When a Regulation is Like “a ‘Mongrel’ – With No Offense to Dogs”

It’s not every day that a federal court describes a regulation as “a ‘mongrel’ – with no offense to dogs.”  But last week, that’s how a federal court characterized a Federal Communications Commission (FCC) regulation on the Telephone Consumer Protection Act (TCPA).

The court was the U.S. District Court for the Eastern District of Pennsylvania, and the case was Dominguez v. Yahoo! Inc., 2017 U.S. Dist. LEXIS 11346 (Jan. 27, 2017).  The plaintiff sued Yahoo for allegedly violating the TCPA by sending unsolicited text messages to his cell phone.  Yahoo moved for summary judgment.  The crux of Yahoo’s argument was that the TCPA applies only to calls or text messages from an Automatic Telephone Dialing System (ATDS).  Yahoo’s position was that it did not use an ATDS to send the text messages at issue, and that Dominguez’ claim therefore was without merit.

To address Yahoo’s argument, the Court explored the question of what an ATDS is.  The court noted that an ATDS is “a system that has the capacity to store or produce telephone numbers to be called using a random or sequential number generator, and dial those numbers.”  However, the key word “capacity” is not defined in the TCPA.

Next, the Court observed that the FCC, in 2015, announced a new, broad definition of “capacity.”  The FCC’s new definition covers not only equipment that currently functions as an ATDS, but also equipment that has “potential capacity” as an ATDS.  The FCC’s new rule, the Court noted, “created a space within the definition for equipment that, while not an ATDS as currently configured, could become one with some level of modification.”  In a separate case, the 2015 rule currently is being challenged in the U.S. Court of Appeals for the District of Columbia.

For two reasons, the Dominguez Court held that the 2015 rule did not help the plaintiff.  First, even under the 2015 rule, Yahoo’s equipment did not fit the definition of an ATDS.

Second, the text messages at issue were sent prior to the enactment of the 2015 rule.  So, plaintiff’s claim raised a retroactivity problem.

As the Court noted, the question of whether to apply a regulation retroactively hinges on what type of regulation it is.  If a regulation merely confirms an existing understanding of an existing policy, it might be reasonable to retroactively apply it.  If a regulation creates a new substantive policy, it can’t apply retroactively.

The 2015 rule, the Court explained, contained no specific characterization of what type of rule it is.  The Court noted “its dismay that the majority of FCC Commissioners would have issued it without any characterization – thus, infecting numerous district court judges with the disease of uncertainty.”  The rule, in sum, is “resembles a ‘mongrel’ – with no offense to dogs.”

Ultimately, however, “[w]hile it is not clear that this is a ‘substantive’ rule, it is more like a substantive rule than anything else, such that only prospective application will be permissible.”  Thus, retroactively applying it would be “manifestly unjust to Yahoo.”

The Court therefore dismissed plaintiff’s TCPA claim.  For TCPA practitioners, the Court’s decision is an important reminder that, even if the D.C. Court of Appeals upholds the 2015 rule, the rule will not necessary apply to pre-2015 calls or text messages.

Eric Epstein

Eric Epstein

Eric has over 10 years of litigation experience. He has first-chaired trials in federal and state courts. Eric also serves as an adjunct instructor at Columbia University School of Law, where he teaches legal writing and oral advocacy.

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