The Kennedy Privacy Law Firm

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1 The Kennedy Privacy Law Firm th Street, NW Washington, DC Charles H. Kennedy Phone: (202) Mobile: (202) April 28, 2016 emarketing Newsletter: Special Report on FCC Petition Concerning Calls to Business Telephones As I briefly discussed in my Privacy and emarketing Newsletter of April 4, 2016, the FCC has asked for comment on a petition filed by Todd C. Bank, an attorney in New York State, who wants the Commission to declare that a caller can be liable under the TCPA for making a prerecorded marketing call to a residential number at which the called party conducts a business. A favorable FCC ruling on Bank s petition would substantially increase the risks faced by companies when they call persons who conduct business from their homes. Because the issues are so significant, and because comments must be filed by May 17, 2016, 1 I m using this Newsletter to say more about the Bank petition. What Todd Bank Wants Todd C. Bank calls himself the annoyance lawyer, not because his own behavior is annoying (although a case for that can be 1 Initial comments are due May 2, 2016, but reply comments may be filed on or before May 17. Parties are not required to file initial comments as a condition of filing reply comments. 2 Bank describes his practice at made), but because he files lawsuits against people who annoy him. 2 For example, when a judge demanded that he remove a baseball cap in court, Bank sued the court on the ground that the judge was violating his First Amendment rights. Obviously, Bank is an easy man to annoy. In January, 2012, Bank was annoyed by a prerecorded telephone call from a marketer representing Independence Energy, which was selling retail electrical service. Bank filed a purported class-action complaint on behalf of himself and all others who received these calls on their residential telephone lines. The complaint alleged violations of 47 U.S.C. section 227(b)(1)(B), which prohibits anyone from initiating any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party The complaint also cites the FCC s regulation at 47 CFR (a)(2), which requires prior express consent for automated calls placed to emergency, healthcare and mobile numbers. This regulation does not refer to calls to residential lines and does not implement TCPA section 227(b)(1)(B), the TCPA 1

2 If Bank hoped for a quick settlement of this class-action claim, that hope was dashed when the defendant moved to dismiss the complaint on the ground that Bank s phone was not a residential line because Bank listed the number on his stationery, his website and in court filings as a business number. The court agreed with Independence Energy that if a telephone number is held out to the public as a business line, callers should be able to rely on that representation even if (as Bank alleged) the number is registered with the telephone service provider as residential. The court therefore permitted the defendant to take discovery into the ways in which Bank used and publicized the number to which the challenged calls were made. After discovery was concluded, the court found that Bank did, in fact, use and publicize his telephone number for business purposes. Accordingly, the court dismissed Bank s complaint. This setback sent Bank to the FCC, where he now asks the Commission to adopt what he calls a bright-line test: If a telephone number is registered with the user s telephone service provider as residential, then it is residential for TCPA purposes even if the subscriber uses the number for business purposes and advertises it as such. 4 Bank apparently believes that if his petition succeeds, the task of class action lawyers in cases like his will be simplified. Courts could be expected to follow the bright-line test on the ground that the Commission, as an expert agency, had adopted the test as an exercise of its authority to interpret an ambiguous section on which the complaint is based. My best guess is that Bank intended to cite 47 CFR (a)(3), which prohibits the initiation of commercial calls, using an artificial or prerecorded voice, to any residential line without the called party s prior express consent. Assuming this citation is an error, Bank makes it consistently, referring to 47 CFR (a)(2) in his court filings and in his FCC petition. statutory provision. So, if a plaintiff could allege (and submit evidence to prove, in the event of a defendant s summary judgment motion) that the defendant called a number registered as residential with the telephone service provider, the plaintiff s case could proceed even if the plaintiff used and advertised the number as a business number. In such a case, a defendant might prefer to write a check to the plaintiff s attorney rather than incur the expense of further litigation. The Case against Bank s Petition The order Bank wants would be inconsistent with Congress s decision, when it wrote the TCPA, to grant businesses a lower level of protection from prerecorded calls than it gave to residential subscribers. That decision was confirmed by the FCC when it adopted rules to implement the TCPA: Commenters express concern that prerecorded message calls will affect public health and safety and impede commerce. Most commenters, however, do not raise privacy concerns with respect to prerecorded calls to businesses. Based on the record and on the scope of the prohibitions on autodialers and prerecorded messages in the rules we adopt today, we are not persuaded that additional prohibitions on prerecorded voice message calls to businesses are necessary at this time. 5 The FCC has not revisited, much less reversed, this decision since it wrote its first 4 In support of this suggestion, Bank cites an unpublished decision by a state trial judge in Missouri that adopted a registration test. 5 In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 7 FCC Rcd 8752, n. 7 at 8756 (1992). 2

