After recently scheduling oral argument in the consolidated appeal from the July 2015 Declaratory Ruling and Order, the United States Court of Appeals for the D.C. Circuit has scheduled oral argument in the consolidated appeal from the Federal Communication Commission’s (“FCC”) October 2014 Final Order (the “Anda Order”) for Tuesday, November 8, 2016. As we previously reported, in the Anda Order the FCC found that it had the statutory authority to promulgate a rule requiring that the opt-out notice Congress specified in the Junk Fax Prevention Act (“JFPA”) must be present on faxes for the sender to take advantage of the Established Business Relationship (“EBR”) exemption must also appear on solicited faxes. The FCC also decided that, because of reasonable confusion surrounding the rule, there was good cause to waive the rule for fax senders who had previously sent solicited faxes without an opt-out notice. Following the release of the Anda Order, both class action plaintiffs (“Plaintiff Petitioners”) and class action defendants (“Defendant Petitioners”) filed cross-appeals, which were consolidated and centralized in the D.C. Circuit as Bais Yaakov of Spring Valley, et al. v. FCC, No. 14-1234.
The Plaintiff Petitioners argue that the FCC had the authority to require by rule that opt-out notices appear on solicited faxes, but that it lacked the authority to grant retroactive waivers of that rule, and that by granting such retroactive waivers, the FCC unlawfully extinguished pending TCPA claims in violation of the separation of powers. The Defendant Petitions, by contrast, agree with the FCC that it has the authority to grant retroactive waivers, but argue that the FCC lacked the authority to regulate solicited faxes in the first place by requiring an opt-out notice because the JFPA’s opt-out notice requirement applies only to EBR faxes, and the FCC’s regulation of solicited faxes is a content-based restriction on speech that poses serious First Amendment concerns and cannot survive strict scrutiny. In support of Defendant Petitioners, the NFIB Legal Center filed an amicus brief arguing that requiring solicited faxes to contain an opt-out notice violates the First Amendment because it impedes a business’s right to communicate with its customers and clients, and that the government only has a legitimate interest in restricting unsolicited fax advertisements.
The FCC, in turn, has vigorously defended its authority to both require opt-out notices on solicited faxes and to retroactively waive that rule for fax senders who were confused by the regulation. The FCC argues that requiring an opt-out notice on solicited faxes is an appropriate exercise of its broad power to implement the statute’s general prohibition against the faxing of an “unsolicited advertisement” and that the regulation does not violate the First Amendment because it regulates commercial speech and satisfies the intermediate scrutiny standard because it directly advances government’s substantial interest in protecting consumers from receiving unsolicited fax advertisements in a narrowly tailored way. In response to Plaintiff Petitioners’ arguments, the FCC argues that its rules allow it to waive its regulations for good cause and that the waivers do not violate the separation of powers doctrine because the opt-out notice rule, while a regulation promulgated pursuant to the authority granted to the FCC by the TCPA, was not a regulation mandated by the TCPA and could therefore be waived.
During the pendency of the appeal, courts have reached conflicting decisions on the effect of the Anda Order, with some courts holding that “the FCC cannot use an administrative waiver to eliminate statutory liability in a private cause of action,” Physicians Healthsource, Inc. v. Stryker Sales Corp., 65 F. Supp. 3d 482, 498 (W.D. Mich. 2014), and others holding that the FCC has the power to waive its own regulations for good cause. See e.g., Simon v. Healthways, Inc., No. 14cv1408022, 2015 U.S. Dist. LEXIS 176179, at *20 (C.D. Cal. Dec. 17, 2015) (recognizing the FCC’s authority to grant retroactive waivers of the opt-out notice rule for solicited faxes); True Health Chiropractic, Inc. v. McKesson Corp., No. 13cv2219, 2016 U.S. Dist. LEXIS 111657, at *16 (N.D. Cal. Aug. 22, 2016) (holding that the FCC’s rules authorize it to waive its regulations for good cause). Other courts, meanwhile, have stayed cases pending the outcome of the appeal. See, e.g., Suzanne Degnen, D.M.D., P.C. v. Dental Fix RX LLC, No. 15cv1372, 2016 U.S. Dist. LEXIS 103155, at *7 (E.D. Mo. Aug. 5, 2016) (granting stay in TCPA action pending the FCC’s determination of the defendants’ petitions for retroactive waiver and on any appeals filed in connection with the ruling in order to avoid litigating issues that would likely be mooted by a waiver).
Check back here for coverage of oral argument and the D.C. Circuit’s decision.
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