In a much-anticipated decision involving the Telephone Consumer Protection Act (“TCPA”), the Eighth Circuit in Nack v. Walburg, Case No. 11-1460 (8th Cir. May 21, 2012), reversed a grant of summary judgment in favor of the defendant and remanded the proceeding, along the way questioning, but not ruling upon, the validity of the regulations by the Federal Communications Commission (“FCC”).
Although not a workplace class action, Nack demonstrates the importance of understanding regulations applicable to your business, evaluating their impact, and, if necessary, raising a timely challenge to those regulations. To the extent that TCPA class actions spike numerous Rule 23 rulings, it is also important for understanding and crafting class certification approaches.
Nack presents perhaps one of the most disconcerting fact patterns related to this already troubling statute. Nack, a lawyer and serial TCPA plaintiff, agreed to receive a facsimile communication from Douglas Walburg, the defendant. Id. at 3. After receiving the fax, Nack sued Walburg for failing to include appropriate opt-out language on the fax. The district court granted summary judgment in favor of Walburg, holding that once Nack consented to receive the specific fax, no opt-out notice was required. Id. at 5.
The Court’s Opinion
On appeal, Nack argued that the FCC regulation was unambiguous, and required an opt-out notice, regardless of whether the fax was solicited or unsolicited. Id. at 6. The FCC filed an amicus brief supporting that position, and during the first round of oral argument, the Eighth Circuit indicated its agreement with that interpretation, but questioned the authority of the FCC to make such a requirement where the statute appears to govern only unsolicited facsimiles. Id. Walburg refocused his arguments, arguing that even if the governing regulation required an opt-out notice: (1) the FCC exceeded its authority, as the statute only involves unsolicited facsimiles; (2) the FCC authority did not allow an opt-out violation to give rise to a private right of action; and (3) the regulation violates the First Amendment. Id. As to the first two arguments, the Eighth Circuit indicated that it would agree that if the FCC exceeded its authority, or received authority beyond the §227(b) (authorizing private right of actions), Walburg may have a valid argument. However, the Eighth Circuit declined to make such a ruling, as it was precluded from doing so by the Hobbs Act, which requires any challenge to a FCC regulation to be brought first before the agency. Id. at 8-11. Notably, the Eighth Circuit advised that “the district court may entertain any requests to stay proceedings for pursuit of administrative determination of the issues raised herein.” Id. at 12.
The Eighth Circuit also declined to reach Walburg’s constitutional argument, holding that he had failed to raise the issue below. Id. In closing, however, the Eighth Circuit stated that while it had previously ruled in Missouri ex rel. Nixon v. Am. Blast Fax, Inc., 323 F.3d 649, 660 (2003), that TCPA provisions related to unsolicited fax advertisements were not an unconstitutional restriction upon commercial speech, “the analysis and conclusions […] would not necessarily be the same if applied to the agency’s extension of authority over solicited advertisements.” Id.
Unfortunately, the Eighth Circuit left open several issues that will allow continued expansion of this niche area of class action litigation. However, through its commentary, the Eighth Circuit opened several doors for potential challenges to the statute. It should be noted that some of these challenges may ultimately be untimely, given the FCC ‘s small window of time allotted to challenge its regulations. We will keep a close eye on this case as it is sure to bring additional important changes to the class action landscape. In the meantime, this case provides a good reminder to businesses to keep abreast of evolving regulations that may apply to your business, including, in this case, marketing.