Posted on November 8, 2011 by Mark Brennan

FCC Proposes $2.96 Million Forfeiture for TCPA Violations

The Federal Communications Commission (FCC) has released a Notice of Apparent Liability for Forfeiture (NAL) against Travel Club Marketing, Inc. (Travel Club) in the amount of $2.96 Million for apparent violations of the Telephone Consumer Protection Act (TCPA) and related FCC rules regarding the delivery of prerecorded messages, as well as its Caller ID rules.  This enforcement action serves as a reminder to companies placing autodialed calls or delivering prerecorded messages to ensure that such calls and messages comply with the TCPA and the FCC's rules.

In the NAL, the FCC found that Travel Club had apparently violated the TCPA and the FCC’s TCPA rules by delivering 144 unsolicited, prerecorded messages to 113 cellular telephone numbers.  Under the TCPA and the FCC’s implementing rules, the delivery of prerecorded messages to wireless telephone numbers is prohibited (absent an emergency) unless the caller has obtained “prior express consent” from the called party.  The FCC also found that Travel Club apparently violated the TCPA and related FCC rules by delivering 41 unsolicited, prerecorded advertising messages to the residential telephone lines (e.g., landlines) of 29 consumers.  The calls did not qualify for any of the exemptions to the TCPA restriction against the delivery of prerecorded calls to residential telephone lines.  

In addition, the FCC found in the NAL that Travel Club apparently violated section 64.1601(e) of the FCC’s rules, which requires that telemarketers transmit certain Caller ID information, including information that enables consumers to make do-not-call requests during regular business hours.

The FCC imposed the maximum penalty of $16,000 per call for each of Travel Club’s 185 apparent violations, for a total proposed forfeiture of $2,960,000.  Although the FCC has previously considered $4,500 per message to be an appropriate base amount for delivering an unsolicited, prerecorded message, it noted that it was imposing the maximum penalty because of the number of Travel Club’s “apparent willful, repeated violations” and its “apparent deceptive and evasive conduct.” 

Again, companies should ensure that their calling practices comply with the TCPA and the FCC’s rules, as well as FTC and state requirements.  Otherwise, they risk not only class action litigation, but also potential regulatory enforcement fines that are imposed on a per-call basis.
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Posted on March 1, 2011 by Timothy Tobin

Not all Persons Are Entitled to Personal Privacy under FOIA

The U.S. Supreme Court today in FCC v. AT&T, Inc., reversed the U.S. Court of Appeals for the Third Circuit, holding that “personal privacy” under the Freedom of Information Act (“FOIA”) does not extend to corporations even though they are defined as “persons” under the statute. Chief Justice Roberts, writing for the Court, expressed his “trust that AT&T will not take [the decision] personally.” The decision was 8-0. (Justice Kagan did not participate.)

The Supreme Court’s analysis hinged on its conclusion that “person” and “personal” are two very different words and that the adjectival form of one word does not necessarily have the same or similar meaning as the underlying noun. Given the commonly understood meaning of the word personal and the term “personal privacy,” and given the context of FOIA and the provision at issue’s relationship to other FOIA sections, the Court concluded that personal privacy does not extend to corporations or other artificial entities. 

FOIA was originally enacted in 1966 in support of the belief that the people have the right to know about Government activities and therefore should have access to Government records. FOIA governs the release of documents and information in the U.S. Government’s possession to the public and it includes nine exemptions allowing for the Government to withhold records sought when they concern certain sensitivities or personal rights. The case arose from a 2004 Federal Communications Commission (“FCC”) Enforcement Bureau investigation of AT&T under the FCC’s e-rate (Education Rate) program. During the investigation, AT&T provided the FCC with numerous documents. A trade association of competitive communications providers, CompTel, submitted a FOIA request to the FCC for the AT&T documents, and AT&T opposed the request.

While the Enforcement Bureau withheld some documents from disclosure to CompTel under other FOIA exemptions, both the Bureau and later the FCC refused to exempt other AT&T corporate documents (except for redacting some individuals’ names) under Exemption 7(C). 5 U.S.C. § 552b(c)(7)(C). Exemption 7(C) applies to “records or information compiled for law enforcement purposes” that “could reasonably be expected to constitute an unwarranted invasion of personal privacy.” The FCC concluded that granting corporations personal privacy rights under Exemption 7(C) was contrary to FCC and judicial precedent.

The U.S. Court of Appeals for the Third Circuit disagreed with the FCC. It held that corporations were entitled to personal privacy under Exemption 7(C). The Third Circuit noted that the Administrative Procedures Act, which FOIA amended, defines the noun “person” to include corporations. The Third Circuit, therefore, concluded that the word personal, an undefined term in FOIA, as the adjectival form of person, must “refer back to that defined term.”

