Category: FCC Roundup

1
District Court Decertifies TCPA Class Following Invalidation of Solicited Fax Rule
2
It Wasn’t Me! – District Court Dismisses TCPA Action Alleging Vicarious Liability against Hotel Chains
3
D.C. Circuit Holds that FCC Lacks Authority to Require Opt-Out Notices for Solicited Faxes, Vacates FCC Order
4
Federal Government Not Successful in Moving to Dismiss First Amendment Challenge to TCPA
5
FCC Begins Rulemaking Process to Allow Blocking of “Spoofed” Number Calls
6
FCC Solicits Comments on Petitions Seeking Clarification of “Prior Express Consent”
7
Rep. Virginia Foxx Seeks to Prohibit Political Robocalls to Numbers on Do-Not-Call Registry
8
FCC Hits Companies in Latest Wi-Fi Blocking Inquiries, Proposing $718,000 Penalty, Fueling Further Controversy
9
Company Agrees to $750,000 Penalty to Resolve FCC Inquiry into Wi-Fi Network Management Practices at Convention Center Venues
10
FCC Denies $3.3 Billion in Bidding Credits to AWS-3 Auction Winners, Requires Full Payment in 30 Days

District Court Decertifies TCPA Class Following Invalidation of Solicited Fax Rule

Joseph C. Wylie, Molly K. McGinley and Nicole C. Mueller

A district court recently decertified a class of plaintiffs seeking damages after the judge ruled that recent changes in the Telephone Consumer Protection Act (the “TCPA”) warranted decertification.  In particular, the court ruled that under the “Solicited Fax Rule,” the question of consent required individualized analysis, and rejected the plaintiff’s argument that solicited faxes require the specific opt-out language required by TCPA regulations.

Plaintiff Lawrence S. Brodsky, an insurance wholesaler, filed a lawsuit against HumanaDental Insurance Company (“HumanaDental”) following the receipt of two identical one-page fax messages sent by Humana Specialty Benefits.  Plaintiff has “market agreements” with numerous insurance companies in which he sells those companies’ products through various insurance agents and independent contractors.  Plaintiff entered one such contract with Humana Insurance Co. “and all of their affiliates,” which stipulated that Plaintiff agreed that Humana Insurance Co. and all of its affiliates “may choose to communicate with [Plaintiff] through the use of . . . facsimile to the . . . facsimile numbers of” Plaintiff.  In connection with this agreement, Plaintiff provided Humana Insurance Co. with his facsimile number.

Following the denial of HumanaDental’s motion for summary judgment, the court granted HumanaDental’s motion for class certification in part and certified a class of entities who received one or more faxes between May 2007 and September 2008 that named Humana Specialty Benefits or HumanaDental on the bottom of the fax and, among other items, contained an “opt out” notice that stated “If you don’t want us to contact you by fax, please call 1-800-U-CAN-ASK,” or “If you don’t want us to contact you by fax, please call 1-888-4-ASSIST.”  Plaintiff argued that these faxes violated the TCPA because they did not contain the proper “opt out” language.

The Solicited Fax Rule

The TCPA prohibits sending “unsolicited advertisements” via fax, and a fax is “unsolicited” if the recipient has not given its prior expression invitation or permission to receive the fax.  The TCPA provides select exceptions to the ban on unsolicited faxes if, among other things, the fax contains an “opt-out notice” that meets various statutory requirements.  In 2006, the Federal Communications Commission (the “FCC”), pursuant to its authority to prescribe regulations to implement the requirements of the TCPA, promulgated the “Solicited Fax Rule,” which required both solicited and unsolicited faxes to include the opt-out notice described in the TCPA.  In other words, the FCC’s 2006 rule mandated that senders of solicited faxes comply with a statutory requirement that applied only to senders of unsolicited faxes.

