November 15, 2018

TCPA-fax
Supreme Court to Hear TCPA Fax Case

The United States Supreme Court has agreed to hear argument on a matter involving the Telephone Consumer Protection Act (“TCPA”), granting certiorari to an appeal of a TCPA fax case arising from a decision handed down by the United States District Court for the Southern District of West Virginia.

What are the issues in this TCPA fax case that the Supreme Court is likely to address?

The initial West Virginia case was brought as a result of a company’s receipt of an unsolicited fax that promoted free goods available to health care professionals, including prescription drug reference guides.  The company that sent the subject fax publishes the compendium, but does not actually sell either the guide itself or anything referenced in the guide.  The defendant moved to dismiss the lawsuit arguing that there was no violation of the TCPA because the fax was not an advertisement within the meaning of the statute.  The district court agreed, dismissing the suit.

On appeal, however, the Fourth Circuit Court of Appeals reversed.  The appeals court ruled that the Hobbs Act required the district court to apply the Federal Communications Commission’s (“FCC”) interpretation of the TCPA, which, in 2006, created a rule which provides that a fax offering goods or services constitutes an advertisement under the TCPA regardless of whether the goods or services are marketed as free.

The Hobbs Act provides a mechanism for judicial review at the federal appeals court level for challenges to certain administrative agency orders or rules in order to prevent disjointed challenges at the district court level.  Many have argued that the Hobbs Act has been mis-applied recently, to the point of providing too much deference to administrative agencies.  This deference, the reasoning maintains, has the resulting effect of stripping courts of their ability to perform the function of statutory interpretation.

The Supreme Court is now being asked to rule on the following issues: (1) whether the FCC’s 2006 Order did in fact create a per se rule that faxes promoting free goods or services are advertisements regardless of whether they have a commercial aim or purpose; and (2) whether the Hobbs Act requires courts to automatically defer to the FCC’s interpretation of the term “advertisement” when considering TCPA violation allegations.

The Implications of the Supreme Court’s TCPA Fax Case

It is anticipated that the Supreme Court’s ruling in this TCPA fax case will have a profound impact on TCPA cases going forward, both in the fax and traditional telemarketing space.  First, the Supreme Court is likely to provide clarity to a 2006 Order concerning the scope of the FCC’s interpretation of the term “advertisement” under the TCPA.  Second, the Court has the opportunity to decide whether courts nationwide, through misapplication of the Hobbs Act, have afforded too much deference to FCC interpretative rules.   This latter issue, if decided in the affirmative, would likely liberate judges to interpret the TCPA in a way that has differed from longstanding FCC interpretations (which those in the industry have considered to be unnecessarily punitive towards legitimate business).  Against this backdrop of prospective abrupt change in the TCPA regulatory environment, it is imperative to have telemarketing practices and procedures regularly examined by experienced counsel.

If you are interested in learning more about this topic, need to review your fax marketing practices and procedures or if you are the subject of a TCPA lawsuit, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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