D.C. Circuit Strikes Down FCC's Solicited Fax Rule

In a 2-1 decision, a panel of the D.C. Circuit concluded that the FCC does not have authority to require companies to include opt-out notices on faxes that are sent with the prior express consent of the recipient.

Junk Fax Prevention Act

In 2005, Congress passed the Junk Fax Prevention Act, which modified the Telephone Consumer Protection Act, to address the problem of unsolicited faxes that were plaguing businesses. The Junk Fax Prevention Act generally made it unlawful to transmit an unsolicited advertisement. The Act, however, recognizes a limited exception where an existing business relationship exists and the fax number is voluntarily provided or made publicly available in certain ways. The Junk Fax Prevention Act requires this limited class of permissible unsolicited faxes to contain instructions for the recipient to opt-out of receiving further faxes.

 In 2006, the FCC adopted rules implementing the Junk Fax Prevention Act. In addition to requiring opt-out notice on unsolicited faxes, the FCC also implemented a rule requiring opt-out notices on faxes sent to recipients that had provided their express consent to receive such faxes.

D.C. Circuit Opinion

When Anda, a generic drug company, sent faxes to recipients that had agreed to receive them, but omitted the opt-out notice, it faced a class action demanding $150 million in damages. The result was a case before the D.C. Circuit challenging the legality of the FCC’s rule requiring an opt-out notice on “solicited” faxes.

In its March 31, 2017 Opinion, the D.C. Circuit sided with Anda, finding that the FCC’s rule was invalid because it exceeded the Commission’s jurisdiction. According to the Court, Congress limited the FCC’s power to require opt-out notices to the narrow class of lawful, unsolicited faxes. By imposing an opt-out requirement on solicited faxes, the FCC had overreached and was without authority to enforce the rule.