Biggerstaff v. Federal Communications Commission

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 20, 2007 Decided December 28, 2007

No. 06-1191

ROBERT BIGGERSTAFF,
PETITIONER

v.

FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
RESPONDENTS

Consolidated with
No. 06-1251

On Petitions for Review of an Order of the
Federal Communications Commission

Christopher A. LaVoy argued the cause for petitioner Robert
Biggerstaff. With him on the briefs were Edward Moomjian, II
and Roy A. Katriel.
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Douglas M. McKenna argued the cause and filed the briefs
pro se.

C. Grey Pash, Jr., Counsel, Federal Communications
Commission, argued the cause for respondents. With him on the
brief were Thomas O. Barnett, Assistant Attorney General,
Catherine G. O'Sullivan and Nancy C. Garrison, Attorneys,
Samuel L. Feder, General Counsel, Federal Communications
Commission, and Jacob M. Lewis and Daniel M. Armstrong,
Associates General Counsel. James J. Fredricks, Attorney, U.S.
Department of Justice, and John E. Ingle, Deputy Associate
General Counsel, Federal Communications Commission,
entered appearances.

Before: GINSBURG, Chief Judge, and ROGERS and GRIFFITH,
Circuit Judges.

Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge: Robert Biggerstaff and Douglas
McKenna filed petitions for review of a final rule of the Federal
Communications Commission implementing the Junk Fax
Prevention Act of 2005 (“JFPA”), Pub. L. No. 109-21, 119 Stat.
359 (codified at 47 U.S.C. § 227), by adopting an exemption to
the prohibition against unsolicited telephone facsimile
advertisements for entities with whom the recipient has an
established business relationship (“EBR”). In the Matter of
Rules and Regulations Implementing the Telephone Consumer
Protection Act of 1991; Junk Fax Protection Act of 2005, 21
F.C.C.R. 3787 (2006) (“Order”). Neither petitioner, however,
challenges the final rule itself, but rather each focuses on either
a past administrative action by the Commission or the future
effect of the wording of the Order accompanying the final rule.
Biggerstaff’s concern is that a 1992 administratively-created
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EBR exemption, In the Matter of Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991,
7 F.C.C.R. 8752 (1992) (“1992 Report”), is contrary to the
express text and legislative history of the Telephone Consumer
Protection Act of 1991 (“TCPA”), Pub. L. No. 102-243, 105
Stat. 2394. Although Biggerstaff has standing and his claim is
ripe, his challenge to the 1992 EBR exemption is beyond the
scope of the 2006 rulemaking, which was to implement the
JFPA. Therefore, we must dismiss his petition as untimely.
McKenna’s concern is that permissive wording in the Order
wrongly implies that the JFPA grants statutory authority to send
unsolicited faxes when an EBR only grants an exemption from
federal liability under the statute. We must dismiss his petition
because McKenna lacks standing. He proposes no substantive
changes to the Order that will affect the legal rights of those
who send unsolicited faxes and only speculates that textual
revisions to the Order would reduce the number of unsolicited
faxes he receives and thereby redress the harm he alleges.

I.

In 1991, Congress enacted the TCPA, which prohibited the
sending of “unsolicited advertisement[s]” to telephone facsimile
machines. TCPA § 3(b)(1)(C), 105 Stat. at 2396. An
unsolicited advertisement was defined as “any material
advertising the commercial availability or quality of any
property, goods, or services which is transmitted to any person
without that person’s prior express invitation or permission.” Id.
§ 3(a)(4), 105 Stat. at 2395. The TCPA provided a private right
of action for injunctive relief and monetary damages in state
court. Id. § 3(b)(3), 105 Stat. at 2396. In a footnote to the 1992
Report implementing the TCPA, the Commission stated:

In banning telephone facsimile advertisements, the
TCPA leaves the Commission without discretion to
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create exemptions from or limit the effects of the
prohibition . . .; thus, such transmissions are banned in
our rules as they are in the TCPA. We note, however,
that facsimile transmission from persons or entities
who have an [EBR] with the recipient can be deemed
to be invited or permitted by the recipient.

