Hidden Gem: Did the Ninth Circuit Just Tip its Hand in a Junk Fax Case on the Validity of the FCC’s Predictive Dialer Rulings After ACA Int’l?

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Call it a silver lining, but the Ninth Circuit might have just telegraphed a little something about what to expect in the big Marks v. Crunch appeal – in an otherwise not-so-great opinion reversing the denial of class certification in a putative junk-fax class action.

Orienting ourselves quickly, Marks is an appeal from a 2014 ruling by Judge Bashant of the Southern District of California granting summary judgment in favor of the Defendant because its equipment “lack[ed] a random or sequential number generator.”  See Marks v. Crunch San Diego, LLC, 55 F. Supp. 3d 1288, 1292 (S.D. Cal. 2014).  The D.C. Circuit’s opinion in ACA Int’l v. FCC, 885 F.3d 687 (D.C. Cir. 2018) (“ACA Int’l”) was handed down in the midst of the Marks appeal, and the Ninth Circuit sought additional briefing, and held oral argument on the validity of the FCC’s 2003 and 2008 predictive dialer rulings following ACA Int’l.  The opinion in Marks is now pending, and stands to decide the fate of the FCC’s prior predictive dialer rulings (at least within the Ninth Circuit).

Just today, the Ninth Circuit issued an opinion in True Health Chiropractic v. McKesson Corp., No. 17-17123, 2018 U.S. App. LEXIS 19641 (9th Cir. July 17, 2018) which – on its face – has nothing to do with ACA Int’l, the viability of the FCC’s predictive dialer rulings, or the definition of an ATDS.  It’s an opinion reviewing the District Court’s denial of class certification in a junk-fax case based on the predominance of individualized issues of consent.  The Ninth Circuit reversed key parts of the court’s ruling on the basis that the evidence presented by Defendant – that it had submitted intending to establish individualized issues of consent – was actually uniform enough to satisfy the predominance requirement under Fed. R. Civ. P. 23(b)(3) as to Defendant’s consent defense.  Oh, the irony.

While these aspects of the court’s ruling are worthy of their own blog post, there’s something far more interesting here when reading in between the lines.  In addition to these predominance issues, the Ninth Circuit also reviewed a ruling by the lower court that the FCC’s “Solicited Fax Rule” had been overturned by D.C. Circuit in Bais Yaakov of Spring Valley v. FCC, 852 F.3d 1078, 1082 (D.C. Cir. 2017) (“Bais Yaakov”).  The “Solicited Fax Rule” was a prior rule by the FCC – first promulgated in 2006, then reaffirmed in a 2014 order – that required certain “opt out” language to appear in faxes regardless of whether the recipient had consented to receiving them.  The later 2014 order was appealed and ultimately consolidated before the D.C. Circuit, which held that the rule – originally promulgated in 2006 (though not “directly” under review) – was invalid.

Sound familiar?  That’s because the FCC’s predictive dialer rulings follow a similar arc.  The FCC first expanded the definition of an ATDS to cover predictive dialers in 2003, reaffirmed that ruling in 2008, then reaffirmed it again in 2015.  The later 2015 ruling was then appealed to the D.C. Circuit.  And although the appeal was of the later 2015 ruling, the D.C. Circuit still examined the validity of the underlying predictive dialer rulings that had been reaffirmed, and “set aside” the FCC’s overall “treatment” of “the functions a device must perform the qualify as an autodialer.”  ACA Int’l, at 701.

Not surprisingly, the Plaintiff in True Health argued that the Solicited Fax Rule remained valid because the FCC was only reviewing the later 2014 order in Bias Yaakov, and “the FCC’s 2006 Solicited Fax Rule was not directly under review.”  True Health, at *14.  Sound familiar again?  That’s because this argument is in line with the reasoning of the courts that have held the FCC’s prior predictive dialer rulings survived ACA Int’l (i.e. the prior rulings were not “expressly” or “directly” reversed by the D.C. Circuit).  See e.g. Reyes v. BCA Fin. Servs., Inc., No.: 1:16-cv-24077-JG, 2018 U.S. Dist. LEXIS 80690 (S.D. Fla. May 14, 2018); Case That Will Not Be Named, No. 3:17–cv–00505, 2018 WL 3134619 (M.D. Tenn. June 27, 2018).

But the Ninth Circuit in True Health rejected this line of reasoning in the context of the Solicited Fax Rule.  It held that “the validity of the 2014 order depended on the validity of the 2006 Solicited Fax Rule, and the court in Bais Yaakov squarely held that the underlying Solicited Fax Rule was invalid.”  True Health, at *15.  So even though the D.C. Circuit was reviewing a later affirmation of an earlier rule, it does not follow that the earlier rule was somehow shielded from reversal just because it wasn’t “directly” under review.  Bingo!

There are vivid parallels between ACA Int’l and Bais Yaakov that suggest the Ninth Circuit might reach the same conclusion with respect to the FCC’s predictive dialer rulings.

Just like Bais Yaakov, the appeal in ACA Int’l was from a later 2015 ruling that reaffirmed the FCC’s prior predictive dialer rulings.  And just like Bais Yaakov, the validity of the FCC’s 2015 order depended on the validity of the original, underlying rule from 2003.  Indeed, the D.C. Circuit expressly held that “[w]hile the Commission’s latest [2015] ruling purports to reaffirm the prior orders, that does not shield the agency’s pertinent pronouncements from review.”  The D.C. Circuit went on to examine the validity of the FCC’s underlying predictive dialer rulings, finding that those “prior rulings left significant uncertainty about the precise functions an autodialer must have the capacity to perform,” and therefore “set aside,” the FCC’s underlying “treatment” of “the functions a device must perform to qualify as an autodialer.”  ACA Int’l, at 701 (underlining added).

The issue before the Ninth Circuit in Marks has strikingly similar contours to the issue it just decided in True Health.  The same logic should therefore lead to a similar conclusion: that the FCC’s prior predictive dialer rulings are defunct because the D.C. Circuit’s opinion in ACA Int’l encompassed not just a review of the FCC’s 2015 reaffirmation of the prior predictive dialer rulings, but the validity the underlying rulings themselves.  And given the parallels between Bais Yaakov and ACA Int’l, it is difficult to envision the Ninth Circuit reaching a different conclusion in the context of the FCC’s prior predictive dialer rulings.

But this is TCPAland after all, where consistency and uniformity in the law remain elusive concepts.  Having said that, True Health provides us with a little glimmer of insight into what we might expect to see from the Ninth Circuit in the upcoming Marks opinion.  As the Grand Duchess says on the Ramble, I’m on the edge of my seat.