On May 9, 2013, the Federal Communications Commission (“FCC”) issued a declaratory ruling which found that Dish Network, LLC may be held vicariously liable for a third-party marketer’s violations of the Telephone Consumer Protection Act of 1991 (“TCPA”). Last year we told you that the FCC ruled that sellers “may be held vicariously liable” for the actions of their third-party telemarketers if an agency relationship exists. (See FCC Issues New TCPA Ruling on Telemarketing Liability). Dish Network then appealed this declaratory ruling to the United States Court of Appeals for the District of Columbia. In late January of this year, the Court refused to take up the issue, citing jurisdictional concerns. Although language in the Court’s decision suggests that the FCC’s ruling is not entitled to deference by the courts, the FCC’s decision may nonetheless still be used by courts. Accordingly, the FCC’s decision on TCPA vicarious liability remains intact and, as such, marketers must be especially cautious moving forward.
Vicarious Liability under the TCPA
In two prior federal actions, the plaintiffs alleged that the underlying sellers were liable for TCPA violations engaged in by their third-party telemarketers. The sellers countered that they did not “initiate” the subject calls as defined under the TCPA because the third-party telemarketing contractors were the actual initiators of the calls, and thus the sellers should not be held liable.
Before ruling on the TCPA claims, the courts in each case asked the FCC for a declaratory ruling on the potential liability of the seller. The FCC subsequently held that, while the sellers did not “initiate” the calls as contemplated under the TCPA, they could be held liable where there is an “agency relationship.”
The District of Columbia Appellate Court Decision
Dish Network petitioned the United States Court of Appeals for the District of Columbia to review the FCC’s decision concerning vicarious liability. The Court noted that its jurisdiction is limited to review only “final orders” of the FCC. The Court determined that the FCC’s declaratory ruling on vicarious liability under the TCPA is not “final” because the decision has no binding effect on the courts and is not entitled to deference under federal law. During the appeal, the FCC itself argued that the declaratory ruling is persuasive only, and not binding on any courts. Accordingly, Dish Network’s appeal was dismissed.
It is unlikely that any federal court will overturn the FCC’s declaratory ruling on vicarious liability, and although not binding, the ruling may be relied on by courts deciding liability in cases brought under the TCPA. Sellers should therefore take care to begin relationships with telemarketers through well-crafted agreements that seek to prevent the establishment of an agency relationship, using guidance provided by the FCC.