7 F.C.C.R. at 8779 n.87 (citations omitted).

Upon reconsideration in 1995, the Commission reaffirmed
its recognition of the EBR exemption, explaining “that the
existence of an [EBR] establishes consent to receive telephone
facsimile advertisement transmissions.” In the Matter of Rules
and Regulations Implementing the Telephone Consumer
Protection Act of 1991, 10 F.C.C.R. 12,391, 12,408 (1995).
However, in 2003, the Commission “revers[ed] [its] []
conclusion that an [EBR] provides companies with the necessary
express permission to send faxes to their customers,” In the
Matter of Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991, 18 F.C.C.R. 14,014, 14,127
(2003) (“2003 Rule”), and instead required that “permission to
send fax advertisements must be provided in writing,” id. at
14,128. In the preamble to the 2003 Rule the Commission
“emphasize[d] that, prior to the effectuation of rules contained
herein, companies that transmitted facsimile advertisements to
customers with whom they had [EBR]s were in compliance with
the Commission’s existing rules.” Id. at 14,127 n.699.
However, the 2003 Rule never went into effect; the Commission
extended the effective date on several occasions, eventually
doing so “[i]n light of the on-going developments in Congress
. . . .” In the Matter of Rules and Regulations Implementing the
Telephone Consumer Protection Act of 1991; Fax Ban Coalition
Petition for Further Extension of Stay, 20 F.C.C.R. 11,424,
11,427 (2005).
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In July 2005, Congress enacted the JFPA, which amended
the TCPA to codify an EBR exemption to the prohibition against
unsolicited facsimile advertisements. 47 U.S.C. §
227(b)(1)(C)(i). The Commission issued a Notice of Proposed
Rulemaking to implement the rule changes required by the
JFPA, In the Matter of Rules and Regulations Implementing the
Telephone Consumer Protection Act of 1991; Junk Fax
Protection Act of 2005, 20 F.C.C.R 19,758 (2005) (“2005
NPRM”), and further stayed the effective date of the 2003 Rule
until the conclusion of the new rulemaking, id. at 19,772.
Biggerstaff and McKenna filed comments in response to the
2005 NPRM and now petition for review of the Order
promulgating the final rule.

II.

On appeal, Biggerstaff focuses on the lingering effect of the
1992 administratively-created EBR exemption and seeks to have
the court set aside that exemption on the ground that it
contradicts the express text and legislative history of the 1991
TCPA. McKenna, in turn, focuses on the future effect of the
JFPA’s EBR exemption and seeks to have the term “permits”
changed to “does not prohibit” in the Order in view of the
statutory text, which merely exempts from federal liability those
who send unsolicited facsimile advertisements on the basis of an
EBR. For the following reasons, the court cannot address the
merits of either petitioner’s contentions.

A.
As a threshold matter regarding the court’s jurisdiction, the
Commission challenges the Article III standing of both
petitioners on the ground that neither can show (1) injury in fact
(2) that was caused by the conduct of the Commission and (3)
that can be redressed by judicial relief. See Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560-61 (1992). We agree as to
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McKenna, but not Biggerstaff.

1. Biggerstaff asserts that he has standing to challenge the
final rule because he “has pre-JFPA junk faxes subject to the
[1992] EBR administrative defense that he has refrained from
suing on because of the likelihood he will face the defense.”
Pet’r Br. at 9. The Commission views his proffers of injury to
be based on speculation both that he has a viable and timely
claim under the TCPA for damages arising from a December 10,
2004 fax transmission appended to his brief and that the sender
of that fax might raise an EBR defense. The Commission relies
on Platte River Whooping Crane Critical Habitat Maintenance
Trust v. FERC, 962 F.2d 27 (D.C. Cir. 1992), where the court
instructed that “[a]llegations of injury based on predictions
regarding future legal proceedings are . . . ‘too speculative to
invoke the jurisdiction of an Art[icle] III Court,’” id. at 35
(quoting Whitmore v. Arkansas, 495 U.S. 149, 157 (1990))
(second alteration in original).

Biggerstaff states in a sworn declaration that he has
confronted the EBR defense in previous lawsuits and is
therefore likely to encounter it again:

In my previous junk fax cases, many defendant[s] have
raise[d] “established business relationship” defenses.
As[] a result, I have been subject to onerous discovery
requests and depositions seeking complete records of
all my business contacts and transactions, such as
many years of bank receipts, credit card bills and the
like. This has been done by defendants attempting to
“discover” any form of an “established business
relationship” with me. This produces the effect of a
negative suit value and effectively renders the salutary
purposes of the [statute] and the protection of the
statute as written by Congress as effectively useless to
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me.

