marks even in the face of a countervailing FCC order.

But what about that pesky Hobbs Act?

Lacking any precedent for this situation it is useful to look at what courts are doing with  the application of ACA Intl. The Hobbs Act dictates that the ACA Int’l ruling is binding across the country, so gauging district court willingness to defer to the D.C. Circuit Court of Appeal over conflicting precedent from their own circuits today might afford a pretty nice glance at what those same courts will do tomorrow. And here the scales tip heavily in favor of deference– indeed only two district court cases have held that ACA Int’l does not trump existing circuit court precedent. So that’s good. Unfortunately, both of those courts are within the Ninth Circuit. See McMillion and Alarm.com. As Pooh would say: “Oh bother.”

Moreover, the Sixth Circuit’s decision in Sandusky Wellness Ctr., LLC v. Medco Health Sols., Inc. 788 F.3d 218 (6th Cir. 2015) set a bad example for district courts. There, the appellate court directly tackled the meaning of the term “advertisement” under the TCPA, declining to defer to the FCC’s 2006 ruling on the subject because it found the statutory definition unambiguous, without even mentioning the Hobbs Act’s jurisdictional bar. See Id. at 223. Hmmmm. Although Marks found that the language of the TCPA was ambiguous, it also made a decision for itself as to what the statute meant to say knowing full well that the FCC was set to rule on that same issue. Might a district court–when weighing whether the impact of the Hobbs Act–conclude that if the Sixth Circuit didn’t have to yield in interpreting the TCPA then the Ninth Circuit won’t either? And, that being the case, might that same court also conclude that it is better to apply existing and binding circuit court authority rather than honor the jurisdictional limits of the Hobbs Act? And when you factor in that an appeal from a district court ruling applying Marks over the FCC’s latest ruling within the Ninth Circuit’s footprint would be appealed to–you got it–the Ninth Circuit Court of Appeals, it starts to seem pretty likely that district courts out West won’t be abiding the FCC’s ruling, even if they really should be.

Eesh.

The bottom line is–I think–that the Fourth Circuit’s approach to the Hobbs Act is the correct one.  As was stated in Carlton & Harris Chiropractic, Inc., a future district court will lack jurisdiction to even consider an argument contrary to the FCC’s new ATDS formulation. Assuming the district courts take that mandate seriously, they should disregard Marks entirely in favor of the FCC’s new ruling, even within the Ninth Circuit–the question of whose definition to apply should never even arise since district courts lack jurisdiction to consider the FCC’s inviolate statements in the first instance.

Then again, if the district courts took the FCC’s primary jurisdiction seriously they would be yielding to it right now instead of issuing conflicting ruling by the barrel full, so…. yeah. Don’t hold your breath folks.

Whatever district courts do with Marks, a few things are now clear. First, Marks makes an appeal of any new TCPA ruling from the FCC to the D.C. Circuit Court of Appeal much more likely. While this would probably have happened anyway, after the D.C. Circuit Court of Appeal’s ruling in ACA Int’l an appeal back to that same court on a narrow definition of the sort ACA Int’l had essentially already blessed would have been treated as a frivolous–if not criminal–waste of time. But Marks gives much more credence to the idea that a narrow statutory interpretation is not the only correct one. Second, Marks makes an ultimate showdown in the U.S .Supreme Court over the definition of ATDS much more likely. A circuit split is just a ruling away since no other circuit court of appeals is likely to track Marks’ aggressive path to TCPA expansion. Indeed, with Dominguez already holding contrary to Marks, an appeal to the Supremes may be a reality before the year is out. (Hey Crunch–if you’re looking for Supreme Court counsel, I know a guy… )

In the end, Marks is very unlikely to derail the FCC’s anticipated TCPA reform completely, but it is likely to complicate what should have been the streamlined and uniform application of a ruling to be issued by the agency Congress trusted to interpret and implement the TCPA. Rather than uniformity and calm, however, we can now expect the FCC’s new ATDS ruling to be met with conflicting district court opinions, a trip back to the D.C. Circuit Court of Appeal and another TCPA visit to the U.S. Supreme Court. In other words, Marks assures more of the same in TCPAland for a long time to come. And that’s bad news for everybody.

