Soundboard Association v. Federal Trade Commission

888 F.3d 1261 (D.C. Cir. 2018)

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Nature of the Case

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Facts

P is a trade association for companies that manufacture or use 'soundboard' telemarketing technology. Soundboard enables telemarketing agents to communicate with customers over the phone by playing pre-recorded audio clips instead of using the agent's live voice. The agent can choose a pre-recorded clip to ask questions of or respond to a customer, break into the call and speak to the customer directly. Agents can make and participate in multiple calls simultaneously. D regulates telemarketing. D issued the Telemarketing Sales Rule (TSR), which restricts telemarketing to certain times of day, creates the 'do-not-call' list, and imposes other requirements to prevent fraud, abuse, and intrusions on customer privacy. A 2003 amendment prohibited telemarketers from failing to connect a customer to an agent within two seconds of the customer's completed greeting. This amendment prohibited outbound telemarketing campaigns consisting 'solely of prerecorded messages (robocalls).' D rejected the industry's argument that an interactive opt-out mechanism for robocalls would adequately protect consumer privacy. P submitted a 'request for a D Staff Opinion Letter' regarding whether Call Assistant's use of soundboard was subject to the new amendments. D responded with an 'informal staff opinion' letter stating that the 2008 TSR Amendments . . . do not prohibit telemarketing calls using a soundboard. The 2009 Letter expressly conditioned this conclusion on the factual representations in the request. The letter stated, 'Please be advised further that the views expressed in this letter are those of the FTC staff. They have not been reviewed, approved, or adopted by the Commission, and they are not binding upon the Commission. However, they do reflect the opinions of the staff members charged with enforcement of the TSR.' D began to receive consumer complaints about the use of soundboard that conflicted with factual representations made by P. On November 10, 2016, D issued a letter concluding that the TSR did apply to soundboard calls and rescinding the 2009 Letter effective May 12, 2017. P sought to enjoin the revocation of the 2009 Letter. P argued that the 2016 Letter is a legislative rule requiring notice and comment under 5 U.S.C. § 553 because it expanded the scope of the TSR to reach soundboard. It also argued that it is a content-based speech restriction that 'treats speech tailored for first-time donors differently than speech tailored for previous donors.' D moved for summary judgment claiming the 2016 Letter was not a reviewable final agency action, and in any event was an interpretive rule not subject to notice and comment. The District Court granted summary judgment for D. The court concluded the 2016 Letter was a final agency action but held it was an interpretive rule not subject to notice and comment, and that the TSR's application to SBA survived the intermediate scrutiny applicable to regulations of commercial speech. P appealed.