In an unusual move, on January 16, 2018, the Federal Communications Commission (FCC) asked the Supreme Court to uphold a Court of Appeals ruling, even though that ruling invalidated one of the FCC’s own rules. The case, known as Bais Yaakov v. FCC, was decided by the District of Columbia Court of Appeals in March 31, 2017. The case concerned “junk faxes,” or faxed advertisements, which continue to be used as a means of advertisement despite the general decline in fax machines.
In 2006, the FCC issued a rule that required all fax advertisements to have specific opt-out instructions on the first page, and, at the time, the FCC took the position that the instructions must be present whether the fax was solicited or unsolicited.
The problem was, Congress only gave the FCC the authority to regulate unsolicited faxes. Under the administration of President Barack Obama, the FCC consistently fought to maintain the requirements for solicited faxes, and a small group of class-action attorneys got rich by suing legitimate businesses for failure to include the full opt-out instructions.
In March 2017, the Bais Yaakov ruling was issued, restricting the FCC rule to unsolicited faxes. The plaintiff’s attorney appealed en banc, lost, and then asked the Supreme Court to hear the case.
The FCC was given the chance to weigh in on the issue, and with the change in the FCC’s leadership under President Donald Trump, the FCC asked the Supreme Court to uphold the lower court’s ruling, even though that ruling went against the official FCC regulation. While the FCC’s court filing did not contain any sweeping statements of policy, it is clear that the FCC’s position fits under President Trump’s general philosophy of removing onerous business regulations.
TAKEAWAY: Because the FCC has agreed with a private defendant that courts should no longer enforce the FCC solicited fax rule, the Supreme Court will likely uphold the lower court’s ruling, effectively limiting the requirement of placing opt-out instructions on faxes to unsolicited faxes only.
PartnerScott has focused on complex commercial litigation and arbitration involving advertising and marketing law, class action defense, administrative investigations, contractual disputes, consumer fraud, and business ...