Sorenson Communications, Inc. v. F.C.C.
| Decision Date | 04 June 2009 |
| Docket Number | No. 08-9545.,No. 08-9503.,No. 08-9507.,No. 08-9547.,No. 08-9550.,08-9503.,08-9507.,08-9545.,08-9547.,08-9550. |
| Citation | 567 F.3d 1215 |
| Parties | SORENSON COMMUNICATIONS, INC. and GoAmerica, Inc., Petitioners, v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents. Sorenson Communications, Inc. and GoAmerica, Inc., Intervenors-Petitioners. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Before TACHA, MURPHY and TYMKOVICH, Circuit Judges.
The Americans with Disabilities Act ("ADA") mandates that individuals with hearing or speech disabilities have access to telecommunications relay services ("TRS"), which are telephone transmission services enabling such individuals to communicate in a manner functionally equivalent to how individuals without disabilities communicate. 47 U.S.C. § 225(a)(3), (b)(1). Interstate TRS providers are compensated for the costs of providing TRS from a fund (the "TRS Fund") governed by the Federal Communications Commission ("FCC"). 47 C.F.R. § 64.604(c)(5)(iii). In two declaratory rulings, the FCC articulated three restrictions on TRS providers which petitioners challenge in this case. First, the FCC prohibited providers from using revenues received from the TRS Fund to lobby customers. Telecommunications Relay Servs. (2008 Declaratory Ruling), 23 F.C.C.R. 8993, 8998 (2008). Second, it prohibited providers from using customer data collected in the course of providing TRS for lobbying or any other purpose except the handling of TRS calls. Id. at 8997; Telecommunications Relay Servs. (2007 Declaratory Ruling), 22 F.C.C.R. 20140, 20176 (2007). Third, the FCC prohibited providers from engaging in various marketing practices designed to increase TRS usage. 2008 Declaratory Ruling, 23 F.C.C.R. at 8998-99; 2007 Declaratory Ruling, 22 F.C.C.R. at 20173-75.
Sorenson Communications, Inc. ("Sorenson") and GoAmerica, Inc. ("GoAmerica"), two TRS providers, raise statutory and constitutional challenges to these restrictions. Exercising jurisdiction pursuant to 47 U.S.C. § 402(a) and 28 U.S.C. § 2342(1), this court concludes the restriction on using revenue from the TRS Fund for lobbying is arbitrary and capricious because the FCC provided no explanation for why lobbying was singled out for prohibition. This court also concludes the restriction on the use of customer data violates the First Amendment as an impairment of providers' right to engage in political and commercial speech without any showing the restriction is narrowly tailored to advance a significant government interest. GoAmerica's challenge to the restriction on abusive marketing practices is dismissed under 47 U.S.C. § 405(a) because GoAmerica failed to present its argument to the FCC prior to seeking judicial review.
The ADA mandates that individuals with hearing or speech disabilities have access to TRS. 47 U.S.C. § 225(a)(3), (b)(1). Various types of TRS exist. 2007 Declaratory Ruling, 22 F.C.C.R. at 20141 n. 2. One type of TRS is Video Relay Service ("VRS"), which enables a person with a hearing disability to remotely communicate with a hearing person by means of a video link and communications assistant. Id. at 20142 n. 9. The VRS customer communicates with the communications assistant by sign language, and the communications assistant communicates with the hearing person by voice. See id.; 47 C.F.R. § 64.601(a)(26).
TRS customers do not pay the costs associated with the service. 47 U.S.C. § 225(d)(1)(D). Providers of traditional telephone voice transmission service are obligated to make TRS available to persons with hearing and speech disabilities. Id. § 225(b). The costs associated with interstate and intrastate TRS are compensated by way of funds administered by the federal and state governments, respectively.1 Id. § 225(d)(3)(B). The TRS Fund is financed by interstate telecommunications providers on the basis of interstate end-user telecommunications revenues. 47 C.F.R. § 64.604(c)(5)(iii)(A). TRS providers are compensated out of the TRS Fund at a rate determined by the FCC. Id. § 64.604(c)(5)(iii)(E). For VRS, the FCC sets tiered per-minute compensation rates that vary depending on the size of the provider. 2007 Declaratory Ruling, 22 F.C.C.R. at 20162-63. VRS is compensated at a higher rate than most other forms of TRS, and the number of people using VRS has increased in recent years. Id. at 20145. For the 2007-08 Fund year, nearly 75 percent of the TRS Fund was attributable to VRS. Id.
In 2006, the FCC decided to examine whether it should revise its rate structure for TRS. Further Notice of Proposed Rulemaking: Telecommunications Relay Servs., 21 F.C.C.R. 8379, 8380 (2006). In its notice of proposed rulemaking, the FCC sought "comment on a broad range of issues concerning the compensation of providers of ... TRS from the Interstate TRS Fund." Id. These included "numerous issues relating to the cost recovery methodology used for determining the TRS compensation rates paid by the Fund, as well as the scope of the costs properly compensable under Section 225 and the TRS regime as intended by Congress." Id. at 8384. The notice also proposed new methodologies for calculating per-minute compensation rates. Id. at 8385.
