D.C. Circuit Upholds FCC Order Keeping Commercial Non-Telemarketing Exemption

TCPA Connect

The D.C. Circuit Court of Appeals rejected a challenge to the Federal Communications Commission’s (FCC) commercial non-telemarketing call exemption, upholding the agency’s December 2020 order maintaining the exemption and establishing specific requirements as mandated by the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act.

Section 227(b)(2)(B) of the Telephone Consumer Protection Act (TCPA) authorizes the FCC to exempt two types of calls: “calls that are not made for a commercial purpose” and “such classes or categories of calls made for commercial purposes as the Commission determines … will not adversely affect the privacy rights that this section is intended to protect” and “do not include the transmission of any unsolicited advertisement.”

In 1992, the FCC broadly exempted prerecorded or artificial voice message calls to residences that are “made for commercial purposes which do not transmit an unsolicited advertisement.”

When Congress enacted the TRACED Act in 2019, Section 8 of the new law directed the agency to ensure that every TCPA exemption contained requirements for calls made pursuant to the exemption with regard to the classes of parties that may make such calls, the classes of parties that may be called, and the number of such calls that a calling party may make to a particular called party.

The FCC issued a notice of proposed rulemaking in October 2020 proposing measures to implement Section 8 and seeking comment on how the agency could best implement it. The agency asked whether the general exemption for commercial non-telemarketing calls remained in the public interest.

An individual named Vincent Lucas submitted comments in response, contending that the FCC should eliminate the exemption and replace it with “specific, narrowly tailored exemptions.”

On Dec. 30, 2020, the FCC issued an order retaining the exemption for commercial non-telemarketing calls and establishing specific requirements for the exemption, including limits on the number of calls within a 30-day period.

Lucas filed a petition for judicial review, challenging the 2020 order as arbitrary and capricious.

The federal appellate panel disagreed, not swayed by Lucas’ argument that the FCC acted arbitrarily and capriciously in applying the same numerical limits to all subcategories of calls that are exempted as commercial non-telemarketing calls. Lucas also told the court that the exemption was too broad, allowed for certain subcategories of calls that are advertisements and adversely affected privacy rights that the TCPA intended to protect.

“These arguments are without merit,” the D.C. Circuit wrote. “The Commission’s decision to retain the exemption and establish limits on such calls in accordance with the TRACED Act was reasonable and supported by the record. In its order, the Commission found that commercial non-telemarketing calls should remain exempt because they ‘benefit[] consumers by enabling businesses to communicate with their customers on important matters such as prescription refill reminders, power outage updates, and data security breaches.’”

While other commenters argued for or against certain limits related to the exemption, they nevertheless contended that the exemption generally remained in the public interest, the court pointed out—Lucas was the only commenter advocating for the wholesale elimination of the exemption.

“The retention of this exemption is all the more reasonable given the Commission’s implementation of new limits on the number of exempted calls permitted (three per 30-day period) and an opt-out mechanism that allows consumers to prohibit unwanted calls,” the panel wrote.

Nor did the FCC act arbitrarily and capriciously by implementing the same numerical limits for all subcategories of calls within the exemption.

Commenters (including Lucas) did not submit any specific cost or benefit data on potential call limits to demonstrate that different limits were necessary for any specific subcategory, and the agency found the cap struck “the appropriate balance between these callers reaching consumers with information and reducing the number of unexpected and unwanted calls consumers currently receive.”

As for Lucas’ contention that certain debt collection calls and calls from broadcasters should not be exempt as commercial non-telemarketing calls, the D.C. Circuit agreed with the FCC that the challenge was time-barred, as it implicated the review of agency rulings adopted in 1992 and 2003.

To read the judgment in Lucas v. Federal Communications Commission, click here.

Why it matters: The D.C. Circuit panel’s decision upholds the FCC’s 2020 order and maintains the exemption for commercial non-telemarketing calls (albeit with limits on the number of calls that can be made). However, due to the Paperwork Reduction Act, portions of the FCC’s 2020 order (including the limit on the number of calls within a 30-day period) are delayed indefinitely. The FCC announced that it will publish a document in the Federal Register announcing the effective date of these exemptions. We will continue to monitor the Federal Register. In the meantime, for more information on these exemptions, see the article linked here.

manatt-black

ATTORNEY ADVERTISING

pursuant to New York DR 2-101(f)

© 2022 Manatt, Phelps & Phillips, LLP.

All rights reserved