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FCC Brief as Amicus Curiae - Palm Beach Golf v. Sarris (11th Cir.)

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Released: July 28, 2014
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Case: 13-14013 Date Filed: 07/17/2014 Page: 1 of 9

Federal Communications Commission

Washington, D.C. 20554

Office Of General Counsel

445 12th St. S.W.

Washington, D.C. 20554

Tel: (202) 418-1740 / Fax: (202) 418-2819

July 17, 2014

John Ley, Clerk of Court

United States Court of Appeals

for the Eleventh Circuit

56 Forsyth Street, N.W.

Atlanta, Georgia 30303

Re:

Palm Beach Golf Center-Boca, Inc. v. Sarris, No. 13-14013

Dear Mr. Ley:

The Federal Communications Commission respectfully submits this letter

brief in response to the Court’s request of July 7, 2014. In that request, the Court

asked for the FCC’s position “on whether the [Telephone Consumer Protection Act

(TCPA)] and its accompanying regulations allow a plaintiff to recover damages

from a defendant who sent no facsimile to the plaintiff, but whose independent

contractor did.” As we explain, the answer is yes.

In its letter, the Court adverted to the FCC’s May 9, 2013 declaratory ruling

in DISH Network, 28 FCC Rcd 6574 (2013), pet. for review dismissed, DISH

Network, LLC v. FCC, 552 Fed. Appx. 1 (D.C. Cir. 2014), which addressed

questions regarding the availability of direct and vicarious liability for unlawful

telemarketing calls under the TCPA. As the Court observed, the TCPA and the

FCC’s implementing regulations “use[] different language in describing facsimile

transmissions and telemarketing calls.”

The DISH Network ruling did not address or alter the treatment of facsimile

transmissions under the TCPA or the Commission’s implementing regulations.

Under the terms of the statute and regulations, the recipient of an unsolicited

facsimile advertisement may recover damages from a defendant that does not itself

transmit the offending facsimile, if the defendant has hired an independent

contractor to transmit facsimiles advertising the defendant’s goods or services.

Such liability does not depend upon the application of federal common law

vicarious liability principles.

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BACKGROUND

1. Statutory and Regulatory Background. The Telephone Consumer

Protection Act, Pub. L. No. 102-243, 105 Stat. 2394, codified at 47 U.S.C. § 227,

contains an assortment of provisions designed to protect consumer privacy and

prevent unwanted communications over telephone lines. Separate subsections of

the statute address voice telephone calls and facsimile advertisements. Those

subsections contain different language, and FCC rules implementing those

provisions treat voice calls and faxes differently.

a. Voice Telephone Calls. The TCPA makes it unlawful, subject to certain

exceptions, for any person within the United States to “initiate any telephone call

to any residential telephone line using an artificial or prerecorded voice … without

the prior express consent of the called party.” 47 U.S.C. § 227(b)(1)(B). Such

artificial or prerecorded voice calls are commonly referred to as “robo-calls.” The

statute also authorizes the FCC to establish a national do-not-call registry that

consumers can use to notify telemarketers that they object to receiving telephone

solicitations. 47 U.S.C. § 227(c)(1)-(4). The FCC’s implementing regulations

provide – again, subject to exceptions – that no person or entity may “initiate any

telephone solicitation … [to any] residential telephone subscriber who has

registered his or her telephone number on the national do-not-call registry.” 47

C.F.R. § 64.1200(c)(2).

In identifying the party that “initiates” calls in violation of these robo-call

and do-not-call-registry prohibitions, the Commission’s rules distinguish between

the “telemarketer” and the “seller.” The Commission defines the “telemarketer” as

“the person or entity that initiates a telephone call or message for the purpose of

encouraging the purchase or rental of, or investment in, property, goods, or

services, which is transmitted to any person.” 47 C.F.R. § 64.1200(f)(11)

(emphasis added). By contrast, the “seller” is defined as “the person or entity on

whose behalf a telephone call or message is initiated for the purpose of

encouraging the purchase or rental of, or investment in, property, goods, or

services, which is transmitted to any person.” Id. § 64.1200(f)(9) (emphasis

added). Thus, for example, in the DISH Network context, DISH was the seller and

its third-party telemarketers were the parties that initiated calls promoting DISH’s

satellite television services.

