D.C. Circuit Strikes Down FCC Solicited Fax Rule
On March 31, 2017, the D.C. Circuit struck down a regulation by the Federal Communications Commission (“FCC”) requiring that senders of fax advertisements include notices on how recipients can opt out of receiving future fax ads for faxes sent with consent. See Bais Yaakov of Spring Valley v. Fed. Commc'ns Comm'n,
852 F.3d 1078, 1080 (D.C. Cir. 2017).
Prior to the court’s ruling, the FCC issued a rule that required all fax ads (regardless of consent) to comply with opt-out notice provision of the Telephone Consumer Protection Act, 47 U.S.C. 227(b)(1)(C)(iii), (b)(2)(D) (“TCPA”). See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991; Junk Fax Prevention Act of 2005,
71 Fed. Reg. 25,967, 25,971-72 (May 3, 2006) (codified at 47 C.F.R. § 64.1200(a)(4)(iv)). Generally, the notice must be clear and must appear conspicuously on the first page of the fax. The notice is required to: (1) inform the recipient that he or she may request to opt-out of fax ads and that the sender’s failure to comply within the shortest reasonable time (30 days) is unlawful; (2) provide domestic phone and fax numbers and a cost-free mechanism for recipients to submit their opt-out requests; and (3) notify recipients that they can submit their request at any time on any day of the week. 47 U.S.C. § 227(b)(2)(D).
Many plaintiffs have brought class actions based on this particular provision, which proved to be useful for getting around defense arguments that issues of consent bar class certification. See Sandusky Wellness Ctr., LLC v. Medtox Sci., Inc.,
821 F.3d 992, 998 (8th Cir. 2016) (reversing denial of class certification of proposed class of individuals who received fax ads without sufficient opt-out notices); see also Ira Holtzman, C.P.A. v. Turza,
728 F.3d 682, 684 (7th Cir. 2013) (“[B]ecause Top of Mind omitted opt-out notices, it does not matter which recipients consented or had an established business relation with Turza.”).
So what will be the result of the D.C. Circuit’s ruling? At the very least, it means a sender’s failure to include an opt-out notice on a solicited fax, that is, a fax sent with permission, will not give rise to an independent violation of the TCPA. But the ruling’s impact should not be overstated. This writer’s survey of class actions brought under the TCPA’s fax provision, § 227(b)(2)(C), shows that such cases are not premised solely
on a deficient opt-out notice. But see
Allison Grande, FCC’s Loss On Fax Rule Could Curb Explosion Of TCPA Suits, Law360 (Mar. 31, 2017) (commentary of defense practitioner’s view of the impact of the D.C. Circuit’s ruling), https://www.law360.com/articles/908677/fcc-s-loss-on-fax-rule-could-curb-explosion-of-tcpa-suits.
Moreover, plaintiffs should keep in mind that failure to include a sufficient opt-out notice also serves as a basis to attack an affirmative defense. Under the TCPA, senders wishing to rely on the Established Business Relationship (“EBR”) defense, must meet several criteria, one of which is the inclusion of a sufficient opt-out notice. See AL & PO Corp. v. Med-Care Diabetic & Med. Supplies, Inc.,
No. 14 C 01893, 2014 WL 6999593, at *4 (N.D. Ill. Dec. 10, 2014) (“[I]f the sender of an unsolicited faxed advertisement has ‘an established business relationship with the recipient’ and certain other conditions are met, including that the fax contains a qualifying opt-out notice, then there is no liability.”). Indeed, the law is so straightforward that plaintiffs facing an EBR defense with a deficient opt-out notice should consider moving for partial summary judgment. See generally Wilson v. Sundstrand Corp.,
No. 99 C 6944, 2003 WL 21961359, at *4 (N.D. Ill. Aug. 18, 2003) (“A plaintiff is not required to demonstrate liability, or a prima facie case of liability, before seeking summary determination of an affirmative defense.”); Price v. Code-Alarm, Inc.,
No. 91 C 699, 1992 WL 328808, at *5 (N.D. Ill. Nov. 5, 1992) (stating partial summary judgment on an affirmative defense is proper where “no dispute of material fact exists concerning [the] defense and, as a matter of law, [the] defense cannot be asserted.”).
Accordingly, while the D.C. Circuit’s ruling may extinguish some parts of TCPA litigation, most TCPA cases do not appear to be affected.