Decl. of Robert Biggerstaff ¶ 6 (July 23, 2007).

Unlike the standing claims presented in Platte River and
Whitmore, which relied on predictions about court decisions,
Biggerstaff’s concern that future defendants will raise an EBR
defense to pre-JFPA facsimile transmissions rests on his
personal experience that such a defense is, if not certain,
definitely likely. Biggerstaff’s assertion of injury is thus more
akin to that in Pennell v. City of San Jose, 485 U.S. 1 (1988),
where the Supreme Court concluded that “[t]he likelihood of
enforcement [of an Ordinance by tenants], with the concomitant
probability that a landlord’s rent will be reduced below what he
or she would otherwise be able to obtain in the absence of the
Ordinance, is a sufficient threat of actual injury to satisfy Art.
III’s requirement” that the plaintiff “‘demonstrate a realistic
danger of sustaining a direct injury as a result’” of the
governmental action at issue, id. at 8 (quoting Babbitt v. United
Farm Workers Nat’l Union, 442 U.S. 289, 298 (1979)). The
Court has recognized that a prediction of injury based on
experience suffices to show injury in fact to the extent that “past
wrongs are evidence bearing on whether there is a real and
immediate threat of repeated injury,” O’Shea v. Littleton, 414
U.S. 488, 496 (1974). Biggerstaff’s declaration and his
appended unsolicited facsimile advertisement yield a claim that
is more than a “vague and unsupported assertion” of injury.
Interstate Natural Gas Ass’n of Am. v. FERC, 285 F.3d 18, 46
(D.C. Cir. 2002). His previous experience litigating his
unsolicited facsimile claims indicates that his fears that future
defendants will raise the EBR defense are not “imaginary or
speculative,” Younger v. Harris, 401 U.S. 37, 42 (1971).
Additionally, Biggerstaff explains that the fax appended to his
brief regarding mortgage refinancing is most likely from one of
several mortgage vendors he had contacted earlier in the year
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when inquiring about refinancing opportunities. He asserts that
“[s]uch an entity would obviously raise a defense of an
‘established business relationship’” based on Biggerstaff’s
initial inquiry. Biggerstaff Decl. ¶ 5. Biggerstaff thus has
established a “likelihood” of injury that rises above the level of
“unadorned speculation,” Pennell, 485 U.S. at 8. Biggerstaff’s
claim is also ripe, see Abbott Labs., Inc. v. Gardner, 387 U.S.
136 (1967), because it involves a pure question of law and he
would encounter hardship if the court were to defer making a
decision, as he could not challenge the 1992 EBR exemption in
a lawsuit under the TCPA in the state courts of his home state of
South Carolina, see Reply Br. at 8 (citing Holliday v. Staples,
Inc., 2004 WL 5349483 (S.C.C.P.)).

Therefore, because Biggerstaff has presented sufficient
evidence of (1) injury in fact, (2) causation, as the 1992 EBR
defense of which he complains was created by the Commission,
and (3) redressability through judicial invalidation of the 1992
EBR exemption, he has standing to challenge the final rule.

2. McKenna states in his sworn affidavit that he is injured
as a result of receiving unsolicited facsimile advertisements
because these “junk faxes” take his paper and ink without his
consent, interfere with his business activities, and erode the
goodwill of his small business. In his reply brief he notes that
the Commission, in addressing Biggerstaff’s challenge,
concedes that private parties rely on the Commission’s rules in
deciding whether or not to take action. Therefore, he asserts, it
is likely that facsimile advertisers will rely on the wording in the
Order to assess whether they may lawfully send faxes to people
with whom they have an EBR.

Even assuming McKenna has met his burden with respect
to the first two prongs of the standing requirement, he still fails
to demonstrate that facsimile advertisers will respond differently
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if the court were to require the Commission to revise its Order
to strike references to “permit” and substitute “does not
prohibit” in referring to the JFPA’s relationship to unsolicited
faxes. McKenna asserts:

My considerable experience dealing with unsolicited
fax senders, with recipients, with the press, with
professional lawyers, and with the courts leads me to
believe there is widespread ignorance and
misunderstanding with respect to the difference
between an exemption from liability in a remedial
consumer protection statute and a law that actually
statutorily permits conduct, even when such permission
would be flat-out unconstitutional.

