D.C. Circuit Opens the Door to New TCPA Defense Arguments on Liability and Deference to FCC

A Telephone Consumer Protection Act (TCPA) case decided by the U.S. Court of Appeals for the D.C. Circuit has direct implications for all organizations that employ third-party providers to conduct their outbound calling and text messaging campaigns. It could also impact the extent to which courts will defer to portions of the FCC’s TCPA orders when interpreting the statute. More details are discussed below. In addition, on February 6, members of Hogan Lovells’ TCPA Practice will host a special webinar on recent TCPA developments and key compliance challenges for 2014. If you are interested in attending this webinar, please contact Mark Brennan at [email protected].

In Dish Network LLC v. FCC, the D.C. Circuit held that DISH could not appeal the FCC’s “guidance” on the applicability of agency principles to TCPA liability because such guidance did not constitute a “final order” of the FCC. In the challenged declaratory ruling, the FCC held that the principles of the federal common law of agency govern the determination of whether a seller is liable for the actions of third parties that telemarket the seller’s goods. It then provided “illustrative examples” as “guidance” that would demonstrate that a telemarketer is an authorized representative with apparent authority from the seller (making the seller vicariously liable for the telemarketer’s TCPA violations). Those examples included giving the outside entity access to information that would normally be in the seller’s exclusive control and giving the third party the ability to enter consumer information directly into the seller’s internal customer management systems.

DISH sought review of that “guidance,” arguing that the FCC went beyond its authority under the TCPA by expressing how agency law might apply in specific contexts. On appeal, the FCC argued that the “guidance” was non-binding, not entitled to deference by courts, and not appealable. The D.C. Circuit agreed.

The D.C. Circuit’s holding means that courts are free to evaluate independently arguments about the application of the federal common law of agency, without giving the FCC’s guidance additional weight beyond its power to persuade. This could have broad ramifications for sellers who work with third-party calling vendors—an $18 billion industry that employs nearly half a million people. In addition, the case confirms that FCC “guidance” in TCPA rulings has no binding effect on courts and is not entitled to deference under Chevron.

How can we help? 

The combined resources of Hogan Lovells’ top-ranked Federal Communications Commission (FCC) and privacy capabilities and our deep class-action litigation experience puts us in a position to provide top-notch advice on TCPA issues. We have created a TCPA Working Group that brings together attorneys in our litigation, communications, and privacy areas. We provide regular TCPA counseling to clients from a broad range of industries, including technology, healthcare, communications, transportation, and financial services. We have extensive experience representing clients in court and before the FCC, Federal Trade Commission, Congress, and state enforcement agencies. In addition, we have secured dismissals and nominal settlements for clients in TCPA actions and have worked with the FCC to clarify rules addressing a number of key TCPA issues.

The author wishes to thank Austin Bonner from our Washington, D.C. office for her contributions to this article.

Authored by Mark Brennan