FCC Defends its Retroactive Waiver of Fax Advertisement Rules on Appeal
On December 24, 2015, the Federal Communications Commission (“FCC”) filed its respondents brief in the U.S. Court of Appeals for the D.C. Circuit in Bais Yaakov of Spring Valley, et al. v. FCC. The case centers around the October 2014 Anda Order in which the Commission granted a retroactive waiver to twenty-five entities of its rule that requires a sender of solicited fax advertisements to include language on the advertisement to notify the recipient of his or her right to opt-out of receiving similar advertisements in the future.
The Anda Order was appealed both by class action plaintiffs – who challenged the grant of a retroactive waiver – and by recipients of the waiver – who challenged the conclusion that the opt-out rule applied to solicited faxes at all. The parties challenging the retroactive waiver argued that the FCC did not have the authority under the Telephone Consumer Protection Act (“TCPA”) to grant a retroactive waiver for a violation, and that the FCC violated the Constitutional tenet of separation of powers by intruding on the power of the judiciary to adjudicate TCPA claims already asserted in pending judicial proceedings. Separately, the waiver recipients argued that the TCPA applies only to unsolicited faxes, not those sent with the customer’s permission, and that the existing regulation raises First Amendment concerns.
The FCC responded to both challenges in a single brief. First, in response to the waiver recipients, the Commission argued that although the TCPA only expressly prohibits unsolicited fax advertisements, the opt-out notice requirement for solicited faxes is a reasonable means to accomplish the goals of the TCPA by allowing recipients to easily revoke consent, thereby preventing unsolicited faxes in the future. The Commission further asserted that the opt-out notice requirement does not violate the First Amendment because it furthers the government’s substantial interest in “ensuring that consumers are not burdened with the costs from unwanted fax advertisements” and fax solicitors incur only a minimal burden by having to include the opt-out notice language on their advertisements.
Next, in response to the class action plaintiffs, the Commission asserted that the retroactive waiver was reasonable and “the public interest was best served” by it because the order that implemented the opt-out notice requirement “could have led a reasonable advertiser to be confused about the requirement or to have a misplaced confidence that the requirement did not apply.” It further stated that waivers are “presumptively retroactive” and often used as a means of avoiding inequitable results for a party that might otherwise be subject to liability under a particular statute or rule. Finally, the Commission argued that, in light of the waiver being granted, there would be no enforceable TCPA “violation” for the class action plaintiffs to pursue, and therefore there was no interference with any pending judicial proceedings.
The court is expected to hear oral arguments in the case sometime this spring, but has not yet announced the date.
Petitioners and Intervenors File Arguments Before the D.C. Circuit Challenging The FCC’s Interpretation of the TCPA in its July 10, 2015 Declaratory Ruling and Order
Petitioners recently filed their brief challenging the FCC’s July 10, 2015 Declaratory Ruling and Order addressing various TCPA petitions. (Challenges are consolidated as ACA International, et al. v. FCC, Case No. 15-1211). The Petitioners’ brief was filed on November 25, 2015; one week later, on December 2, 2015, Intervenors filed their arguments in support of Petitioners.
Petitioners and Intervenors challenge three rulings in the FCC Order: (1) the definition of Automatic Telephone Dialing System (“ATDS”), (2) the treatment of calls to wireless numbers reassigned to other subscribers without the caller’s knowledge, and (3) the rule permitting customers to revoke consent “by any reasonable means.” The briefs argue that the FCC’s definition of ATDS to include “potential functionalities” of equipment contradicts the TCPA’s definition of an ATDS and is otherwise arbitrary and unreasonable. With respect to reassigned numbers, the briefs contend that the FCC’s interpretation of the term “called party” to mean the subscriber at the time of the call, not the intended recipient, is arbitrary and capricious. Finally, with respect to revocation of consent, the briefs contend that the FCC’s conclusion is arbitrary and capricious because it fails to provide a workable means by which callers can track and implement consent revocations.
Ten Petitioners collectively filed the Petitioners’ brief; and nine Intervenors supported the subsequent Intervenors’ brief. Additionally, fourteen amicus parties filed briefs in support of Petitioners’ arguments. The FCC’s brief in response to these filings is due on January 15, 2016. Oral argument before the D.C. Circuit is expected to occur in March or April.
FCC Reaffirms Potential TCPA Liability for Text Message Platforms
On January 11, 2016, the FCC’s Consumer and Governmental Affairs Bureau released an order denying a petition by a text message platform provider for a declaratory ruling that the Commission should evaluate TCPA liability for these types of entities under the same standard established for fax broadcasters. In the Order, the Bureau explained that a separate liability standard for text message apps and platforms was laid out in the Commission’s July 2015 Omnibus TCPA Order and that “text broadcasters can be liable for TCPA violations based on the factors discussed in that decision.” The petitioner, Club Texting, Inc., filed its request for a declaratory ruling in 2009. In the petition, Club Texting asked the Commission to apply the fax broadcaster TCPA liability standard to text message platforms, such that “liability will attached only if a text broadcaster ‘demonstrates a high degree of involvement in, or actual notice of, the unlawful activity and fails to take steps to prevent such transmissions.’” In support of this request, Club Texting claimed that if the Commission made an affirmative finding that text broadcasters are not “senders” for TCPA purposes, it would “promote compliance” by the broadcasters’ third party clients that “are in the best position to ensure that recipients have consented to receive the text messages.” In denying the Club Texting petition, the Bureau reaffirmed the position in the Order and noted that “the Commission has clarified the standard to be applied to text broadcasters and that standard is not the same standard as applies to fax broadcasters.” It did not revise the standard, nor did it offer any meaningful clarifications of how the standard will be applied. Indeed, the order explicitly states that it is not adjudicating the liability of any particular text broadcasting service at this time.