Aff. of Douglas M. McKenna ¶ 27 (July 10, 2007). But
McKenna has proffered no evidence that a change in the
wording of the Order will cause a change in third-party
behavior. For example, he proffers no comparison between
public reactions to an order using permissive language and
public response to an order using words that connote an
exemption from liability. The difficulty in making such a
showing here is compounded by the fact that the Order, in
addition to referring to “permitting” unsolicited faxes on the
basis of an EBR, states at several points that an EBR is an
“exemption to the prohibition on sending unsolicited facsimile
advertisements,” 21 F.C.C.R. at 3788; id. at 3791; see also id. at
3793. In contrast to Biggerstaff’s circumstances with regard to
confronting the EBR defense in state litigation, McKenna’s
assertions about what third parties understand and how they
might react to a revised Order is far more tenuous and too
speculative to show redressability.

Therefore, because McKenna fails to show that he has
standing to challenge the final rule, we must dismiss his petition.
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B.
A procedural hurdle bars our consideration of Biggerstaff’s
contention that the court should set aside the 1992
administratively-created EBR exemption because the
Commission lacked authority to adopt it. Biggerstaff has not
petitioned for a rulemaking to modify the 1992 EBR exemption,
which “ordinarily” is “the appropriate way in which to challenge
a longstanding regulation on the ground that it is ‘violative of
statute,’” Kennecott Utah Copper Corp. v. U.S. Dep’t of
Interior, 88 F.3d 1191, 1214 (D.C. Cir. 1996) (quoting Public
Citizen v. Nuclear Regulatory Comm’n, 901 F.2d 147, 152 (D.C.
Cir. 1990)); see also Geller v. FCC, 610 F.2d 973, 978 (D.C.
Cir. 1979). Therefore, for the court to examine the merits of his
contention, Biggerstaff must demonstrate that in the 2006
rulemaking the Commission reopened consideration of its
authority to adopt the 1992 EBR exemption, for otherwise his
challenge is untimely. See 47 U.S.C. § 402(a); 28 U.S.C. §§
2342(1), 2344; see also Cellular Telecomm. & Internet Ass’n v.
FCC, 330 F.3d 502, 504 (D.C. Cir. 2003). The Commission’s
intention to initiate a reopening must be clear from the
administrative record, see Charter Communications, Inc. v.
FCC, 460 F.3d 31, 38 (D.C. Cir. 2006), and we find no such
intention in the 2006 rulemaking.

An agency’s reconsideration of a rule in a new rulemaking
constitutes a reopening when the original rule is “reinstated” so
as to have renewed effect. Public Citizen, 901 F.2d at 152. In
Ohio v. EPA, 838 F.2d 1325 (D.C. Cir. 1988), the court
determined that it could review the validity of a rule
promulgated three years before the challenged rule because “the
period for seeking judicial review may be made to run anew
when the agency in question by some new promulgation creates
the opportunity for renewed comment and objection,” id. at
1328. The court relied on Montana v. Clark, 749 F.2d 740 (D.C.
Cir. 1984), which held that the “time for seeking review ran
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anew from the time of re-promulgation because the agency ‘held
out [a provision in a prior rule] as a proposed regulation, offered
an explanation for its language, solicited comments on its
substance, and responded to the comments in promulgating the
regulation in its final form.’” Ohio v. EPA, 838 F.2d at 1328
(quoting Montana v. Clark, 749 F.2d at 744). Thus, an official
reinterpretation of an old rule that creates a new opportunity to
challenge the continuation of that rule triggers reopening. See
General Motors Corp. v. EPA, 363 F.3d 442, 449-50 (D.C. Cir.
2004).