The Supreme Court examined the words “person” and “personal” independently, noting that “a noun and its adjective form may have meanings as disparate as any two unrelated words.” The Court then provided a multitude of reasons why that is the case with the words “person” and “personal” as used in Exception 7(C):

  • Since the word “personal” is undefined in the statute, the Court examines its common meaning, which is used ordinarily to refer to individuals and in many cases is used as the opposite of business-related.
  • Dictionary definitions of “personal” suggest that the word is not commonly defined by reference to corporations.
  • Just because the word “person” in common legal usage typically includes corporations, that does not mean in context that the word “personal” in common legal usage also refers to corporations. Moreover, there was a dearth of legal precedent that AT&T cited to support that interpretation.
  • When considering the words surrounding personal, as the Court must do when interpreting a word at issue from a statute, Exemption 7(C)’s inclusion of the two words “personal privacy,” when viewed together, suggests more than just “the sum of its two words: the privacy of a person”; instead it connotes “a type of privacy evocative of human concerns.”
  • Other than the Third Circuit opinion, AT&T was unable to cite to any judicial precedent or statutes that refer to a corporation’s personal privacy. Conversely, editions of leading treatises relatively contemporaneous with the enactment of FOIA, reflect the common law understanding at the time that personal privacy did not apply to corporations (citing Restatement (Second) of Torts § 652I, comment c (1976) and W. Prosser, Law of Torts, § 97 (2d ed. 1955), § 112 (3d. ed. 1964) and § 117 (4th ed. 1971)). 
  • In response to AT&T’s argument that the Supreme Court has recognized corporations’ privacy interests in the Fourth Amendment context, the Court noted that corporations’ constitutional or common law privacy interests were not at issue in this case.
     

The Court also found support for its holding in two other provisions of FOIA, Exemptions 4 and 6, which both preceded the enactment of Exemption 7(C) by a number of years. Exemption 6 uses the same phrase as Exemption 7(C) in exempting from disclosure “personnel and medical files and similar files the disclosure of which would constitute a clearly unwanted invasion of personal privacy.” 5 U.S.C. § 552b(c)(6) (emphasis added). The Court found that for Exemption 6, the phrase “personal privacy” defines the “particular subset” of “personnel and medical files and similar files” that FOIA seeks to protect from disclosure. Without that additional language, even “similar files” would be categorically exempted. In addition, the Court noted that while it had not previously addressed the issue of whether Exemption 6 is limited to individuals’ records, it regularly has referred to that exemption as involving an “individual’s right of privacy.” Moreover, Exemption 4 plainly covers corporations as it exempts “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552b(c)(4). When subsequently enacting Exemption 7(C), Congress could have selected an approach similar to that used in Exemption 4 rather than one similar to Exemption 6 if it wanted to protect corporations’ privacy. Finally, the Court noted that since Exemption 7(C)’s enactment in 1974, the Government has been interpreting it to apply to individuals.

The Supreme Court’s decision is limited to FOIA, but the reasoning the Court employs likely means that absent the enactment of a statute that expressly affords corporations privacy rights, it is doubtful corporations will be able to claim statutory rights to privacy under state or federal statutory law. The Court leaves open the possibility of a different result under constitutional law or common law.
 
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Posted on June 17, 2010 by Mark Brennan

New FCC Proceeding Seeks Comment on Potential Exemptions to Telemarketing, Autodialer, and Prerecorded Message Restrictions

The Federal Communications Commission (FCC) issued a Public Notice seeking comment on a Petition for Expedited Clarification and Declaratory Ruling (Petition) filed by Global Tel*Link Corporation (Global Tel) regarding its outbound calling practices.  The Petition raises several key issues under the Telephone Consumer Protection Act (TCPA) and related FCC rules, including whether certain calls (e.g., non-telemarketing calls) should be exempt from some of the TCPA’s restrictions on the use of prerecorded messages and autodialers.  Given the broad applicability of the TCPA and the FCC’s rules, this new proceeding could affect any company that places calls using prerecorded messages or autodialers.

The TCPA and the FCC’s rules prohibit, among other things, the use of automatic telephone dialing systems (“autodialers”) or artificial or prerecorded messages when calling, inter alia, telephone numbers assigned to wireless services, absent an emergency or the “prior express consent” of the called party.  Of note, the restriction against placing these calls to mobile phones without prior express consent applies regardless of whether the call is a “telemarketing” call.  The TCPA and the FCC’s rules also make it unlawful to place a non-emergency telephone call to a residential line “using an artificial or prerecorded voice” without the recipient’s “prior express consent” (although there are some exceptions).   

