United States: FCC Declares Overly-Broad Absolute Liability For Unsolicited Faxes Under The TCPA?

In response to an invitation from the United States Court of Appeals for the Eleventh Circuit concerning a question involving the interpretation of the Telephone Consumer Protection Act ("TCPA"), the Federal Communications Commission ("FCC") filed a letter brief in Court on July 17, 2014, declaring that "under the plain text of [the Code of Federal Regulations ("CFR")] – and unlike the robo-call and do-not-call contexts – direct liability for sending an unsolicited facsimile advertisement attaches to the entity (defined as the 'sender') whose goods or services are being promoted, and not generally to the entity that physically transmits the facsimile." Although the FCC used the term "direct liability," the statutory interpretation that it proposes is overly-broad and appears contrary to a plain reading of the text of the Act. It is now up to the Eleventh Circuit to either adopt or reject the FCC's interpretation.

The Alleged TCPA Fax Violation

The underlying facts of the subject litigation are not complex. The plaintiff, a golf center in Palm Beach, brought an action under the TCPA against a dental office, alleging that the defendant had sent it an unsolicited advertisement via facsimile in December 2005. The defendant had retained an independent contractor to perform marketing services on its behalf. That contractor, in turn, retained a third party, Business to Business Solutions ("BTB"), to send its clients' advertisements via telecopier. BTB sent the fax at issue, but the plaintiff sued the dental office. The district court granted the dental office summary judgment, dismissing the TCPA claims. The court determined that the defendant can only be held vicariously liable, at most (and not directly liable), under the facts at issue. The plaintiff appealed to the Eleventh Circuit, and the Eleventh Circuit solicited the FCC's opinion on the question at issue.

The FCC's Position

In its letter brief, the FCC initially argued that the district court erred in relying on its opinion in In re Joint Petition by Dish Network LLC ("Dish Network") (For more information, see FCC Issues New TCPA Ruling on Telemarketing Liability). In the Dish Network opinion, the FCC stated that under the TCPA, a seller can only be vicariously liable for telephone calls placed on its behalf by a third-party telemarketer. However, according to the FCC, its reasoning in the Dish Network opinion cannot be applied to faxes sent in violation of the TCPA. Instead, according to the FCC, "so long as the transmitted fax constitutes an unsolicited facsimile advertisement promoting the defendant's goods or services," the defendant will be directly liable, even if the facsimile was sent without its knowledge or authorization.

In opposition to the FCC's interpretation, the defendant in the action responded as follows:

If all a plaintiff need show for its cause of action under [the TCPA] is receipt of "an unsolicited facsimile advertisement promoting the defendant's goods or services," fax broadcasters could subject companies to crushing liability by taking a ream of paper from a company's work[place], creating a promotion on the company's letterhead and blasting the advertisements to every fax number in the state. This is not strict liability; it is absolute liability.

It is now up to the Eleventh Circuit to either adopt or reject the FCC's interpretation. Although the FCC argued that the Court "must apply" its interpretation, the defendant has suggested that the FCC is entitled to no deference because rather than an interpretation, the FCC's letter brief created new law.

Protect Yourself Against TCPA Liability

If courts around the country adopt the FCC's reasoning on seller direct liability for unsolicited faxes, the effect could be far reaching. Companies, as well as third-party marketers, could suffer as a result. We will continue to monitor this action and provide an update once the Eleventh Circuit issues a ruling.

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