Except maybe for guys running TCPA-related websites…

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Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

We broke the news this morning that the Ninth Circuit has published its opinion in Marks v. Crunch San Diego, LLC, No. 14-56834, 2018 WL 4495553 (9th Cir. Sept. 20, 2018). We now have a new definition of an ATDS in the Ninth Circuit. It is:

[T]he term “automatic telephone dialing system” means equipment which has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person).

In other words, all dialers that call automatically from a list are – at least within the Ninth Circuit – subject to the TCPA.  How did the court get there? It took three steps (leaps?):

First, the court found that in ACA Int’l v. FCC, the D.C. Circuit invalidated the FCC’s predictive dialing rulings going all the way back to 2003, and that those rulings were therefore “no longer binding,” on the court.

Blank slate, check.

Second, the court found that Congress’s definition of ATDS is “ambiguous” and the court therefore needed to “use canons of construction, legislative history, and the statute’s overall purpose to illuminate Congress’s intent.”

Wide latitude to interpret the TCPA, check.

Third, after undertaking this examination, the court held that the statutory definition of an ATDS “includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator.”

New extreme and expansive definition of an ATDS, check.

Let’s break each piece down.

Prior FCC Rulings Invalidated

The court fist examined the impact of ACA Int’l on the validity of the FCC’s predictive dialer rulings going all the way back to 2003. It found that in the 2015 Omnibus Order, the FCC had “reopen[ed] consideration of [its] prior rulemaking,” because “[a]n agency’s reconsideration of a rule in a new rulemaking constitutes a reopening when the original rule is ‘reinstated’ so as to have renewed effect.” The Ninth Circuit therefore held:

Because the D.C. Circuit exercised its authority to set aside the FCC’s interpretation of the definition of an ATDS in the 2015 order, and any prior FCC rules that were reinstated by the 2015 order, we conclude that the FCC’s prior orders on that issue are no longer binding on us.

Due to the invalidity of all prior FCC orders on ATDS functionality, the court found it had a blank slate and would “begin anew to consider the definition of ATDS under the TCPA.”

The Definition of an ATDS is Ambiguous

The court started its analysis with “plain language” of the statute. Refreshing ourselves quickly, 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.

Based on the language of the statute, the Ninth Circuit framed the issues before it thusly:

The question is whether, in order to be an ATDS, a device must dial numbers generated by a random or sequential number generator or if a device can be an ATDS if it merely dials numbers from a stored list. We must also determine to what extent the device must function without human intervention in order to qualify as an ATDS.

But the court wasn’t persuaded by either party’s position on the issues, finding that their “competing interpretations . . . fail[ed] to make sense of the statutory language without reading additional words into the statute.” Even putting the parties’ own interpretations aside (because they didn’t seem to matter), the court noted that it had itself “struggle[ed] with the statutory language,” and found it was “not susceptible to a straightforward interpretation based on the plain language alone,” and “ambiguous on its face.”

So let’s pause here for a moment. The court’s finding gave it significant latitude to enshrine its own interpretation of what functions equipment must perform to be considered an ATDS. This is because a finding of ambiguity opens the door to the court’s consideration of all sorts of things that are extrinsic to the plain language of the statute like “canons of construction, legislative history, and the statute’s overall purpose to illuminate Congress’s intent.”

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But this is seemingly inconsistent with the Ninth Circuit’s prior position in Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir. 2009) “that the statutory text is clear and unambiguous.” The court addressed this in a footnote, however, and disclaimed any inconsistency because this statement in Satterfield was limited only to “one aspect of the text,” concerning “whether a device had the ‘capacity’ to store or produce telephone numbers.”

And just like that, the court cleared the way for itself to formulate its own interpretation of what Congress meant when it defined an ATDS as a device which has the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator.”

An ATDS “Includes a Device That Stores Telephone Numbers to be Called, Whether or not Those Numbers Have Been Generated by a Random or Sequential Number Generator”

Based on its finding that the definition of ATDS was ambiguous, the Ninth Circuit went on to examine the “context and the structure” of the TCPA. Based on this examination, the court found that “Congress intended to regulate devices that make automatic calls,” and that the “language in the statute indicates that equipment that made automatic calls from lists of recipients was also covered by the TCPA.”

