Federal judges have struck down an anti-robocall rule, saying that the Federal Communications Commission improperly treated every American who owns a smartphone as a potential robocaller.

The FCC won't be appealing the court decision, as Chairman Ajit Pai opposed the rule changes when they were implemented by the commission's then-Democratic majority in 2015. Pai issued a statement praising the judges for the decision Friday, calling the now-vacated rule "yet another example of the prior FCC’s disregard for the law and regulatory overreach."

The FCC's 2015 decision said that a device meets the Telephone Consumer Protection Act (TCPA) definition of an "autodialer" if it can be modified to make robocalls, even if the smartphone user hasn't actually downloaded an autodialing app.

That interpretation treats all smartphones as autodialers because any smartphone has the capability of downloading an autodialing app, judges ruled. Since any call made by an autodialer could violate anti-robocall rules, this led to a troubling conclusion: judges said that an unwanted call from a smartphone could violate anti-robocall rules even if the smartphone user hasn't downloaded an autodialing app.

"The Commission's understanding would appear to subject ordinary calls from any conventional smartphone to the Act's coverage, an unreasonably expansive interpretation of the statute," a three-judge panel of the US Court of Appeals for the District of Columbia Circuit said in a unanimous ruling Friday.

The ruling came in a case filed against the FCC by the Association of Credit and Collection Professionals, which says it represents "third-party collection agencies, law firms, asset buying companies, creditors, and vendor affiliates."

Judges also invalidated an FCC rule that helped protect consumers from robocalls to reassigned phone numbers.

Normal calls could be considered robocalls

The TCPA generally makes it illegal to call a cell phone using an autodialer, with some exceptions. Under the US law, an autodialer is a device with the "capacity" to perform the function of "storing or producing telephone numbers 'using a random or sequential number generator'" and the capacity of "dialing those numbers," the judges noted.

The FCC erred by saying that a device's "capacity" to make robocalls includes "potential functionalities" that can be enabled simply by downloading a smartphone app, judges wrote.

"The Commission's ruling concluded that app downloads and other software additions of that variety—and the enhanced functionality they bring about—are appropriately considered to be within a device's 'capacity,'" judges wrote.

All smartphones, even those that don't have autodialing apps installed, thus meet the statutory definition of an autodialer under the FCC approach, the ruling said. Under the commission's approach, "an uninvited call or message from a smartphone violates the statute even if autodialer features were not used to make the call or send the message," the judges wrote.

Judges wrote that a smartphone user could be hit with $500 fines in a scenario such as this hypothetical:

Imagine, for instance, that a person wishes to send an invitation for a social gathering to a person she recently met for the first time. If she lacks prior express consent to send the invitation, and if she obtains the acquaintance's cell phone number from a mutual friend, she ostensibly commits a violation of federal law by calling or sending a text message from her smartphone to extend the invitation. And if she sends a group message inviting 10 people to the gathering, again without securing prior express consent from any of the recipients, she not only would have infringed the TCPA 10 distinct times but would also face a minimum damages recovery against her of $5,000.

Judges concluded:

It is untenable to construe the term "capacity" in the statutory definition of an [autodialer] in a manner that brings within the definition's fold the most ubiquitous type of phone equipment known, used countless times each day for routine communications by the vast majority of people in the country. It cannot be the case that every uninvited communication from a smartphone infringes federal law and that nearly every American is a TCPA-violator-in-waiting, if not a violator-in-fact.

The FCC's 2015 order defended its approach, saying the FCC "has interpreted 'capacity' broadly since well before consumers' widespread use of smartphones." Despite that, "there is no evidence in the record that individual consumers have been sued based on typical use of smartphone technology," the FCC said at the time.

The 2015 decision was made by then-Chairman Tom Wheeler's Democratic majority, while Republican commissioners Pai and Michael O'Rielly objected to the autodialer definition.

Pai, who became FCC chairman last year, said that "the agency's 2015 ruling 'placed every American consumer with a smartphone at substantial risk of violating federal law.' That's why I dissented from the FCC’s misguided decision and am pleased that the DC Circuit, too, has rejected it."

“One-call safe harbor” also rejected

The court decision covered several aspects of the FCC's 2015 robocall order. Judges also vacated the agency's approach to automated calls made to reassigned phone numbers in cases when the former owner of the number consented to receiving automated calls but the current owner of the number has not consented.

The FCC allowed a "one-call safe harbor," meaning that robocallers can make one call after a number has been reassigned without violating the law. Judges ruled that the one-call safe harbor is arbitrary, in part because the first call after a number has been reassigned "might give the caller no indication whatsoever of a possible reassignment (if, for instance, there is no response to a text message, as would often be the case with or without a reassignment.)"

Two other parts of the FCC's order passed legal muster. Judges upheld the FCC's "approach to revocation of consent, under which a party may revoke her consent through any reasonable means clearly expressing a desire to receive no further messages from the caller." Judges also upheld "the scope of the agency's exemption for time-sensitive healthcare calls."

FCC urged to step up fight against robocalls

The FCC needs to step up the fight against robocalls, Democratic FCC Commissioner Jessica Rosenworcel said.

"One thing is clear in the wake of today's court decision: robocalls will continue to increase unless the FCC does something about it," Rosenworcel said Friday. "That means that the same agency that had the audacity to take away your net neutrality rights is now on the hook for protecting you from the invasion of annoying robocalls. It's past time for the American public to get a serious response from the FCC—and a reprieve from the unrelenting nuisance these calls have become for so many of us."

Pai's FCC recently authorized carriers to block robocalls from invalid numbers before they reach customers' landlines or mobile phones, although carriers aren't required to provide this capability for free. The FCC also proposed a fine of $120 million for a scammer who allegedly made 96 million spoofed robocalls in a three-month period.

Pai's statement said he plans to continue similar anti-robocall efforts. "We will continue to pursue consumer-friendly policies on this issue, from reducing robocalls to reassigned numbers to call authentication to blocking illegal robocalls. And we'll maintain our strong approach to enforcement against spoofers and scammers, including the over $200 million in fines that we proposed last year."

Sen. Ed Markey (D-Mass.) is disappointed that the court order "vacated protections discouraging callers from making more than one unwanted call to a reassigned number," an announcement from his office said.

Markey urged the FCC to "use its existing authority to re-establish robust, enforceable protections." If the FCC fails to do so, Markey said he will work with Congressional colleagues "to restore these commonsense protections."