As described in the Petition, Global Tel provides outbound calling services for prison inmates.  For certain outbound calls (e.g., some calls from inmates to mobile phone numbers), Global Tel sets up a billing arrangement with the called party before connecting the called party to the inmate.  For example, when the inmate places a call, Global Tel initiates an “automated interactive voice response notification” to:

  • inform the called party that an inmate is trying to make contact;
  • get consent for the call; and
  • establish the billing arrangement. 

Global Tel then puts the call through. 

Concerned that these inmate calls could expose the company to liability under the TCPA and the FCC’s rules, Global Tel has asked the FCC to exempt the calls from TCPA enforcement.  For example, Global Tel argues that the calls to landline phones serve no commercial purpose, are not an unsolicited advertisement, and include an opt-out mechanism so that called parties can avoid future calls.  Regarding calls to mobile telephone numbers, Global Tel argues, among other things, that it can be presumed that the inmate has dialed a cell phone number because that is the number at which the called party wishes to be reached.  Moreover, the called party may have only a wireless phone (and not a landline phone).  Separately, Global Tel argues that its calls do not involve the use of an autodialer or predictive dialer.

Although the Petition is focused on Global Tel’s situation, the FCC’s decision in this proceeding could affect many companies that rely on the use of prerecorded messages or autodialers as part of their communications strategy.  Nonetheless, the FCC has established a very short comment period for this item – comments will be due just 15 days after the item appears in the Federal Register, and replies are due 25 days after the item appears in the Federal Register.

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Posted on March 16, 2010 by Mark Brennan

FCC Releases National Broadband Plan, Promotes Consumer Control Over Personal Information

The Federal Communications Commission released its long-awaited National Broadband Plan today, providing an aggressive roadmap for advancing affordable broadband deployment and adoption; stimulating economic growth; and boosting the nation's capabilities in education, healthcare, homeland security, and other areas.  The Plan also appears to confirm that the FCC is looking to take an expanded role in privacy-related consumer protection issues.

In the Plan, the FCC discusses a number of broadband privacy and data security issues focused on the protection of and consumer control over personal information.  For example, the FCC states 

 

[t]he collection, aggregation and analysis of personal information are common threads among, and enablers of, many application-related innovations...

 

and the Plan notes the value of services such as customized suggestions for movie rentals or books and more targeted and relevant advertising.  It cautions, however

 

many users are increasingly concerned about their lack of control over sensitive personal data.

 

The FCC then remarks:  

 

Innovation will suffer if a lack of trust exists between users and the entities with which they interact over the Internet.  Policies therefore must reflect consumers’ desire to protect sensitive data and to control dissemination and use of what has become essentially their “digital identity.”  Ensuring customer control of personal data and digital profiles can help address privacy concerns and foster innovation.

The FCC also makes several broadband privacy and data security recommendations in the Plan, including:

  • Encouraging Congress and the Federal Trade Commission (as well as the FCC) to clarify the relationship between users and their online profiles, including disclosure and consent requirements and data collection, sharing, storage, safeguarding, and accountability responsibilities;
  • Suggesting that Congress consider helping spur the development of trusted "identity providers" that can help consumers maximize the privacy and security of their data;
  • Having the FTC and FCC jointly develop principles to require that customers provide informed consent before broadband service providers share certain information with third parties (including account and usage information and other personally identifiable information); and
  • Prompting the federal government to put additional resources into combating identity theft and fraud and enhancing consumer online security.

In addition, the Plan includes several privacy and data security recommendations in the smart grid and cybersecurity areas, including a recommendation that states require utilities to "provide consumers access to, and control of, their own digital energy information, including real-time information from smart meters and historical consumption, price and bill data over the Internet."  If states fail to do so within 18 months, the Plan recommends that Congress consider national legislation.

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Posted on January 14, 2010 by Mark Brennan

FCC Seeks Comment on Numerous Broadband Privacy Issues

The Federal Communications Commission released a Public Notice this week seeking further comment on numerous privacy issues as part of its National Broadband Plan proceeding.  Based on questions raised in a recent Center for Democracy & Technology filing, some of the broad issues that the Notice seeks comment on include:

  • Consumer expectations of privacy, and how to meet those expectations as new technologies are deployed;
  • Building Privacy by Design;
  • Concerns surrounding the collection, use, and storage of transactional data; and
  • The regulation of third-party applications.

The FCC, which is working to complete the Plan and submit it to Congress by March 17, has thus far not focused extensively on how to protect consumer privacy and personal information in the broadband ecosystem.  This Notice, however, indicates that the FCC may be planning to highlight a number of privacy-related consumer protection issues in the Plan.  Moreover, depending in part on the comments received in response to the Notice, it could also open the door to future privacy and data protection proceedings at the FCC.

Comments are due on January 22, 2010, just over a week after the Commission issued the Notice.

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