The court’s conclusion was based on just two aspects of the TCPA.

First it focused on the exceptions to the TCPA. The court reasoned that because Congress had allowed for the use of an ATDS for calls made with prior express consent, a caller would need to “dial from a list of phone numbers of persons who had consented to such calls, rather than merely dialing a block of random or sequential numbers,” in order to take advantage of this permitted use.

Second, the court looked at Congress’s 2015 amendment to the TCPA in which it exempted the use of an ATDS for debt owed to or guaranteed by the U.S. Government. As with prior express consent, this amendment showed the court that “equipment that dials from a list of individuals who owe a debt to the United States is still an ATDS but is exempted from the TCPA’s strictures.” The court also found the inaction by Congress in passing this amendment – leaving the definition of ATDS “untouched” and not “overruling” the FCC’s interpretation of the term – suggested that Congress gave the FCC’s interpretation its “tacit approval”.

So now we’re interpreting statutes based on “inferences” and “suggestions” drawn from what Congress “tacitly” did by not doing something.

Based on what essentially came down to the fact that the TCPA provides exceptions, the Ninth Circuit held that within the “overall statutory scheme”:

[T]he statutory definition of ATDS is not limited to devices with capacity to call numbers produced by a “random or sequential number generator,” but also includes devices with the capacity to dial stored numbers automatically. Accordingly, we read § 227(a)(1) to provide that the term automatic telephone dialing system means equipment which has the capacity – (1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator – and to dial such numbers (even if the system must be turned on or triggered by a person).

Notably, the Ninth Circuit’s conclusion here is at odds with the Third Circuit’s opinion in Dominguez v. Yahoo, Inc., 894 F.3d 116 (3rd. Cir. 2018), in which the court held that equipment must have the capacity to generate random or sequential telephone numbers, and dial those numbers. But in a footnote, the Ninth Circuit blasted the holding in Dominguez as “unreasoned assumption” that was reached “without explanation,” and without addressing “the interpretive questions raised by the statutory definition of ATDS.”

Human Intervention

The court noted in its definition that even if a person must “turn on” or “trigger” a system to dial numbers, the system still qualifies as an ATDS.  The court noted that Congress was targeting equipment that could “engage in automatic dialing, rather than equipment that operated without any human oversight or control.” Thus, merely “flip[ping] the switch on an ATDS,” does not qualify as human intervention, nor does human intervention occur when a human adds phone numbers to a dialing platform.

Capacity

As mentioned above, the Ninth Circuit originally addressed the issue of “capacity” in Satterfield. However, this issue begs the question – particularly after ACA Int’l – of whether the term means “present” or “potential” capacity. But, alas, the Ninth Circuit found that given the basis of its reversal, it would decline to “reach the question whether the device needs to have the current capacity to perform the required functions or just the potential capacity to do so.”  So it’s left to be seen if a device must have the present capacity to automatically call numbers from a list, or if it qualifies as an ATDS merely if it has the “potential” capacity to perform those functions.

What Now?

As we continue to digest the Marks opinion we’ll follow up with additional pieces diving deeper on its potential impact in TCPAland. For now, the key takeaway here is that we have a new, extreme definition of an ATDS in the Ninth Circuit that encompasses any dialer that automatically calls from a list.

And if there’s one thing that’s clear right now, it’s that the Ninth Circuit just made its mark on TCPAland with Marks.

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insideARM Perspective

Just yesterday, insideARM published an article about Federal Communications Commission (FCC) Chairman Ajit Pai’s responses to three Members of Congress regarding the FCC’s actions on the TCPA. In his responses, Chairman Pai stated that the FCC was reviewing the comments it received on the issue, but he did not provide any specifics about how and when the FCC will provide TCPA clarification.

This new Ninth Circuit decision highlights the need for the FCC to take quick action on clarifying, at the very least, the definition of an ATDS. The Ninth Circuit is now squarely at odds with the Third Circuit, which ruled in Dominguez v. Yahoo, Inc, No. 17-1243, 2018 U.S.App.Lexis 17350 (3rd. Cir June 26, 2018) that this type of a device does not fall within the definition of an ATDS. With the circuit split, companies — many of whom conduct business nationwide — are left with conflicting guidance and uncertainty. The FCC is uniquely positioned to provide clarification on this issue, otherwise we very likely will see this issue on the front doorsteps of the U.S. Supreme Court.