3 TCPA regulations in Bank effectively is asking the FCC to extend a novel level of privacy protection to telephone lines that are used and publicized as business contact information, but that happen to be registered as residential. Banks s proposed bright-line test is meaningless, unadministrable and so unfair in the present business and regulatory environment as to raise questions of due process and free speech rights. A full understanding of the petition s defects requires us to explore some history. When the TCPA was written, local telephone numbers were assigned exclusively by the subscribers Bell telephone or other monopoly service provider, and were published in telephone directories with separate business and residential listings. A business could not obtain a vital listing in the Yellow Pages, or in the business section of the White Pages, unless it ordered (in Todd Bank s parlance, registered ) a business line with the phone company at the premium rate charged for such lines. In this monopoly environment, when a business gave out a telephone number on its business cards, in advertising or otherwise, callers could confidently assume that it was listed with the serving telephone company as a business number. There was a negligible risk of inadvertently placing a prerecorded commercial call to a business that was using a line classified as residential in the telephone company s tariffs. The environment of 1991 no longer exists. Since the Telecommunications Act of 1996 authorized competition in local telephone service, telephone numbers have been assigned by various competitive service providers, including Voice over Internet Protocol companies. Many of those providers do not publish directories, do not make their customers numbers available for publication in third-party directories, and do not police whether their subscribers are using their services for business or residential purposes. In this environment, it is meaningless to suggest that a caller be liable for placing a prerecorded call to a line that is registered as residential with a service provider. A record of such registration may not exist and may not be accessible by the caller if it does exist. There would simply be no way for a caller to comply reliably with Bank s bright-line test. An example should show how pointless Bank s proposed rule is in the present environment. Suppose that I have a real estate business that I conduct from my home. I contact Vonage, a Voice over Internet Protocol provider, and arrange for a landline telephone service that will be associated with an IP address and routed through the broadband Internet access service at my home. At signup, I select a calling plan based on the volume of calls I expect to make and receive; I also can select various features, such as call forwarding and delivery of voic to my inbox. Vonage advertises some of the available calling plans as home packages; others are advertised as business packages. However, many businesses will find a home package adequate for their needs, and some high-volume home users might find a business plan useful. Vonage doesn t know or care how I will use the plan and the features I select; the labels are purely marketing devices. Vonage also does not publish a telephone directory and does not submit its customers telephone numbers to third-party directories 3

4 or 411 listings. 6 So, unless I volunteer the information, only Vonage and I know which plan I selected. Now, I set up a website to advertise my real estate business, where I solicit business calls to be made to my Vonage number. The Vonage number also appears on my business card, yard signs and advertisements in local media. An employee of a community newspaper, interested in selling me ad space, leaves a prerecorded message at my Vonage number. Can I sue the newspaper for violating the TCPA by making a prerecorded call to a residential line? According to Bank, the answer depends, not upon how I use or advertise my Vonage line, but upon whether I registered it as residential with Vonage. But, what does it mean to register a line as residential with a service like Vonage, which permits its customers to use its services for any purpose they choose? Does my selection of a home calling plan make my Vonage service a residential line for purposes of the TCPA, even though the line is used exclusively for business? What if I used the Vonage phone only for personal calls, but selected a business plan because it offered some feature, such as unlimited international calling, that matched my personal calling habits? Would I then lose the benefit of the TCPA prohibition against prerecorded marketing calls to residential lines? (Remember that according to the FCC, Congress intended to extend a lower level of privacy protection to businesses not calling plans.) The picture would be even murkier if I signed up with a service provider that did not label its calling plans as home or business. In 6 See a court that followed the Bank rule, I would be unable to argue that I had registered my line as residential, business or anything else. As the example shows, the supposed brightline test that Bank proposes would not simplify TCPA litigation at all. A plaintiff s claim that he or she had registered a line as residential would require an inquiry into the business arrangement between the plaintiff and service provider, and the possible application of the term registration to those facts. This inquiry would be no simpler than the exploration into the actual use of the plaintiff s service that the court permitted in Bank s unsuccessful lawsuit. More importantly, even if a coherent registration rule could be formulated, callers would in many cases have no way to determine which category of service a business had selected. As noted earlier, the days when every business number could be found in a directory that listed the number as business or residential are long gone. Callers should not have to act at their peril when they rely upon a called party s own business card, advertising, website information or other data inviting business calls to be placed to a specified number. Whether a number is a business number should depend upon how the subscriber advertises and uses that number not upon a non-public business record in the keeping of the subscriber s service provider. Finally, the implications of a favorable ruling on the Bank s petition could go well beyond the prerecorded call rule. At present, only residential numbers are eligible to be placed on the national do-not-call registry, and marketing calls to business numbers are lawful, even if the subscribers holding those numbers have placed them on the registry. However, if the Commission should agree 79/~/phone-book-and-411-directory-assistancelistings. 4

5 with Bank that a number used for business is residential if it is registered as such with the service provider, the result might be that home businesses will place their numbers on the do-not-call list and sue callers for placing live or prerecorded marketing calls to those numbers. Companies that market to businesses might then be required to scrub the business numbers in their calling databases against the national do-not-call registry, or face a whole new category of calls-action suits. Given the stakes, it is important that the record before the Commission include comments opposing the Bank petition. Otherwise, it cannot be assumed that the Commission will reject it. As always, please be aware that nothing in this Newsletter is legal advice. Please let me know if you want off my mailing list by ing me at ckennedy@kennedyonprivacy.com, where I m also interested in receiving questions and comments. 5

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