Vedder Thinking | Articles FCC Turns into Quasi-Legislator by Rewriting Opt-Out Notice Provision of TCPA
In another example of its efforts to expand its jurisdiction, the Federal Communications Commission on October 30, 2014 found that even solicited facsimiles require opt-out notices. This means that the FCC in essence has approved of plaintiffs' lawyers having their clients call businesses, request faxes, and then sue the businesses if the faxes lack opt-out notices that are strictly compliant with the FCC's interpretation of the opt-out notice requirements of the Telephone Consumer Protection Act, 47 U.S.C. § 227.
As two partially dissenting FCC commissioners argued, this interpretation by the FCC essentially rewrites the TCPA, which expressly provides that the opt-out notice requirements apply only to unsolicited faxes. As Commissioner Pai wrote in his partial dissent: "Indeed, the TCPA uses the phrase 'unsolicited advertisement' nine separate times in describing the opt-out notice of section 227(b), making clear Congress’s intent that this notice only applied to unsolicited advertisements." In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Junk Fax Prevention Act of 2005, Application for Review filed by Anda, Inc., Petitions for Declaratory Ruling, Waiver, and/or Rulemaking Regarding the Commission’s Opt-Out Requirement for Faxes Sent with the Recipient’s Prior Express Permission, CG Docket Nos. 02-278 and 05-338, FCC 14-164 (“FCC Order”) at p. 19 (emphasis in original).
Commissioner O’Rielly agreed: "[B]ecause the mechanism for making a request not to send future unsolicited ads is perfectly clear, there is nothing further for the Commission to interpret or implement to effectuate that prohibition. There is no ambiguity for the Commission to resolve. And as the Supreme Court recently stated, '[a]n agency has no power to ‘tailor’ legislation to bureaucratic policy goals by rewriting unambiguous statutory terms.'" Id. at p. 25 (quoting Utility Air Regulatory Group v. Environmental Protection Agency, 134 S. Ct. 2427, 2445 (2014)). As Commissioner O’Rielly reasoned, the FCC's decision basically validates the behavior of people like Michael Nack, who filed a complaint against defendant Douglas Walburg for a specifically solicited fax solely because the fax lacked the opt-out language. Id. (citing Nack v. Walburg, 715 F.3d 680 (8th Cir. 2013)).
A collective thought bubble has now appeared above the U.S. serial TCPA plaintiff populace, stating the following: "I'm going to ask every business I encounter to send me faxes, and if I’m lucky, there will be no or an inadequate opt-out notice, and I CAN SUE THEM FOR MILLIONS, MAYBE BILLIONS, OF DOLLARS! WHA HA HA HA!"
Fortunately for the petitioners whose requests led to the FCC Order, as well as others similarly situated, the FCC has granted or will grant retroactive waivers of the opt-out notice requirements for allegedly deficient or absent opt-out notices on solicited faxes sent up to six months after issuance of the FCC Order. Id. at pp. 11-15, ¶¶ 22-31. What this means is that by the end of April 2015, the FCC expects businesses that engage in fax advertising to be strictly compliant with the opt-out notice provisions as interpreted by the FCC. And any businesses that have not been strictly compliant should submit requests for retroactive waivers as soon as possible (particularly businesses in active litigation over the opt-out notice provisions because the retroactive waivers, if granted, could preclude opt-out notice liability).
The FCC gave two reasons for granting the retroactive waivers: (1) a footnote in the 2006 Junk Fax Order said that the opt-out notice requirement applied only to unsolicited ads, id. at p. 12, ¶ 24, and (2) the notice preceding the 2006 Junk Fax Order did not make clear that the FCC was contemplating an opt-out notice requirement for solicited fax ads. Id.
These unusual acknowledgments by the FCC of deficiencies that justify retroactive waiver — coupled with the two vigorous partial dissents (which concur only on the retroactive waiver point) — ensure that litigation over opt-out notice issues is far from over. Although the FCC may have provided much-needed relief in the form of retroactive waivers, defendants are almost certain to continue to litigate whether the FCC has acted ultra vires and whether the FCC's opt-out notice interpretation is enforceable.
This opt-out notice issue is particularly significant in class action litigation because plaintiff's lawyers (many of whom submitted comments to the FCC preceding the FCC Order) believe an opt-out notice class is often easier to have certified than an unsolicited fax ad class because the former purportedly has fewer individualized issues. That belief is subject to much debate and being hotly contested across the country in litigation. But one thing is certain: the FCC Order, while granting some relief in the form of retroactive waiver, did not provide the clarity that many litigants had hoped it would. And as with the recent $10 million data breach fine by the FCC, the FCC Order demonstrates that the agency has an increasingly expansive view of its jurisdiction and authority that will continue to face vigorous challenges in TCPA and other litigation across the country.
Commissioner Pai perhaps said it best: "Given our forthright acknowledgment that the rule should be waived because of how it was adopted, I do not see how there can be no controversy regarding its adoption. And because our refusal to recognize the controversy that is staring us in the face is nothing more than litigation strategy, I cannot support it." FCC Order at p. 23.