LeYse v. Clear Channel Broad. Inc.

• Decision Date: 06 September 2012
• Docket Number: No. 10–3739.,10–3739.
• Parties: Mark LEYSE, Plaintiff–Appellant, v. CLEAR CHANNEL BROADCASTING INC.; Clear Channel Communications, Inc.; Critical Mass Media, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

697 F.3d 360

Mark LEYSE, Plaintiff–Appellant,

v.CLEAR CHANNEL BROADCASTING INC.; Clear Channel Communications, Inc.; Critical Mass Media, Inc., Defendants–Appellees.

No. 10–3739.

United States Court of Appeals,Sixth Circuit.

Argued: Oct. 5, 2011.

Decided and Filed: Sept. 6, 2012.

ARGUED:Stephen R. Felson, Cincinnati, Ohio, for Appellant. Judith A. Archer, Fulbright & Jaworski L.L.P., New York, New York, for Appellees. ON BRIEF:Stephen R. Felson, Cincinnati, Ohio, for Appellant. Judith A. Archer, Fulbright & Jaworski L.L.P., New York, New York, Richard M. Goehler, Frost Brown Todd LLC, Cincinnati, Ohio, for Appellees.

Before: KEITH, GRIFFIN, and STRANCH, Circuit Judges.

OPINION

JANE B. STRANCH, Circuit Judge.

Mark Leyse received a prerecorded telemarketing call from a Clear Channel radio station. He sued Clear Channel for violating the Telephone Consumer Protection Act of 1991 (TCPA), Pub. L. No. 102–243, 105 Stat. 2394 (1991), which prohibits certain prerecorded telemarketing calls. The district court dismissed the action, finding that the Federal Communications Commission (FCC) had issued regulations exempting the type of call at issue from the TCPA's prohibitions; that the FCC was authorized by Congress to do so; that the court should defer to the resulting regulation under Chevron U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984); and that the regulation passed muster under Chevron.

On appeal, in addition to arguing over what deference the resulting regulation is due and whether the regulation binds the court under that level of deference, Clear Channel argues that the Hobbs Act deprives this court of subject-matter jurisdiction. Because we conclude that Chevron deference applies to the regulation, that the regulation is valid under Chevron, and that jurisdiction exists, we AFFIRM the judgment of the district court.

I. BACKGROUND

In June 2005, a radio station owned by Clear Channel called Leyse's residential telephone number and delivered the following prerecorded message:

Hi, this is Al “Bernie” Bernstein from 106.7 Lite FM. In case your favorite station went away, I want to take just a minute to remind you about the best variety of yesterday and today at 106.7. Motown, classic 70s from James Taylor, Elton, and Carole King; it's all here. Each weekday, we kick off the workday with an hour of continuous, commercial-free music. This week, when the music stops at 9:20, be the tenth caller at 1–800–222–1067. Tell us the name of the Motown song we played during that hour, and you'll win one thousand dollars. Easy money. And the best variety from 106.7 Lite FM.

Leyse filed a class-action complaint that same month against the defendants (collectively, “Clear Channel”) in the United States District Court for the Southern District of New York, alleging that the prerecorded telephone call violated the TCPA, 47 U.S.C. § 227(b)(1)(B), and the corresponding regulation 47 C.F.R. § 64.1200(a)(2). The New York district court granted Clear Channel's motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure because the court concluded that the FCC had exempted the type of call at issue from the TCPA's prohibitions against prerecorded calls. Leyse v. Clear Channel Broad., Inc., No. 05 CV 6031 HB, 2006 WL 23480 (S.D.N.Y. Jan. 5, 2006). And the court held that the FCC's determination was entitled to deference under Chevron because Congress expressly authorized the FCC to “implement and create exemptions to § 227” and because the exemptions created under this authority were promulgated after notice-and-comment rulemaking. Id. at *3.

Leyse appealed to the Second Circuit. During the appeal, the FCC submitted a letter responding to questions posed by the Second Circuit in which the FCC confirmed that the call at issue did not violate § 227 because the FCC had exempted such calls. But the Second Circuit did not consider the merits because it dismissed the action without prejudice for lack of subject-matter jurisdiction. Leyse v. Clear Channel Broad., Inc., 301 Fed.Appx. 20, 21–22 (2d Cir.2008).

In April 2009, Leyse filed the present action in Ohio. This action is materially identical to the New York action. In May 2009, Clear Channel filed a motion to dismiss for failure to state a claim and the district court granted that motion in June 2010. The court concluded that the FCC had exempted the type of call at issue here, a “hybrid call” that both announces a contest and promotes the station generally. And the court accorded Chevron deference to the FCC's decision to exempt the call, reasoning that Congress expressly delegated to the FCC the power to decide what calls to exempt, that the FCC exercised this power through “notice-and-comment rulemaking procedures in the 2003 and 2005 Orders,” and that the FCC had consistently articulated its position.¹

Leyse timely appealed the district court's decision.