In October 2014, the FCC granted certain non-party petitioners retroactive waivers of the Solicited Fax Rule in light of inconsistencies between the Solicited Fax Rule and other FCC guidance (the “2014 Order”).  The FCC also explicitly invited “similarly situated” parties to apply for other retroactive waivers.  (Prior discussion on this blog regarding the Solicited Fax Rule waivers can be found on this blog here.)

HumanaDental applied for and received such a waiver.  The waiver explicitly excused HumanaDental for any failure “to comply with the opt-out notice requirement for fax advertisements sent with the prior express invitation or permission of the recipient prior to April 30, 2015.”

Following the 2014 Order, several fax senders filed petitions for review of the FCC’s decision in multiple circuit courts.  These petitions were consolidated into an action pending in the District of Columbia Circuit.  In March 2017, a split panel of the D.C. Circuit struck down the Solicited Fax Rule in Bais Yaakov v. FCC, No. 14-1234 (D.C. Cir. Mar. 31, 2017) holding it “unlawful to the extent that it requires opt-out notices on solicited faxes.”  The majority found that the TCPA only applies to unsolicited fax advertisements, such that the FCC lacked the authority to promulgate a rule governing solicited faxes.

HumanaDental’s Motion to Decertify Class

Following HumanaDental’s receipt of a waiver from the FCC and the D.C. Circuit’s decision in Bais Yaakov, HumanaDental moved to decertify the class, arguing that individual questions defeat the superiority and predominance requirements of Rule 23, such that the class must be decertified.  The court agreed that the presence of the FCC waiver led to the conclusion that issues of individualized consent predominated, finding that: (1) a substantial portion of the certified class were not a parties to the same contract that Plaintiff entered into with Humana Insurance Co.; (2) select members of the class may have revoked their consent even after entering into such a contract; and (3) the “scope” of a particular consent in the contract might not extend to other “affiliated” class members offering insurance at the same location.  The court noted by way of example that while Plaintiff was a party to the contract, at least seven other individuals had his permission to use his fax machine during the time period at issue; questions regarding whether those other individuals had consented to receiving faxes from HumanaDental would “consume[] and overwhelm[]” trial.

In so holding, the court rejected Plaintiff’s argument that the waiver, while insulating HumanaDental from an administrative enforcement action with the FCC, had no effect in a private TCPA action.  Plaintiff relied on a single authority for its position, but the Court rejected that decision’s analysis and noted that the case had been “called into question by a number of authorities cited by Defendant” and sided with the caselaw cited by Defendant.

With regard to the application of Bais Yaakov, the Court also declined to adopt Plaintiff’s argument that the case was inconsistent with the Seventh Circuit’s decision in Holtzman v. Turza.  Specifically, the court found that, at best, dicta from that decision could be read to expand the TCPA’s requirements relating to opt out notices to cover solicited as well as unsolicited faxes, but declined to afford Turza “a reading that would improperly expand the TCPA.”

The Court concluded that the waiver and Bais Yaakov bring the question of consent back into the picture.  This decision provides defendants with a stronger argument for defense against motions to certify classes in instances where the communications in question include solicited communications.

Plaintiff has appealed this decision to the Seventh Circuit.

It Wasn’t Me! – District Court Dismisses TCPA Action Alleging Vicarious Liability against Hotel Chains

By Andrew C. Glass, Gregory N. Blase, Roger L. Smerage, and Matthew T. Houston

A Michigan federal district court recently rejected a theory of vicarious liability under the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”). In Kern v. VIP Travel Services, the court concluded that the plaintiffs failed to state a claim against hotel chains for calls independent travel agents allegedly made to generate reservations at the hotels. See generally Op., Kern v. VIP Travel Servs., Case No. 1:16-cv-00008 (W.D. Mich. May 10, 2017). Accordingly, the court dismissed the putative class action. Read More

D.C. Circuit Holds that FCC Lacks Authority to Require Opt-Out Notices for Solicited Faxes, Vacates FCC Order

