FCC hangs up on business lobby in proposed reform of spam call law

May 29, 2015

Margot Freeman Saunders of the National Consumer Law Center was braced for bad news from the Federal Communications Commission on reform of the Telephone Consumer Protection Act (TCPA). Since last year, Saunders has been trying to file responses to an onslaught of petitions at the FCC by business groups complaining about supposedly baseless TCPA class actions, but consumer advocates couldn’t match industry’s lobbying campaign. Saunders said she met twice with FCC staffers to push for more stringent prohibitions on spam phone calls, faxes and texts. Business groups, by contrast, made dozens of trips to the agency.

So Saunders was quite pleasantly surprised by the proposal issued Thursday by FCC chair Tom Wheeler. Wheeler’s fact sheet and blog post on the proposed TCPA changes said the commission’s priority is enhancing consumers’ ability to fend off robocalls and texts, closing some of the loopholes businesses have exploited. He also explicitly defended consumers’ right to bring private TCPA class actions – and implied in his blog post that industry’s petition campaign against TCPA had badly backfired. “The commission has received numerous petitions from companies – including bankers, debt collectors, app developers, retail stores and others – seeking clarity on our consumer rules,” Wheeler wrote. “I intend to use these petitions as an opportunity to empower consumers and curtail these intrusive communications.”

“The chair resisted tremendous pressure,” Saunders told me Friday. “It’s quite amazing.”

The U.S. Chamber of Commerce’s Institute for Legal Reform was also taken aback by the FCC proposal, but not in a good way, said executive vice president Harold Kim. “This is not an encouraging opening statement,” he told me. “I would characterize it as surprising and disappointing.”

Kim and TCPA class action defense lawyer Henry Pietrkowski of Reed Smith emphasized in interviews with me that Thursday’s announcements are just the bare bones of the actual FCC proposal, which the commission will vote on at an open meeting on June 18. Wheeler’s fact sheet hinted that the full FCC proposed rule may include some sort of safe harbor from class actions against businesses that call consumers with reassigned phone numbers, an issue of particular concern to industry groups. “That could be some silver lining,” said Kim, “but there are a lot of questions about how it is going to work.”

In a blog post about the FCC proposal, Pietrkowski called the possible safe harbor “the one bright spot for businesses.” Otherwise, he wrote, the proposed rule changes seem to be “a boon for enterprising plaintiffs’ lawyers who seek to exploit the class action device by holding companies for ransom.”

There’s still a prospect that the U.S. Supreme Court will reshape the debate over TCPA and other class actions based on federal consumer laws when it decides next term in Spokeo v. Roberts whether Congress can confer constitutional standing on otherwise uninjured plaintiffs. Spokeo involves the Fair Credit Reporting Act, not TCPA, but the company’s lawyers at Mayer Brown have argued that the Supreme Court’s Article III analysis should extend to at least a dozen other federal laws, including TCPA, that give consumers a private right of action to enforce consumer laws through class actions seeking statutory damages.

Of course, even if the Supreme Court sides with Spokeo and its business-friendly amicus supporters, it will be a while before lower courts sort out how the decision impacts laws other than the FCRA. TCPA class action lawyers will surely argue, for instance, that consumers meet constitutional standing requirements because they are actually injured, albeit minimally, by robocalls and unwanted texts. Businesses claim they’re laying out tens of millions of dollars a year to settle meritless TCPA class actions.

If that’s true, a lot more money will flow to TCPA plaintiffs’ lawyers before any Spokeo bailout for businesses.

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