Antitrust Law Daily Wrap Up, PRIVACY—S.D. Fla.: Junk fax proceeding stayed pending FCC decision on waiver of TCPA liability, (May 1, 2015)

By Michael Menzhuber, J.D., LL.M.

A health care product provider’s motion to stay a proceeding, pending a Federal Communications Commission (FCC) ruling on the provider’s petition for retroactive waiver of Telephone Consumer Protection Act (TCPA) liability for sending fax advertisements that did not contain adequate opt-out notices, was partially granted by a federal district court in Miami. However, the court determined that the parties could proceed with certain discovery issues (Bondhus v. Henry Schein, Inc., April 30, 2015, Cooke, M.).

Dr. Marvin Bondhus filed a class action lawsuit against Henry Schein, Inc., a health care product provider, for violating the TCPA by sending fax advertisements that failed to contain an adequate opt-out notice. Schein filed a Petition for Waiver with the FCC for a retroactive waiver of TCPA liability and, subsequently, filed motion to stay the proceedings until the FCC ruled on its waiver petition.

The FCC rules require an opt-out notice on all fax ads, even those that are sent to recipients that had provided prior express invitation or permission to receive the faxes. After receiving retroactive waiver of TCPA liability requests from two-dozen petitioners, the FCC found that a footnote in its Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Junk Fax Prevention Act of 2005, 21 FCC Rcd. (2006) that caused confusion regarding the applicability of the opt-out requirement to faxes sent to recipients who had provided prior express permission to receive the faxes or created a false sense of confidence that the requirement did not apply. Consequently, the FCC permitted similarly-situated parties, such as Schein, to seek similar waivers.

Motion to Stay. The court noted that the primary jurisdiction doctrine, used to reconcile the function of administrative agencies with the judicial function of the court, applies whenever enforcement of a claim requires the resolution of issues by an administrative body. The court further noted that there were four factors uniformly present in cases where the doctrine is properly applied: (1) the need to resolve an issue; (2) the issue is within the jurisdiction of an administrative body having regulatory authority; (3) the jurisdiction is pursuant to a statute that subjects an industry or activity to a comprehensive regulatory scheme; and (4) the regulatory scheme requires expertise or uniformity in administration.

The court determined that all four factors were met because: (1) whether or not Schein would be granted a waiver would affect the scope of the case; (2) the FCC has jurisdiction with respect to the implementation and interpretation of the TCPA; (3) the TCPA, and the Junk Act which amended the TCPA, are comprehensive regulatory schemes that govern the use of automated telephone and facsimile equipment that apply to Schein’s ability to send faxes; and (4) the FCC has expertise in area of telecommunication.

Bondhus opposed the motion to stay before discovery had been concluded. The court, however, determined that Bondhus would not be prejudiced by the temporary interruption, which it determined would promote uniformity and resolve an issue in the case that was placed within the special competence of the FCC. Bondhus also argued that the issue of consent would need to be determined through discovery, regardless of the FCC’s decision. The court disagreed because the issue of consent would only materialize if the FCC granted Schein a waiver.

The court disagreed with the Bondhus’ argument that, because Schein actually included opt-out language in its faxes, it could not demonstrate that it was confused as the applicability of the TCPA’s opt-out requirements. The court noted that the FCC had granted waivers of TCPA liability to petitioners that included some sort of opt-out language in their fax ads, as well as those that did not.

Finally, Bondhus argued that, even if the waiver were granted, it would not affect the propriety of certifying the class because “the issue of consent in the context of a TCPA suit is not a bar to class certification.” The court, however, determined that the cases cited in support of this argument were distinguishable. Consequently, the court did not accept the contention that the issue of consent can never act as a bar to certification.

Thus, the court granted Schein’s motion to stay the proceedings but permitted discovery to continue with respect to the particular fax at issue that Schein sent Bondhus and to the consent/express permission defense that Schein could assert if its waiver was granted.

The case is No. 14-22982-Civ-COOKE/TORRES

Attorneys: Joshua Aaron Glickman (Social Justice Law Collective, PL) for Marvin J. Bondhus, MD. Christine N. Czuprynski (Reed Smith, LLP), and Howard Seth Goldfarb (Homer Bonner Jacobs, PA) for Henry Schein, Inc.

Companies: Henry Schein, Inc.

Cases: Advertising Privacy FloridaNews