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Editor’s note: This article is provided through a partnership between insideARM and Womble Bond Dickinson. WBD powers our TCPA case law chart and provides a steady stream of their timely, insightful and entertaining take on this ever-evolving, never-a-dull-moment topic. WBD – and all insideARM articles – are protected by copyright. All rights are reserved.

Editor’s Note: This article is published by insideARM with permission from the author.

Can a communication from a collector violate the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et. seq. (the “FDCPA”) if it never asks the debtor to pay any money? What exactly does the term “debt collection” mean in the context of the FDCPA? These seemingly simple questions have divided the circuit courts, and they may soon be resolved by the United States Supreme Court when it decides a case that arose out of a nonjudicial foreclosure proceeding in Colorado. See Obduskey v. Wells Fargo, 138 S. Ct. 2710 (2018).

The FDCPA has been with us for over forty years, and it is likely one of the most heavily-litigated statutes in the country. It prohibits debt collectors from engaging in a broad range of unfair and misleading debt collection practices. See 15 U.S.C. §§ 1692b-1692i. How is it, then, that after all this time and all this litigation, we still do not know exactly what “debt collection” means?

You would think this would be easy, but like most things relating to the FDCPA, it is not. For starters, as courts have observed, although the statute includes a number of definitions, Congress did not define the term “debt collection” anywhere in the Act. See 15 U.S.C. § 1692(a) (referring to “abundant evidence of” improper “debt collection practices” and observing that certain “debt collection practices” can cause undesired effects); § 1692a (defining certain terms, but not defining “debt collection”); see also Glazer v. Chase Home Fin. LLC, 704 F.3d 453, 460 (6th Cir. 2013) (“Unfortunately, the FDCPA does not define ‘debt collection,’ and its definition of ‘debt collector’ sheds little light, for it speaks in terms of debt collection.”) (citations omitted); Gburek v. Litton Loan Serv. LP, 614 F.3d 380, 384 (7th Cir. 2010) (“Neither this circuit nor any other has established a brightline rule for determining whether a communication from a debt collector was made in connection with the collection of any debt.”). To date, the Supreme Court has never defined the term “debt collection,” nor has that Court ever addressed whether a “debt collection” communication must include an explicit demand for payment of money from the debtor.

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The circuit courts have reached different conclusions on whether a “debt collection” communication must make a demand on the debtor for payment of money in order to be subject to the FDCPA. Decisions from the Ninth Circuit and the Tenth Circuit have held that a collector is not engaged in “debt collection” under the FDCPA unless the challenged communication makes a demand for payment of money. See, e.g., Ho v. ReconTrust Co., NA, 840 F.3d 618, 621-623 (9th Cir. 2016) (mailing notice of default and notice of sale to debtor, which threatened foreclosure, was not attempt to collect money from debtor, and thus was not “debt collection” under FDCPA; “The notices at issue in our case didn’t request payment from Ho.”); Obduskey v. Wells Fargo, 879 F.3d 1216, 1221 (10th Cir.) (following Ho; “Because enforcing a security interest is not an attempt to collect money from the debtor, and the consumer has no “obligation . . . to pay money,” non-judicial foreclosure is not covered under FDCPA) (citations  omitted), pet. for cert. granted, 138 S. Ct. 2710 (2018). (See footnote.)

The approach used by the Ninth Circuit and Tenth Circuit seems simple enough: “debt collection” equals asking the debtor to pay money. Other circuit courts, however, have held that a collector’s communication may amount to “debt collection” under the FDCPA, even if the collector has not made a demand for payment of money on the debtor. See, e.g., McCray v. Federal Home Loan Mortg. Corp., 839 F.3d 354, 360 (4th Cir. 2016) (“nothing in [the] language [of the FDCPA] requires that a debt collector’s misrepresentation [or other violative actions] be made as part of an express demand for payment or even as part of an action designed to induce the debtor to pay.”) (emphasis in original, citation omitted); Gburek, 614 F.3d at 386 (letter offering to discuss “foreclosure alternatives” was attempt to collect a debt: “Though it did not explicitly ask for payment, it was an offer to discuss Gburek’s repayment options, which qualifies as a communication in connection with an attempt to collect a debt.”); Glazer, 704 F.3d at 461 (FDCPA applied to judicial foreclosure complaint, despite absence of any allegation that it made a demand for payment of money on debtor: “Thus, if  the purpose of an activity taken in relation to a debt is to ‘obtain payment’ of the debt, the activity is properly considered debt collection.”); Kaltenbach v. Richards, 464 F.3d 524, 526-28 (5th Cir. 2006) (attorney who filed foreclosure action may be “debt collector” under FDCPA, despite absence of any allegation that attorney made demand for payment of money).

