FCC Denies Petition To Change Its Rules So That It Could Preside Over Class Actions

The FCC recently denied a petition that had asked it to amend its rules so that it could preside over class actions. Although the Petition did not mention the TCPA, it would not have taken long for plaintiffs to create a new front of TCPA litigation had the Petition had been granted.

The Petition was filed by Solvable Frustrations, Inc. (“SFI”), which had billed itself as “An Interactive Resource for Monetary Recourse,” specifically a social network that “aggregates customer complaints” in order to “require wayward corporations … to fix the damage they caused.” The Petition argued that the FCC should supplement its rules to allow class actions because class actions “provide a number of benefits” that existing rules do not, for example allowing class members to seek redress for minor injuries by sharing costs and conserving resources.

Every comment filed with the FCC opposed the Petition. For example, AT&T’s comments called it “a self-serving vehicle for advancing SFI’s private interests” and warned that it would create “an inherently complex and time-consuming process with which the Commission has no experience or expertise,” would “strain the Commission’s already limited resources,” and would “undermine the Commission’s and the public’s interests in the expeditious resolution of legitimate consumer complaints.” CTIA’s comments warned that it “would create an ineffective, inefficient substitute for the public and private remedies that already exist, and would require a staggering diversion of the Commission’s resources. The result would be a Chimera that combines the worst possible attributes of EEOC class actions and civil class actions: binding absent parties but without giving notice, allowing discovery, empaneling juries, or permitting appeals. None of which would be good for customers, providers, the Commission, or indeed anyone other than Petitioner.”

After 19 months—during which the Petitioner shuttered its website—the FCC issued a Memorandum Opinion & Order that held that “it would be contrary to public policy to divert limited Commission resources to the adjudication of class actions when aggrieved parties may bring such actions before the federal courts.”

The FCC made short work of the Petition. It explained that “[t]here is no need for the Commission to entertain class actions” because “such suits may be brought in federal court” and there is “no basis for concluding that the public would benefit from an additional, redundant process before the Commission.” Id. ¶ 4. That was especially true in light of the fact that “federal courts have decades of experience handling class actions” and can always invoke the primary jurisdiction doctrine if they would be “aided by the Commission’s expertise or guidance with respect to a particular issue.” Id.

The FCC also worried that the Petition’s proposed procedures would “divert considerable resources from the Commission’s existing responsibilities.” Id. ¶ 6. It explained that, whereas class actions are “fact-intensive, complex, and time-consuming,” claims brought before the FCC are “regularly resolved on the basis of the pleadings alone” and are sometimes subject to “strict statutory time-limits, some of which are as short as ninety days.” Id.

Finally, the FCC rejected Petitioner’s underlying premise and supposed benefits as speculative: “SFI assumes that, if the Commission granted the Petition, the thousands of individual complaints currently filed with the Commission each year would instead be consolidated and filed as a small, manageable number of class actions. This argument is speculative. For example, there is no evidence that the parties who file complaints with the Commission would prefer to have their disputes resolved through the markedly different procedures pertaining to class actions. Nor is there evidence that the complaints filed here raise common questions of law or fact such that they could be aggregated into a limited number of class actions. In short, if the Petition were granted, it is possible that the Commission would still be required to entertain as many, or nearly as many, individual complaints, and also would be required to adjudicate class actions.”

Michael P. Daly

About the Author: Michael P. Daly

Mike Daly has spent two decades defending, counseling and championing clients that interact with consumers. His practice focuses on defending class actions, handling critical motions and appeals, and maximizing the defensibility of marketing and enforceability of contracts. Clients large and small have trusted him to protect their businesses, budgets and brands in complex cases across the country.

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