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The DISH Network ruling arose in the context of primary jurisdiction

referrals from TCPA litigation involving alleged violations of the robo-call and do-

not-call prohibitions contained in the TCPA and associated FCC rules. In it, the

FCC relied upon these regulatory definitions of “seller” and “telemarketer” to hold

that the party that is directly liable for unlawfully “initiat[ing]” a robo-call or a call

to a number on the do-not-call registry is the telemarketer that “takes the steps

necessary to physically place a telephone call” and not the seller whose goods or

services the telemarketer promotes. DISH Network ¶ 26; see also id. ¶ 27. But the

Commission also ruled that although a seller is not directly liable for robo-call and

do-not-call violations committed by its third-party telemarketers, the seller may

nevertheless be vicariously liable for such violations under federal common law

agency principles.1 Id. ¶¶ 28-47.

b. Facsimile Advertisements. The TCPA uses different language governing

facsimile transmissions. Specifically, the TCPA prohibits the “use [of] any

telephone facsimile machine … to send, to a telephone facsimile machine, an

unsolicited advertisement.” 47 U.S.C. § 227(b)(1)(C) (emphasis added). In contrast

with the Commission’s construction of “initiate” in the robo-call and do-not-call

contexts – where FCC rules describe the directly-liable call “initiat[or]” as the

“telemarketer” that physically makes the call – the FCC defines the directly-liable

“sender,” for purposes of the TCPA’s unsolicited facsimile advertisement

prohibition, as “the person or entity on whose behalf a facsimile unsolicited

advertisement is sent or whose goods or services are advertised or promoted in the

unsolicited advertisement.” 47 C.F.R. § 64.1200(f)(10). In other words, under the

plain text of that definition – 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.2

1 The DISH Network ruling addresses situations where a seller relies on third-party

telemarketers; a seller could of course be directly liable if it acts as its own

telemarketer.

2 Under the FCC’s rules, a party that transmits the unsolicited facsimile

advertisement, but does not also meet the definition of “sender,” may nevertheless

be jointly and severally liable (along with the sender) “if it demonstrates a high

degree of involvement in, or actual notice of, the unlawful activity and fails to take

steps to prevent such facsimile transmissions.” 47 C.F.R. § 64.1200(a)(4)(vii); see

Rules and Regulations Implementing the Telephone Consumer Protection Act of

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The FCC adopted the codified definition of “sender” in 2006. Junk Fax

Order, 21 FCC Rcd at 3808 (¶ 39) (“We take this opportunity to emphasize that

under the Commission’s interpretation of the facsimile advertising rules, the sender

is the person or entity on whose behalf the advertisement is sent.”), 3822 (setting

out codified definition of “sender”). That codification is consistent with the

Commission’s pre-existing uncodified interpretation that “the entity or entities on

whose behalf facsimiles are transmitted are ultimately liable for compliance with

the rule banning unsolicited facsimile advertisements.” Rules and Regulations

Implementing the Telephone Consumer Protection Act of 1991, 10 FCC Rcd

12391, 12407 (¶ 35) (1995).

2. The District Court Proceedings Below. In the proceedings below, the

plaintiff golf center (Palm Beach Golf) brought a private TCPA lawsuit against the

defendant dental office (Sarris), alleging that Sarris had sent the golf center an

unsolicited facsimile advertisement in violation of 47 U.S.C. § 227(b)(1)(C). See

District Court Order at 10-11. The district court described the alleged link between

defendant Sarris and the facsimile transmitted to the plaintiff golf center as

follows: Sarris had “engaged an independent contractor” named Roberts to provide

marketing services to his dental practice, giving Roberts “‘free rein’ to legally

advertise the practice.” Id. at 2. Roberts, in turn, allegedly contracted with an entity

called Business to Business Solutions (“B2B”), which sold facsimile advertising

services in the United States on behalf of a Romanian company called Macaw. See

id. at 2-3. B2B/Macaw allegedly then transmitted the offending fax to the golf

center. See id. at 3-4, 7-9, 11.

The golf center alleged that this link between Sarris and the fax was

sufficient to create direct (as opposed to vicarious) liability on Sarris’s part,

1991, 21 FCC Rcd 3787, 3808 (¶ 40) (2006) (Junk Fax Order). Such “high degree

of involvement” by the party transmitting the facsimile may include “suppl[ying]

the fax numbers used to transmit the advertisement,” “mak[ing] representations

about the legality of faxing to those numbers,” or “advis[ing] a client about how to

comply with the fax advertising rules.” Junk Fax Order, 21 FCC Rcd at 3808

(¶ 40); see also Rules and Regulations Implementing the Telephone Consumer

Protection Act of 1991, 18 FCC Rcd 14014, 14131 (¶ 196) & n.724 (2003) (noting

that requisite high degree of involvement by the party transmitting the fax may also

include a “role in reviewing and assessing the content of a facsimile message”).