In the 2007 Declaratory Ruling, the FCC changed how it calculates per-minute compensation rates. 2007 Declaratory Ruling, 22 F.C.C.R. at 20176. Those changes are not at issue in this appeal. In addition to changing the compensation methodology, the FCC also used the 2007 Declaratory Ruling to clarify issues regarding improper incentives and marketing practices on the part of some TRS providers. 2007 Declaratory Ruling, 22 F.C.C.R. at 20173. Because customers do not pay for the service, the FCC explained, providers could encourage them to make calls they might not otherwise make. Id. at 20173-74. The FCC reminded providers of a 2005 Public Notice regarding impermissible marketing practices. Id. at 20174. It went on to note it was still receiving reports of VRS providers offering improper incentives to TRS customers, and it reaffirmed the prohibitions on improper incentives and marketing practices. Id. at 20175.
The FCC also declared that providers "may not use a consumer or call database to contact TRS users for lobbying or any other purpose." Id. at 20176. It explained that using a customer's profile information to contact the customer was an improper use of such data, and declared that providers could not contact customers to inform them about pending TRS compensation issues. Id. The FCC further declared that providers engaging in improper marketing practices or misusing customer information would be ineligible for compensation from the Fund. Id.
After the 2007 Declaratory Ruling was issued, Sorenson petitioned the FCC to reconsider the prohibition on using customer data to contact customers "for lobbying or any other purpose," arguing the prohibition violated the Administrative Procedures Act ("APA") and the First Amendment. See 2008 Declaratory Ruling, 23 F.C.C.R. at 8996. Counsel for Hands On Video Relay Services, Inc.2 also submitted three ex parte letters to the FCC. In those letters, Hands On stated it "supports much of the [2007 Declaratory Ruling], which addresses certain abusive marketing practices, such as ... contacts made by provider representatives urging VRS consumers to make more calls using a provider's service." The letters went on to list statutory and constitutional concerns with "the portion of the [2007 Declaratory Ruling] which prohibits providers from contacting for any reason consumers who have registered with a provider."
In response to the concerns expressed by VRS providers, the FCC issued the 2008 Declaratory Ruling for the purposes of clarification. Id. at 8993. In the 2008 Declaratory Ruling, the FCC clarified that the restriction on the use of customer information "for any ... purpose" does not prohibit contacts directly related to the handling of TRS calls. Id. at 8997. As examples, it explained providers could contact customers to inform them of a service outage, respond to a call for emergency services, assist in the delivery of emergency services, or provide technical support for TRS products or services. Id. It also stated providers could use such data "to comply with a federal statute, a Commission rule or order, a court order, or other lawful authority." Id. (quotation omitted).
In the 2008 Declaratory Ruling, the FCC also explained providers were prohibited from using revenue from the TRS Fund to contact customers and attempt to persuade them to support the provider's position on matters pending before the FCC, since the payments from the Fund are only intended to compensate providers for the costs of providing TRS. Id. at 8998. Finally, with respect to impermissible financial incentives and marketing practices, the FCC clarified that such practices are prohibited regardless of whether the provider uses customer call data...
To continue reading
Request your trial
-
State v. U.S. Dep't of the Interior, Case No. 2:15–CV–043–SWS (Lead Case)
...the facts and the choice made," the Fracking Rule is likely arbitrary, requiring that it be set aside. Sorenson Commc'ns, Inc. v. FCC, 567 F.3d 1215, 1220–21 (10th Cir.2009) (quoting Motor Vehicle Mfrs. Ass'n of U.S., 463 U.S. at 43, 103 S.Ct. 2856 ) (internal quotation marks omitted).The I......
-
Copar Pumice Co., Inc. v. Tidwell
...of validity; the burden is on the petitioner to demonstrate that the action is arbitrary and capricious. Sorenson Commc'ns, Inc. v. F.C.C., 567 F.3d 1215, 1221 (10th Cir.2009). Agency action is arbitrary and capricious if the agency "has relied on factors which Congress has not intended it ......
-
Guardians v. United States Fish And Wildlife Serv.
...under the arbitrary and capricious standard is narrow in scope, but is still a ‘probing, in-depth review.’ ” Sorenson Commc'ns, Inc. v. FCC, 567 F.3d 1215, 1221 (10th Cir.2009) Qwest Commc'ns Int'l, Inc. v. FCC, 398 F.3d 1222, 1229 (10th Cir.2005)). An agency's action is entitled to a presu......
-
Nat'l Ski Areas Ass'n, Inc. v. U.S. Forest Serv.
...require public notice-and-comment; whereas “interpretive rules” do not. See5 U.S.C. § 553(b)(3)(A), (d); Sorenson Communications v. F.C.C., 567 F.3d 1215, 1222–23 (10th Cir.2009). Legislative rules create “new rights,” “duties” and, “obligations.” See Morton v. Ruiz, 415 U.S. 199, 232, 94 S......