The FCC is Set to Consider the Definition of “Called Party” and the Fate of the TCPA Hangs in the Balance

As we reported here last week, the FCC is seeking comment on a number of key issues that were addressed in ACA Int’l.  One of these key issues is the definition of the term “called party,” which has the potential to completely re-shape the TCPA landscape respecting calls to wrong or recycled numbers.  Here’s why this is so important:

The TCPA exempts autodialed called with the “prior express consent” of the “called party,” but does not provide a definition for “called party.”  Courts have been struggling with the definition of “called party” since at least 2008 when the first cases began deciding that a caller only needed the consent of the person it was trying to reach, not the subscriber or user of a phone.   See Kopff v. World Research Group, LLC, 568 F Supp. 2d 39 (D.D.C. 2008); Cellco P’ship v. Dealers Warranty, LLC, 2010 U.S. Dist. Lexis 106719 (D.N.J. Oct. 5, 2010); Leyse v. Bank of Am., 2010 U.S. Dist. Lexis 58461 (S.D.N.Y. June 14, 2010). 

Before long, however, courts began to depart from the “expected recipient” of the call approach in favor of a more technical reading of the statute that focused on the use of “called party” in other contexts within the TCPA to discern the meaning Congress intended the phrase to have in the “express consent” portion of the statute.  See Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637 (7th Cir. 2012).  Soppet overlooked the different purposes that the phrase “called party” served in the different sections of the TCPA—implying Congress implied different meanings—but nonetheless was rapidly followed by the Eleventh Circuit Court of Appeal in Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242 (11th Cir. 2014).

In July, 2015 the FCC, of course, adopted a dual-identity approach to “called party”—finding it included both the subscriber and the customary user of the phone.  The inclusion of the “customary user” was necessary to assure that callers did not have to invade the privacy of their customers by asking, for instance, who the subscriber of their phone was or—worse still—requiring the customer to provide the consent of their spouse or employer that paid for the phone.  Notably, then-Commissioner Pai—now Chairman Pai—stated in his dissent to the Omnibus that the “expected recipient” approach was “by far” the best reading of the statute.

In ACA Int’l, the D.C. Circuit vacated FCC’s interpretation of the “called party” and its strict-liability-softening one-call safe harbor as arbitrary and capricious.  The Court found that the Commission had “consistently adopted a ‘reasonable reliance’ approach” in determining the “called party” statutory exemption.  ACA found that the FCC’s subscriber-focused approached to “called party” coupled with its woefully inadequate one-call safe harbor was not consistent with the reasonable reliance approach because it is likely that the first post-reassignment call may give the caller no indication that the number has been reassigned.  The Court noted that “a caller’s reasonable reliance on the previous subscriber’s consent would be just as reasonable for a second call.”

In its public notice dated May 14, 2018, the Commission sought comment on how to approach the term “called party.”  In approaching the issue, the FCC first acknowledged the D.C. Circuit Court of Appeal’s finding that the FCC adopts a “reasonable reliance” framework for assessing express consent.  It then identified four possible definitions of “called party” as: (1) the person the caller expected to reach; (2) the party the caller reasonably expected to reach; (3) the person actually reached; i.e., the current post-assignment subscriber; or (4) the customary/regular user of the phone.  Notably, the Public Notice leads with two iterations of the “expected recipient” approach, perhaps echoing to Chairman Pai’s assessment of the salutary benefits of that approach as stated in his Omnibus dissent.  The Commission also puts to question whether the term should be interpreted differently depending on the context.  

Since prior consent of the called party is a defense for the caller, the most obvious approach seems to be to define “called party” with respect to the intent of the caller based upon the objective information available at the time, which is consistent with FCC’s reasonable reliance approach.  That is the only approach that gives a caller a surefire defense.  Any other reading of the statute forces a caller to play Russian roulette anytime it picks up the phone.  If anyone but the customer is reached, the caller is potentially liable for a TCPA violation.  Any such reading is necessarily inconsistent with the “reasonable reliance” on the previous subscriber’s consent that the D.C. Circuit Court of Appeal stated the caller was entitled to.  

If the FCC sticks with its reasonable reliance approach, therefore,—and it ought to since the D.C. Circuit Court of Appeal showed fidelity to that approach in ACA Int’l—  “expected recipient” seems to be the only possible reading of the statute.  Notably, interpreting the phrase “called party” in that way will cut down on the need for a recycled number database and will further incentivize businesses to keep careful records of phone calls so that they can prove who the expected recipient of each call was, given all of the facts.  It will also align with the likely intent of Congress that always recognized “the privacy concerns which the TCPA seeks to protect, [must be balanced with] the continued viability of beneficial and useful business services.”