April 7, 2017Client Alert

Junk Fax Rule as Applied to Solicited Faxes Struck Down by D.C. Circuit

In 2014, the Federal Communications Commission (FCC) issued a rule that required faxes to contain an opt-out notice even if the fax had been requested or solicited (as opposed to being unsolicited), 47 C.F.R. § 64.1200(a)(4). Accordingly, under the FCC’s rule, even when someone affirmatively agreed to receive an advertisement via fax from another company, if the fax did not contain a detailed opt-out notice, the faxing company would be liable under the Junk Fax Prevention Act’s amendment to the Telephone Consumer Protection Act. Unsurprisingly, that rule opened the door to a surge of litigation under the Junk Fax Prevention Act. There were numerous class actions, seeking between $500 and $1,500 per fax, in which the named plaintiff would provide a fax number confirming a request for an advertisement via fax, and upon receipt of the faxed ad, the individual or business would sue the faxing company for failure to include a proper opt-out notice.

In a move that should put a damper on such class actions, in a 2-1 decision, the U.S. Court of Appeals for the D.C. Circuit struck down the FCC’s rule requiring opt-out notices on solicited faxes, even as to persons who have previously consented to receive faxes. The majority noted that the question it was answering was “whether the Act’s requirement that businesses include an opt-out notice on unsolicited fax advertisements authorizes the FCC to require business to include an opt-out notice on solicited fax advertisements.” Based on the text of the statute, the majority reasoned that Congress did not empower the FCC to regulate solicited faxes. It held that “Congress drew a line in the text of the statute between unsolicited fax advertisements and solicited fax advertisements” and “it is the Judiciary’s job to respect the line drawn by Congress …” The dissent disagreed, instead arguing that requiring opt-out notices on all fax ads, whether solicited and unsolicited, was proper implementation of Congress’s ban on unsolicited fax ads because Congress had not explicitly prohibited the FCC from doing so.

This ruling will now make pursuing class actions under the Junk Fax Prevention Act’s opt-out notice provision more difficult. Given that a plaintiff now must show that the fax was unsolicited, it will be difficult to argue that the case should be properly pursued as a class action, as such showing would arguably require an individualized inquiry making class status improper. This ruling also brings an all too rare measure of common sense to the Junk Fax Protection Act. Liability for advertisements the recipient has given permission to send makes little sense, and the D.C. Circuit seems to agree.

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