July 10, 2020

SCOTUS to hear cases on autodialer, FHFA structure

gavelThe U.S. Supreme Court Thursday agreed to hear a lawsuit challenging the Telephone Consumer Protection Act's (TCPA) definition of an automatic telephone dialing system (ATDS, or autodialer), as well as one related to the single-director structure of the Federal Housing Finance Agency (FHFA).

Autodialer Definition

The Supreme Court granted a petition related to a class action lawsuit brought against Facebook that claimed the company's texts to consumers with security notifications violated the TCPA. The issue the court will specifically consider is whether an ATDS "encompasses any device that can store and automatically dial telephone numbers – even if that device cannot store or produce them 'using a random or sequential number generator.'" Lower courts have been split on their interpretation of the definition.

In September 2018, the U.S. Court of Appeals for the Ninth Circuit expanded the definition of an autodialer, keeping it largely in line with the one adopted by the Federal Communications Commission (FCC) in its 2015 Declaratory Ruling and Order. Prior to that decision, the U.S. Court of Appeals for the D.C. Circuit invalidated the FCC's definition of autodialer and rejected the commission's interpretation of when a caller violates the TCPA by calling a reassigned number. Similarly, the Second and Third Circuit Courts have adopted a narrower definition of the FCC's order.

NAFCU, in its advocacy with the FCC, has argued that devices should only be considered an ATDS if "it has the capacity to dial numbers without human intervention." If equipment is not being used as an ATDS, it should not be subject to the TCPA's authority.

NAFCU will continue to support a narrower definition of an autodialer and other reforms to the TCPA to ensure credit unions can contact their members regarding important, time-sensitive information without fear of frivolous litigation. The association is currently engaged with the FCC on call labeling and blocking issues resulting from the implementation of the TRACED Act and STIR/SHAKEN caller identification framework meant to target illegal robocalls.

FHFA Structure

The Supreme Court's agreement to hear the challenge to the FHFA's structure comes on the heels of its determination that the CFPB's single-director structure is unconstitutional.

In the CFPB decision, the Supreme Court found that the bureau's "leadership by a single individual removable only for inefficiency, neglect, or malfeasance violates the separation of powers."

"The CFPB’s single-Director structure contravenes this carefully calibrated system by vesting significant governmental power in the hands of a single individual accountable to no one," the Supreme Court wrote in its decision. "The Director is neither elected by the people nor meaningfully controlled (through the threat of removal) by someone who is. The Director does not even depend on Congress for annual appropriations."

Despite its unconstitutional structure, the court said the agency may continue to operate, so long as the director is subject to removal by the president at will. CFPB Director Kathy Kraninger this week ratified past actions of the bureau in response to the decision.

NAFCU has long argued that the CFPB's structure should be reformed to a commission-based model to ensure transparency and accountability.