Ok, with the courts going in opposite directions, how do we get an answer to this question? It is possible that the Supreme Court may bring some clarity in the upcoming term when it hears the Obduskey case. The Court is expected to address in Obduskey whether the FDCPA applies to a collector’s communications made in connection with non-judicial foreclosure proceedings. While doing so, it is possible the Court will take the opportunity to opine more generally on whether communications that do not include a request for payment from the debtor are subject to the FDCPA. In the meantime, collectors will have to do their best to adjust their communications based on the law of the circuits where they are located. Stay tuned everyone.

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Footnote: Cf. Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984, 989 (9th Cir. 2017) (law firm’s notice which advised that “failure to pay your assessment” would result in recording of a lien was demand for payment of money subject to FDCPA); Reese v. Ellis, Painter, et al., 678 F.3d 1211, 1217-18, n.3 (11th Cir. 2012) (law firm letter that demanded payment on promissory note was debt collection subject to FDCPA: “[W]e do not decide whether a party enforcing a security interest without demanding payment on the underlying debt is attempting to collect a debt within the meaning of § 1692e.”).

Over the past several months, three members of the House of Representatives wrote to the Federal Communications Commission’s (FCC) Chairman Ajit Pai regarding the Telephone Consumer Protection Act (TCPA). On September 7, 2018, Chairman Pai responded to the congressmen.

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The three letters addressed to Chairman Pai came from Rep. Ken Buck (R-CO), Rep. David McKinley (R-WV), and Rep. Lee Zeldin (R-NY). While worded differently, all three letters contained similar content. The letters criticize prior FCC interpretations of the TCPA for causing more problems than they solved. The prior interpretations created ambiguity that caused confusion for legitimate businesses on how to communicate with consumers and led to an increase of class action litigation that does little to help consumers. All three letters commend the FCC’s efforts on the issue of illegal robocalls.

Chairman Pai’s responses to the three letters were also extremely similar in content. The responses agree that the prior interpretations of the TCPA caused confusion. Chairman Pai pointed to his own dissent to the 2015 declaratory ruling to support his agreement with the congressmen. The Chairman stated that in response to the D.C. Circuit Court of Appeals ruling in ACA International v. FCC, the FCC sought comments on the TCPA and the definition of automated telephone dialing system. The comment period closed in June of this year and the FCC is currently reviewing the comments to assist it with further action.

The responses are available here: Response to Rep. Buck, Response to Rep. McKinley, Response to Rep. Zeldin.

insideARM Perspective

Chairman Pai’s responses don’t contain much detail of when and how the FCC will proceed with its guidance on the TCPA. It is nice to see that the TCPA issue is on the FCC’s radar, but it will be even better once the FCC finishes its review of comments and provides some clearer direction for their plan forward.

Update: Later today, the Ninth Circuit Court of Appeals released its decision in Marks v. Crunch San Diego, LLC, No. 14-56834, 2018 WL 4495553 (9th Cir. Sept. 20, 2018), finding that all dialers that call automatically from a list fall into the definition of an automatic telephone dialing system, and therefore are subjec to the TCPA. This puts the Ninths Circuit squarely at adds with the Third Circuit, which decided in Dominguez v. Yahoo, Inc, No. 17-1243, 2018 U.S.App.Lexis 17350 (3rd. Cir June 26, 2018) that this type of device is not an ATDS. The jurisdictional split among the circuits highlights the need for the FCC to take quick action on providing clarification or else the matter is likely to be decided by the U.S. Supreme Court.