Nack v. Walburg

• Decision Date: 21 May 2013
• Docket Number: No. 11–1460.,11–1460.
• Citation: 715 F.3d 680
• Parties: Michael R. NACK, Individually and on behalf of all others similarly situated, Plaintiff–Appellant v. Douglas Paul WALBURG, Defendant–Appellee Anda, Inc., Amicus on Behalf of Appellee Crown Kosher Meat Market, Inc.; Menachem Raitport, Inc.; Federal Communications Commission, Amici on Behalf of Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

715 F.3d 680

Michael R. NACK, Individually and on behalf of all others similarly situated, Plaintiff–Appellant

v. Douglas Paul WALBURG, Defendant–AppelleeAnda, Inc., Amicus on Behalf of AppelleeCrown Kosher Meat Market, Inc.; Menachem Raitport, Inc.; Federal Communications Commission, Amici on Behalf of Appellant.

No. 11–1460.

United States Court of Appeals, Eighth Circuit.

Submitted: Sept. 19, 2012.

Filed: May 21, 2013.

Phillip Andrew Bock, argued, Chicago, IL, Max G. Margulis, Chesterfield, MO, Brian J. Wanca, David M. Oppenheim, Rolling Meadows, IL, Robert M. Hatch, Chicago, IL, on the brief, for Appellant.

Timothy J. Wolf, argued, Russell F. Watters, Robert L. Carter, T. Michael Ward, on the brief, St. Louis, MO, for Appellee.

Eric L. Samore, argued, Chicago, IL, Michael Resis, Albert M. Bower, Yesha Sutaria, Chicago, IL, Matthew A. Brill, Alexander Maltas, Matthew T. Murchison, Washington, DC, Jeffrey W. Muskopf, Saint Louis, MO, on the brief, for amicus Anda, Inc.

Jacob M. Lewis, argued, Laurel R. Bergold, on the brief, Washington, DC, for amicus Federal Communications Commission.

Aytan Yehoshua Bellin, White Plains, NY, on the amici brief of Menachem Raitport and Crown Kosher Meat Market, Inc.

Before WOLLMAN, MELLOY, and COLLOTON, Circuit Judges.

MELLOY, Circuit Judge.

Plaintiff Michael Nack appeals the district court's grant of summary judgment in this case arising under the Telephone Consumer Protection Act of 1991 (“TCPA”), Pub.L. No. 102–243, 105 Stat. 2394, as amended by the Junk Fax Prevention Act of 2005 (“JFPA”), Pub.L. No. 109–21, 119 Stat. 359. Nack bases his claims upon the receipt of one fax advertisement from Defendant Douglas Walburg, which Nack's agent undisputedly consented to receive. The one fax Nack received did not contain opt-out language that he argues was mandated by federal regulation. 47 C.F.R. § 64.1200(a)(3)(iv). He asserts class-action claims on behalf of persons similarly situated and does not base claims upon any party's receipt of an unsolicited fax advertisement. The parties offered competing interpretations of the regulation, and the district court held the regulation did not apply in the current circumstances.

After one round of oral arguments that focused upon regulatory interpretation, our court solicited the input of the Federal Communications Commission (“FCC”). The FCC responded with an amicus brief explaining its interpretation of its own regulation. According to the FCC, the contested opt-out language is required, even on faxes sent after obtaining a potential recipient's consent. Although this interpretation is consistent with the plain language of the regulation, it is questionable whether the regulation at issue (thus interpreted) properly could have been promulgated under the statutory section that authorizes a private cause of action.

Nevertheless, based upon the FCC's interpretation, and for the reasons discussed below, we must reverse the grant of summary judgment. The Administrative Orders Review Act (“Hobbs Act”), 28 U.S.C. § 2342 et seq., precludes us from entertaining challenges to the regulation other than on appeals arising from agency proceedings (except arguably in extenuating circumstances not at issue in this case). Without addressing such challenges, we may not reject the FCC's plain-language interpretation of its own unambiguous regulation. Our reversal today, therefore, places the parties back before the district court where Walburg faces a class-action complaint seeking millions of dollars even though there is no allegation that he sent a fax to any recipient without the recipient's prior express consent.

I. Background

After consenting to receive and then receiving the fax advertisement at issue in this case, Nack filed the present complaint against Walburg. According to Nack's complaint, the key statutory and regulatory provisions at issue are 47 U.S.C. § 227(b)(3) and 47 C.F.R. § 64.1200(a)(3)(iv). No party argues additional facts bear upon the case at this stage of the proceedings. Accordingly, we describe the statutory and regulatory provisions at issue, describe the procedural history of the present case, and move directly to our discussion of the merits.