Biggerstaff maintains that the 2005 NPRM implicitly
reopened consideration of the 1992 administratively-created
EBR exemption by inviting comments on “any other issues that
relate to the sender’s ability to send facsimile advertisements to
persons with whom an EBR was formed prior to enactment of
the [JFPA],” 20 F.C.C.R. at 19,763. But Biggerstaff takes this
statement out of context and mischaracterizes the Commission’s
purpose. The JFPA requires that a sender transmitting a
facsimile advertisement on the basis of an EBR must have
obtained the fax number through either “the voluntary
communication of such number, within the context of such
[EBR]” or “a directory, advertisement, or site on the Internet to
which the recipient voluntarily agreed to make available its
facsimile number for public distribution.” 47 U.S.C. §
227(b)(C)(ii). An exception exists if the EBR was in existence
and the sender possessed the fax number prior to the JFPA’s
date of enactment, in which event the sender need not
demonstrate how it obtained the number. Id. The 2005 NPRM
sought comment on how to “verify that a sender had an EBR
and recipient’s facsimile number prior to July 9, 2005.” 20
F.C.C.R. at 19,763. This statement is not fairly understood as an
attempt by the Commission to examine its statutory authority to
create the pre-JFPA EBR exemption; it was made in an effort to
implement the new statutory mandate. Nor does the reference
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in the Order accompanying the final rule, noting that Biggerstaff
and others “oppose an EBR exemption for fax advertising,” 21
F.C.C.R. at 3793 & n. 43, suggest that the Commission
reconsidered the validity of the 1992 EBR exemption, especially
given that the Commission’s response to the objection referred
only to its “mandate [] to implement the statute as enacted by
Congress,” that will help “prevent future unwanted faxes,” id.
“[A]n agency [does not] reopen an issue by responding to a
comment that addresses a settled aspect of some matter, even if
the agency had solicited comments on unsettled aspects of the
same matter.” Kennecott, 88 F.3d at 1213.

Biggerstaff also maintains that a Notice of Proposed
Rulemaking in 2002, see In the Matter of Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991,
17 F.C.C.R. 17,459 (2002) (“2002 NPRM”), which resulted in
the prospective revocation of the 1992 EBR exemption,
reopened consideration of that exemption by inviting comments
on whether the Commission should continue to recognize the
EBR defense. The parties agree that the 2005 NPRM
incorporated the 2002 NPRM. See Resp’t Br. at 15; Pet’r Reply
Br. at 15. In 2002, because “telemarketing practices ha[d]
changed significantly” since 1991, 17 F.C.C.R. at 17,460, the
Commission sought comment on “whether the Commission’s
rules need to be revised in order to more effectively carry out
Congress’s directives in the TCPA,” id. at 17,461. Specifically,
the 2002 NPRM solicited comment on “the Commission’s
determination that a prior business relationship between a fax
sender and recipient establishes the requisite consent to receive
telephone facsimile advertisement transmissions.” Id. at 17,483.

But although the 2002 NPRM did reconsider the 1992 EBR
exemption, instead of “reaffirm[ing]” it, Public Citizen, 901
F.2d at 151, and “re-promulgat[ing]” it, Ohio v. EPA, 838 F.2d
at 1328, the Commission revoked it altogether, see 2003 Rule,
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18 F.C.C.R. at 14,127. The Commission’s prospective
rescission of the EBR exemption in 2003 places Biggerstaff’s
challenge to that exemption outside the scope of the 2006
rulemaking. Given the absence of any indication in either
NPRM that the Commission intended to re-examine its statutory
authority in 1992 to adopt an EBR exemption, there is no basis
for the court to conclude that the Commission reopened the issue
in the 2006 rulemaking. See Charter Communications, 460 F.3d
at 38; see also FCC v. Schreiber, 381 U.S. 279, 289 (1965). The
enactment of the JFPA and its deadline for the promulgation of
regulations, see JFPA § 2(h), 119 Stat. at 362, were reason
enough for the Commission to confine its 2006 rulemaking to
implementing the JFPA. Further, given an agency’s obligation
under the Administrative Procedure Act to provide notice of a
proposed rulemaking that is “adequate to afford interested
parties a reasonable opportunity to participate in the rulemaking
process,” Florida Power & Light Co. v. United States, 846 F.2d
765, 771 (D.C. Cir. 1988) (internal quotation marks omitted);
see 5 U.S.C. § 553(b), had the Commission also intended to
rescind the 1992 administratively-created EBR exemption
retroactively, it is unclear how interested parties who have relied
on the EBR exemption in past transactions would have been put
on notice.

Accordingly, because Biggerstaff’s challenge to the validity
of the 1992 EBR exemption falls outside the scope of the 2006
rulemaking, and because McKenna lacks Article III standing, we
dismiss the petitions.