By Joseph C. Wylie II, Molly K. McGinley, Nicole C. Mueller                     

The U.S. Court of Appeals for the District of Columbia Circuit, in a 2-1 split decision, has issued an opinion that the Federal Communications Commission (the “FCC”) lacked authority under the Telephone Consumer Protection Act (“TCPA”) to regulate facsimiles that were sent with the recipient’s consent. [1]  This opinion found that an FCC rule issued in 2006 (the “2006 Order”) requiring a sender to include an opt-out notice on faxes that were solicited by the recipient was unlawful and vacated the FCC order implementing the rule. [2]

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Federal Government Not Successful in Moving to Dismiss First Amendment Challenge to TCPA

By Andrew C. Glass, Gregory N. Blase, Christopher J. Valente, and Michael R. Creta

A North Carolina federal district court recently denied a motion by the federal government to dismiss claims raising a First Amendment challenge to a portion of the Telephone Consumer Protection Act (“TCPA”). See American Ass’n of Political Consultants v. Lynch, Case No. 5:16-00252-D (E.D.N.C.). At this early stage of the case, the government did not address the substance of the constitutional challenge.  Rather, the government asserted that the court did not have jurisdiction over the case and that the political organizations which filed the suit did not have standing to maintain suit.  The court, however, rejected the government’s arguments and allowed the case to proceed.

Background

Last year, a bi-partisan coalition of political groups filed a two-count complaint alleging that aspects of the TCPA run afoul of First Amendment free-speech protections. Specifically, the suit contends that the TCPA’s prohibition on making auto-dialed calls or texts to cell phones without the requisite consent, 47 U.S.C. § 227(b)(1)(A)(iii), imposes a content-based restriction on speech that fails to pass strict scrutiny and is unconstitutionally underinclusive.  The federal government moved to dismiss on standing and subject-matter jurisdiction grounds. In response, the plaintiffs amended their complaint to add the Federal Communications Commission (“FCC”) as a defendant and to address purported deficiencies in the original complaint.

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FCC Begins Rulemaking Process to Allow Blocking of “Spoofed” Number Calls

By Pamela J. Garvie, Andrew C. Glass, Joseph Wylie II, Gregory N. Blase, and Matthew T. Houston

The Federal Communications Commission unanimously voted at its March 23, 2017, “open meeting” to begin the process for adopting rules allowing carriers to block “spoofed” number calls.  These are calls that use a reputable or commonly-known telephone number to mask the actual originating number.  The proposed rules would allow carriers to block calls purporting to originate from telephone numbers that (1) are not assigned to a subscriber, (2) are invalid, or (3) are assigned to a subscriber expressly requesting that its number not be spoofed.  In his remarks, Chairman Ajit Pai indicated that the proposed rules are needed to target scammers impersonating federal agencies, such as the Internal Revenue Service, and to protect consumers from unwanted solicitations.  Commissioner Michael O’Rielly indicated that the proposed rules aim to address illegal “robocalls” in a manner that does not affect legitimate businesses, as opposed to prior efforts to regulate such calls under the Telephone Consumer Protection Act, 47 U.S.C. § 227.  The proposed rules and accompanying comments suggest an effort by the now Republican-controlled FCC to issue rules specifically intended to block unwanted robocalls, often from overseas, intended to defraud consumers.

The FCC approved both a Notice of Proposed Rulemaking and a Notice of Inquiry to solicit feedback from consumers and other parties with an interest in the proposed rules. Comments on the proposed rules will be due within forty-five (45) days after publication in the Federal Register. Final rules are unlikely to take effect earlier than late 2017.