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because Sarris met the definition of “sender” under the FCC’s rules and the fax

advertisement was unsolicited. Id. at 14.

The district court granted summary judgment in favor of the defendant

dental office. Id. at 33. The court rejected the golf center’s direct liability claim,

ruling that it could establish liability, if at all, only on the basis of vicarious

liability. Id. at 12-13. In doing so, the court relied on the FCC’s ruling, in DISH

Network, that the “seller” generally is not directly liable for unlawful telemarketing

calls initiated by third-party telemarketers on the seller’s behalf. Id. The court

acknowledged that DISH Network “specifically examined the meaning of the word

‘initiate’ as used in the [statutory] telemarketing prohibition … instead of the word

‘send’ as used in the [statutory] unsolicited fax prohibition.” Id. at 13 n.13. The

court also conceded that DISH Network “specifically addressed the [FCC’s rule

defining the] term ‘seller’ in the telemarketing context, not [the definition of]

‘sender’ in the fax context.” Id. at 13 n.13. The court nevertheless appeared to find

that the Commission’s analysis in DISH Network regarding the absence of direct

seller liability in the telemarketing context also applied to foreclose direct sender

liability in the fax advertising context, and hence foreclosed direct sender liability

by the defendant dental office. Id. at 12-13.3

ARGUMENT

In holding “that a party is not directly liable” under the TCPA’s prohibition

against “send[ing]” unsolicited facsimile advertisements “unless it actually

transmits a fax,” the district court acknowledged the existence of, but did not cite

or discuss, “pre-DISH Network decisions” to the contrary. District Court Order at

14; see also Addison Automatics, Inc. v. The RTC Group, Inc., 2013 WL 3771423

at *4 (N.D. Ill. 2013) (direct TCPA liability available against party whose goods or

services are advertised in fax transmitted by others); Machesney v. Lar-Bev of

Howell, Inc., 292 F.R.D. 412, 415 (E.D. Mich. 2013) (same). The court

3 The district court went on to conclude that summary judgment for the defendant

also was warranted because Palm Beach Golf had not established a case for

vicarious liability under common law agency principles, District Court Order at

14-23, and because the plaintiff lacked Article III standing to present its TCPA

claims, id. at 23-29. This Court’s July 7 Letter did not ask the FCC to address these

bases for the district court’s decision and we express no view with respect to those

issues (nor to the factual disputes addressed in the parties’ briefs).

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determined, however, that the DISH Network ruling supplanted any prior precedent

on the subject and compelled the conclusion that a party whose goods or services

were promoted in an unsolicited fax transmitted by a third party could be held

liable, if at all, only “under federal common law principles of agency for the

actions of a third-party.” Id. That holding was in error.

First, the DISH Network ruling applies only to liability for telemarketing

calls and neither addresses nor alters the Commission’s pre-existing regulatory

treatment of unsolicited facsimile advertisements. As noted above, the FCC issued

the DISH Network ruling in response to primary jurisdiction referrals from TCPA

litigation involving alleged violations of the robo-call and do-not-call prohibitions.

See DISH Network ¶¶ 5-23. Those provisions prohibit the “initiat[ion]” of certain

robo-calls and calls to telephone numbers listed on the national do-not-call

registry. See 47 U.S.C. § 227(b)(1)(B) (robo-call prohibition); 47 C.F.R.

§ 64.1200(c)(2) (do-not-call prohibition); see pp. 2-3, above. In clarifying which

party incurs direct liability for initiating a call in that context, the FCC found

guidance in its rules defining “telemarketer” as the party that “initiates” a

telephone call and “seller” as the party “on whose behalf a telephone call” is

initiated. DISH Network ¶ 27 (citing 47 C.F.R. § 64.1200(f)(11) & (9)). The

Commission determined on the basis of those definitions that the party that incurs

direct liability for “initiat[ing]” an unlawful call is the telemarketer that physically

makes the call and not the seller on whose behalf a call is made. Id. ¶¶ 26-27.

Because facsimile advertisements were not at issue in the DISH Network

proceeding, the FCC had no occasion to opine on direct or vicarious liability in that

context. Thus, nowhere in the DISH Network ruling does the FCC address the

distinct prohibition against “send[ing]” unsolicited facsimile advertisements under

47 U.S.C. § 227(b)(1)(C), or the distinct definition of “sender” in the agency’s

rules (47 C.F.R. § 64.1200(f)(10)). The district court therefore improperly relied on

the DISH Network ruling to hold that direct liability by the defendant dental office

was foreclosed.