II. ANALYSIS

A. Standard of review

We review the district court's decision to grant a motion to dismiss de novo. Pedreira v. Ky. Baptist Homes for Children, Inc., 579 F.3d 722, 727 (6th Cir.2009).

B. Scope of the FCC's rule

Leyse argues that the prerecorded call he received lies outside the category of calls the FCC exempted from the TCPA's prohibitions. We disagree.

The TCPA (codified in relevant part at 47 U.S.C. § 227) regulates telemarketing. Congress found that telemarketing was pervasive and that “[u]nrestricted telemarketing ... can be an invasion of privacy.” TCPA §§ 2(1), 2(5). Federal law was therefore needed to balance “[i]ndividuals' privacy rights, public safety interests, and commercial freedoms of speech and trade ... in a way that protects the privacy of individuals and permits legitimate telemarketing practices.” Id. § 2(9). And Congress explicitly found that the “Federal Communications Commission should have the flexibility to design different rules for those types of automated or prerecorded calls that it finds are not considered a nuisance to privacy, or for noncommercial calls, consistent with the free speech protections embodied in the First Amendment.” Id. § 2(13).

The TCPA's provisions prohibiting prerecorded calls—which also exempt certain prerecorded calls from that prohibition—provide, in relevant part, as follows:

(b) Restrictions on the use of automated telephone equipment

(1) Prohibitions

It shall be unlawful for any person within the United States ...

....

(B) to initiate any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party, unless the call is ... exempted by rule or order by the Commission under paragraph (2)(B);

....

(2) Regulations; exemptions and other provisions

The Commission shall prescribe regulations to implement the requirements of this subsection. In implementing the requirements of this subsection, the Commission—

....

(B) may, by rule or order, exempt from the requirements of paragraph (1)(B) of this subsection, subject to such conditions as the Commission may prescribe—

....

(ii) such classes or categories of calls made for commercial purposes as the Commission determines—

(I) will not adversely affect the privacy rights that this section is intended to protect; and

(II) do not include the transmission of any unsolicited advertisement.[²

47 U.S.C. § 227(b)(1), (b)(2) (emphasis added). So in § 227(b)(2), Congress expressly (1) mandates that the FCC prescribe regulations to implement the subsection, and (2) gives the FCC the power to exempt prerecorded, commercial calls from the general prohibition on prerecorded calls to a residential phone line.

In 1992, the FCC began and completed the notice-and-comment “rulemaking mandated by the statute,” in which it, among other things, “define[d] the contours of statutorily permissible exemptions to the prohibitions of the statute.” Notice of Proposed Rulemaking, 7 FCC Rcd. 2736, ¶ 1 (Apr. 17, 1992) (hereinafter 1992 NPRM); accord in re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 7 FCC Rcd. 8752,¶¶ 2–5 (Oct. 16, 1992) (hereinafter 1992 Report and Order). The FCC exemptedprerecorded calls “that [are] made for a commercial purpose but do[ ] not include the transmission of any unsolicited advertisement.” ³47 C.F.R. § 64.1200(c)(2) (1992); accord 1992 Report and Order ¶ 5, Appendix B. In formulating this rule, the FCC reasoned that “[s]ome messages, albeit commercial in nature, do not seek to sell a product or service and do not tread heavily upon privacy concerns.” 1992 NPRM ¶ 11.

In April 2000, a member of the public, Robert Biggerstaff, asked the FCC to clarify its exemption decision in several respects, including how it applied to prerecorded calls from television and radio stations. Biggerstaff noted that television and radio stations use recorded messages to solicit consumers to tune into their broadcasts. He argued that these prerecorded calls should not be exempt from § 227(b)'s prohibitions, reasoning that radio and TV stations are commercial entertainment “services” and make money from the viewers even if the consumer is not paying the station directly for the “service,” and the viewers receive advertising when they tune in.

The FCC addressed Biggerstaff's request along with many other matters in its new notice-and-comment rulemaking that began in 2002 and was completed in 2003. Notice of Proposed Rulemaking, 17 FCC Rcd. 17459, ¶¶ 1, 13, n.122 (Sept. 18, 2002) (hereinafter 2002 NPRM); In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 18 FCC Rcd. 14014 (July 3, 2003) (hereinafter 2003 Report and Order). The FCC's decision to reevaluate these rules, which entails public input, was related to heightened privacy concerns prompted by advances in technology, changes in telemarketing practices, and increases in the amount of telemarketing. 2002 NPRM ¶¶ 1, 7, 11.

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