FCC Solicits Comments on Petitions Seeking Clarification of “Prior Express Consent”

By Joseph C. Wylie II, Molly K. McGinley, Nicole C. Mueller

The Consumer and Governmental Affairs Bureau of the Federal Communications Commission (the “FCC”) recently issued public notices for comments on two petitions that seek clarification or reversal of the FCC’s interpretation of the “prior express consent” of the Telephone Consumer Protection Act (the “TCPA”). Taken together, the petitions request a reversal of the FCC’s long-standing guidance that a consumer provides “prior express consent” to be contacted on a wireless number by providing that number to a business in connection with a voluntary transaction, thus allowing the business to use autodialed or prerecorded voice calls to the consumer to communicate with the consumer regarding the parties’ relationship.  A change to the FCC’s interpretation of “prior express consent” could have significant impact on businesses’ communications with its existing customers.

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Rep. Virginia Foxx Seeks to Prohibit Political Robocalls to Numbers on Do-Not-Call Registry

By Pamela J. Garvie, Andrew C. Glass, Joseph C. Wylie II, Gregory N. Blase, and Molly K. McGinley

Rep. Virginia Foxx (R-NC) has introduced a bill, H.R. 740 (the “Robo Calls Off Phones Act” or “Robo COP Act”), to “stop the intrusion of political robocalls in homes across America.” Rep. Foxx stated that “politicians made sure to exempt political robo-calls from the power of the ‘Do Not Call’ registry. If these calls weren’t such a nuisance, their blatant exclusion would be laughable.” Claiming that eligible voters receive more than 20 political prerecorded voice calls per day, Rep. Foxx seeks through the bill to end the “robocall loophole” for politicians.

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FCC Hits Companies in Latest Wi-Fi Blocking Inquiries, Proposing $718,000 Penalty, Fueling Further Controversy

By Stephen J. Matzura and  Marty Stern

On the heels of a consent decree with a services provider imposing a $750,000 penalty for its Wi-Fi management practices at convention center venues, the FCC slammed another services provider earlier this week for allegedly blocking Wi-Fi access at the Baltimore Convention Center.  In a Commission-level Notice of Apparent Liability (“NAL”), the FCC proposed a $718,000 penalty against M.C. Dean, Inc. for allegedly blocking access to third-party Wi-Fi hotspots during at least 26 days in November and December 2014 at the venue, “apparently” in violation of Section 333 of the Communications Act.

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Company Agrees to $750,000 Penalty to Resolve FCC Inquiry into Wi-Fi Network Management Practices at Convention Center Venues

By Stephen J. Matzura and Marty Stern

The FCC’s Enforcement Bureau entered into a consent decree with a company (Smart City Holdings, LLC and two of its subsidiaries) to end an investigation into whether the company’s use of enabling technologies for managing and protecting Wi-Fi networks unlawfully blocked personal Wi-Fi access at several convention center venues in Ohio, Indiana, Florida, and Arizona, where the company  provides managed network services.

According to the Bureau, the investigation focused on whether the company’s use of certain network management equipment which automatically deauthenticated personal mobile “hotspots,” used to access the Internet via users’ wireless data plans, complies with Section 333 of the Communications Act, which prohibits willful or malicious interference with the radio communications of any licensed or authorized station.

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FCC Denies $3.3 Billion in Bidding Credits to AWS-3 Auction Winners, Requires Full Payment in 30 Days

By Stephen J. Matzura and Marty Stern

The FCC unanimously adopted an order released earlier this week denying approximately $3.3 billion in small business bidding credits to SNR Wireless LicenseCo, LLC and Northstar Wireless, LLC, two entities financed by DISH Network Corporation that had won licenses in the AWS-3 auction which concluded in January (Auction 97).  The auction, which had net winning bids of over $41 billion, significantly exceeded expectations and has been termed a “whopping success” from a revenue standpoint. In a statement issued prior to the order’s release, Commission Chairman Tom Wheeler stated that the entities “are not eligible for bidding credits” based on the Commission’s “fact-based analysis,” which “ensures that bidding credits only go to the small businesses our rules aim to serve.”  The Commission’s order, released the following day, details the Commission’s analysis of whether DISH revenues should be attributed to SNR and Northstar based on its degree of control over the entities.

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