Second, as described above (at pp. 3-4), the FCC has defined the party that

incurs direct liability for “send[ing]” an unsolicited facsimile advertisement under

47 U.S.C. § 227(b)(1)(C) very differently from the party that unlawfully

“initiate[s]” a robo-call or do-not-call violation. By its plain terms, 47 C.F.R.

§ 64.1200(f)(10) defines the direct liability-incurring “sender” not as the party that

physically transmits the fax, but as “the person or entity on whose behalf a

6

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Case: 13-14013 Date Filed: 07/17/2014 Page: 7 of 9

facsimile unsolicited advertisement is sent or whose goods or services are

advertised or promoted in the unsolicited advertisement.” (Emphasis added.) Read

in light of that binding regulatory definition,4 the unsolicited fax prohibition in

section 227(b)(1)(C) clearly “allow[s] a plaintiff to recover damages [under a

theory of direct liability] from a defendant who [transmitted] no facsimile to the

plaintiff, but whose independent contractor did,” July 7 Letter at 1, so long as the

transmitted fax constitutes an unsolicited facsimile advertisement promoting the

defendant’s goods or services.

CONCLUSION

For the foregoing reasons, the district court misapplied the TCPA, the DISH

Network ruling, and FCC regulations regarding unsolicited facsimile

advertisements to the extent that it ruled, as a matter of law, that the defendant

dental practice may not be directly liable under the TCPA for any unsolicited

facsimile advertisement sent to the plaintiff golf center unless the defendant

actually transmitted the fax.

Respectfully submitted,

/s/ Laurence N. Bourne

Jonathan B. Sallet

General Counsel

David Gossett

Acting Deputy General Counsel

Richard K. Welch

Deputy Associate General Counsel

Laurence N. Bourne

Counsel

4 As the district court otherwise acknowledges, courts in non-Hobbs Act

proceedings such as this one “must apply” – and may not entertain collateral

attacks on – a final order or regulation of the FCC in deciding an issue addressed

by such order or regulation. District Court Order at 13 n.13 (citing 28 U.S.C.

§ 2342(1)). Accord CE Design, Ltd. v. Prism Business Media, Inc., 606 F.3d 443,

446 (7th Cir. 2010); Self v. BellSouth Mobility, Inc., 700 F.3d 453, 461-64 (11th

Cir. 2012).

7

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Case: 13-14013 Date Filed: 07/17/2014 Page: 8 of 9

In the

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

PALM BEACH GOLF CENTER-BOCA, INC.

)

APPELLANT, )

V. ) NO. 13-14013

JOHN G. SARRIS, D.D.S., P.A. )

APPELLEE.

)

CERTIFICATE OF SERVICE

I, Laurence N. Bourne, hereby certify that on July 17, 2014, I electronically filed

the foregoing Letter Brief with the Clerk of the Court for the United States Courts

of Appeals for the Eleventh Circuit by using the CM/ECF system. Participants in

the case who are registered CM/ECF users will be served by the CM/ECF system.

Phillip A. Bock

Ryan M. Kelly

Daniel J. Cohen

David M. Oppenheim

Bock & Hatch, LLC

Brian J. Wanca

134 N. Lasalle Street

Anderson Wanca

Suite 1000

3701 Algonquin Rd

Chicago, IL 60602

Suite 760

Counsel for: Palm Beach Golf Center-

Rolling Meadows, IL 60008

Boca

Counsel for: Palm Beach Golf Center-

Boca

Gregory S. Weiss

Kevin D. Franz

Cohen Milstein Sellers & Toll, PLLC

William S. Reese

2925 PGA Blvd

Lane Reese Summers Ennis &

Suite 200

Perdomo, PA

Palm Beach Gardens, FL 33410

2600 S. Douglas Rd

Counsel for: Palm Beach Golf Center-

Suite 304

Boca

Coral Gables, FL 33134

Counsel for: John G. Sarris

   

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Case: 13-14013 Date Filed: 07/17/2014 Page: 9 of 9

Michael Resis

Molly Arranz

Eric Samore

SmithAmundsen, LLC

150 N. Michigan Ave

Suite 3300

Chicago, IL 60601

Counsel for: John G. Sarris

/s/ Laurence N. Bourne

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