FCC Addresses Vicarious-Liability Standards Under Telephone Consumer Protection Act

Keywords: FCC, telephone consumer protection act, telemarketing

The Federal Communications Commission (FCC) has issued a declaratory ruling regarding the standards for vicarious liability under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. That law prohibits certain telemarketing practices, such as placing telemarketing calls to phone numbers on the "do not call" list or using an "automatic telephone dialing system" to place unsolicited non-emergency calls to wireless phone numbers. In its ruling, the FCC held that sellers who use third-party telemarketers are not automatically liable for the third parties' violations of the act, but that the seller may still be vicariously liable under "federal common law principles of agency."

The declaratory ruling arose out of two separate federal cases in which plaintiffs were attempting to hold sellers vicariously liable for the alleged TCPA violations of third-party telemarketers. In both cases, the plaintiffs alleged that telemarketers had violated the TCPA, either by making unsolicited calls using prerecorded messages or by calling individuals who were on the do not call list. In both cases, the court referred the vicarious liability issue to the FCC. Charvat v. EchoStar Satellite, LLC, 630 F.3d 459 (6th Cir. 2010); United States v. DISH Network, L.L.C. , 2011 WL 475067 (C.D. Ill. Feb. 4, 2011).

In its declaratory ruling—formally titled In re Joint Petition Filed by DISH Network, LLC, et al. for Declaratory Ruling Concerning the Telephone Consumer Protection Act (TCPA) Rules—the FCC examined two separate provisions of the TCPA. Section 227(b) creates a right of action against "any person" who uses an automatic dialing machine to call a cellular telephone or a prerecorded message to call any telephone unless the caller has the prior consent of the party being called or the call is otherwise permitted by the FCC. The other provision at issue, Section 227(c), authorizes the FCC to establish a "do not call" registry and creates a private right of action for "anyone [on the no-call list] who has received more than one telephone call within any 12-month period by or on behalf of the same entity."

Although the do-not-call provision (Section 227(c)) explicitly allows suit with respect to calls made "on behalf of" an entity, whereas the automatic-dialer and prerecorded-call provision (Section 227(b)) does not, the FCC held that both sections incorporated the same federal common-law...