In a widely anticipated opinion, the D.C. Circuit has held that the Federal Communications Commission overreached when it required that solicited faxes include specific opt-out notices.^[1] The result will heavily impact the plaintiff’s bar moving forward and will end many pending Telephone Consumer Protection Act cases premised on faxes sent with consent that contained allegedly deficient or no opt-out language.

The FCC Overstepped Its Authority

“Believe it or not,” wrote Judge Kavanaugh for the majority, “the fax machine is not yet extinct.” Harkening to the underlying litigation against Anda, Inc. that ultimately resulted in the opinion, the majority noted that “[m]any of the plaintiff pharmacies in that case admitted that they had expressly given permission to Anda to send fax advertisements …. But those plaintiffs nevertheless sought over $150 million in damages from Anda because Anda’s fax advertisements allegedly did not include opt-out notices that complied with the Solicited Fax Rule’s requirements. Let that soak in for a minute: Anda was potentially on the hook for $150 million for failing to include opt-out notices on faxes that the recipients had given Anda permission to send.”

Before delving into the meat of the argument, the majority noted that the current Chairman of the FCC, Ajit Pai, previously described the FCC’s decision to require opt-out language in solicited faxes as the result of “convoluted gymnastics.” The D.C. Circuit agreed, pointing out that although the TCPA may require opt-out language for unsolicited faxes that in itself did not provide the FCC with authority to require businesses to include opt-out language in solicited faxes. The “FCC … seem[ed] to suggest that the agency may take an action …so long as Congress has not prohibited the agency action in question” but “ha[d] it backwards”—it “may only take action that Congress has authorized.” With that, the D.C. Circuit vacated a 2014 FCC Order in which the FCC held steadfast to its interpretation of the TCPA.

The Saga Continues …

Shortly after the decision, a set of intervenors filed a Petition for Rehearing En Banc raising two arguments. First, they claim that although the TCPA did not specifically authorize the FCC to require opt-out language in solicited faxes, the FCC’s rule was proper because the TCPA grants the FCC broad general authority. Second, they argue that although Congress may have expressly authorized the FCC to act with respect to unsolicited faxes, this did not necessarily mean the FCC was foreclosed from mandating opt-out language for solicited faxes. On May 5th, the D.C. Circuit issued an order requiring the Defendant-Petitioners and Intervenors to file a joint response by May 22nd.

That a Petition seeking rehearing was filed by serial plaintiffs’ attorneys is unsurprising. If the decision stands, it will effectively gut a legion of pending and future TCPA cases – and potential attorneys’ fees – premised on allegedly imperfect faxes that were nonetheless sent with consent.

^{[1]  Bais Yaakov of Spring Valley et al. v. F.C.C. and U.S., No. 14-1234 (D.C. Cir. filed Mar. 31, 2017 (Dkt. No. 1668739).}

Part I - Telephone Consumer Protection Act: Regulatory Update May 2017