In an Order on Reconsideration issued December 9, 2020, the Federal Communications Commission concluded that the TCPA applies to contractors working for the federal government.  The Order reverses a 2016 Declaratory Ruling.  Unlike the 2016 ruling in which it declined to address state and local governments, the FCC also determined in the Order that the TCPA does not apply to state governments but state government contractors and local governments are subject to the TCPA.

In the 2016 ruling, issued in In Re Broadnet Teleservices LLC, the FCC responded to three requests for clarification of the word “person” under section 227 of the Communications Act, which makes it unlawful for any person to place autodialed or pre-recorded or artificial-voice calls to wireless telephone numbers absent prior express consent, an emergency, or other exception.  Although declining to take a position on state or local governments, the FCC found that the TCPA did not apply to calls placed by the federal government or federal government contractors.

Section 227 defines the word “person” as “individual, partnership, association, joint-stock company, trust, or corporation.”  With respect to the federal government, the FCC pointed to the “longstanding interpretative presumption” that the word “person” does not include the sovereign absent an affirmative showing of legislative intent, and the FCC found no evidence of such intent in the TCPA’s legislative history.  Citing agency principles and prior FCC decisions permitting vicarious liability under the TCPA, the FCC concluded that the word “person” also did not include government contractors.  The FCC reasoned that allowing federal contractors to be held liable under the TCPA could lead to an untenable result – the government could be held vicariously liable for conduct in which the TCPA allows the government to engage.

Now, four years later, after being urged by consumer groups to reconsider the Broadnet ruling, the FCC has reversed course regarding federal government contractors, and has also taken a position regarding whether the TCPA applies to calls placed by state and local governments and their contractors.  The FCC reexamined the definition of “person,” and noted that every government contractor falls within the enumerated categories.  Additionally, the longstanding presumption to exclude the sovereign from the term “person” applied only to the sovereign itself, not its contractors or agents.  With respect to vicarious liability, the FCC determined that it incorrectly applied the Commission’s precedent when discussing vicarious liability in Broadnet.

Unlike in Broadnet, in the new Order, the FCC addressed the application of the TCPA to state and local government callers.  Citing U.S. Supreme Court precedent, the FCC noted that state governments are considered sovereign, and therefore, excluded from the definition of “person,” absent legislative intent to the contrary.  Therefore, state government callers are not subject to the TCPA provided the calls are placed in the conduct of official business, but for the same reason as federal contractors, state contractors are subject to the TCPA.

Finally, the FCC found that local governments, including counties, cities, and towns, as well as their contractors, are included in the definition of “person.”  The Commission relied on Supreme Court authority holding that municipalities are not sovereigns.  Alternatively, it concluded that even if the definition of “person” under Section 227 was ambiguous, the underlying policy goals and legislative history of the TCPA support the application of the TCPA’s restrictions to local governments.

Critically, the FCC highlighted some avenues for state and federal government contractors to avoid liability.  First, at least for federal government contractors, nothing in the Order alters or impairs a contractor’s ability to invoke derivative immunity from liability under traditional federal common law principles.

Second, a contractor may be able to avoid liability for calls if it is not the “maker” of the call.  As noted in the Order, the FCC has previously explained that a person may be found to have made or initiated a call in one of two ways: (1) by “taking the steps necessary to physically place a telephone call”; and (2) by being “so involved in the placing of a specific telephone call as to be directly liable for making it.”  This requires a case-by-case, fact-intensive analysis.  If the government makes all decisions regarding whether to place a call and the timing, recipient and content of the call, and takes the steps to physically place the call, whereas the contractor manages the technical aspects of the service, the contractor may not be the maker of the call subject to liability under the TCPA.