The TCPA, as amended by the JFPA, defines the term “unsolicited advertisement” to mean “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission, in writing or otherwise.” 47 U.S.C. § 227(a)(5) (2006).¹ In relevant part, the statute prohibits the “use [of] any ... device to send, to a telephone facsimile machine, an unsolicited advertisement, unless ... the unsolicited advertisement contains a notice meeting the requirements under paragraph 2(D).” Id. § 227(b)(1)(C) & (C)(iii). The notice must be conspicuous, provide a domestic telephone number, and identify a cost-free mechanism for the recipient to opt-out of receiving future “unsolicited advertisements.” Id. § 227(b)(2)(D)(i), (iv)(I)–(II). The sender must also make the opt-out mechanism available “any time on any day of the week.” Id. § 227(b)(2)(D)(v). Finally, the TCPA as amended by the JFPA creates a private cause of action based upon § 227(b) or upon regulations promulgated under § 227(b), as follows:

A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State—

(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation,

(B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or

(C) both such actions.

If the court finds that the defendant willfully or knowingly violated this subsection or the regulations prescribed under this subsection, the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under subparagraph (B) of this paragraph.

47 U.S.C. § 227(b)(3) (emphasis added).

The statute itself does not expressly impose similar limitations or requirements on the sending of solicited or consented-to fax advertisements. The most pertinent regulation in this case, however, read most naturally and according to its plain language, extends the opt-out notice requirement to solicited as well as unsolicited fax advertisements:

A facsimile advertisement that is sent to a recipient that has provided prior express invitation or permission to the sender must include an opt-out notice that complies with the requirements in paragraph (a)(3)(iii) of this section.

47 C.F.R. § 64.1200(a)(3)(iv).

In the district court, the parties framed their arguments in terms of regulatory interpretation. Based upon the limited reach of the actual statute, the district court doubted that the above-quoted language from 47 C.F.R. § 64.1200(a)(3)(iv) should be interpreted to apply to faxes other than unsolicited faxes. Looking at other regulatory provisions, headers, titles, and the general organizational structure of the regulation (including the placement of section 64.1200(a)(3)(iv) within a section dealing generally with unsolicited facsimiles), the district court held that the regulation applied only to unsolicited faxes and did not apply in the present case.

In reaching this conclusion, the district court reviewed commentary including an FCC order from 2006 discussing the regulation of permissive or solicited fax advertisements under the JFPA. In that commentary, the FCC described the purpose of the regulation at issue in a manner largely consistent with the plain language of the regulation, stating:

In addition, entities that send facsimile advertisements to consumers from whom they obtained permission, must include on the advertisement their opt-out notice and contact information to allow consumers to stop unwanted faxes in the future.

In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, Junk Fax Prevention Act of 2005, 21 FCC Rcd. 3787, 3812 (2006) (“2006 Order”). As noted by the district court, however, the FCC also set forth a confusing and inconsistent assertion in the 2006 Order. In direct contradiction to the plain language of the regulation and the passage quoted above, the FCC stated, “the opt-out notice requirement only applies to communications that constitute unsolicited advertisements.” 2006 Order at 3808 n. 154.

After an initial round of briefing and arguments, we solicited the views of the FCC as an amicus. In its brief, the FCC confirmed its plain-language interpretation of its regulation. The FCC explained that the regulation reached faxes for which the recipient had granted consent because consent, once granted, need not be interpreted as permanent. The FCC sought to ensure that even recipients who consented to receive a fax could easily and without expense stop the sending of any possible future faxes. The FCC acknowledged, but did not attempt to explain, the inconsistent passage from the 2006 Order.

Through supplemental briefing in response to the FCC's brief, and through a second round of arguments, Walburg's position evolved to reflect the shifting landscape around him. Although he initially argued primarily that the regulation could not be interpreted as applying to “solicited” faxes, he now focuses his argument upon the validity of the regulation and the scope of the private right of action. He argues that the regulation could not have been properly promulgated pursuant to the authorizing statute because the statute itself does not reach solicited fax advertisements. He also argues that, even if the FCC otherwise possessed the authority to promulgate the regulation at issue, the FCC's statutory authority for the regulation of solicited fax advertisements could not come from the particular statutory section that authorizes the private cause of action. Fur...