Petition for Writ of Certiorari — Soundboard Association, Petitioner v. Federal Trade Commission

Supreme Court briefNov 30, 2018

Ask Donna

What actually matters in this document.

Text

APPENDIX A

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

-------------------------

Argued November 6, 2017

Decided April 27, 2018

No. 17-5093

SOUNDBOARD ASSOCIATION,

APPELLANT

FEDERAL TRADE COMMISSION,

APPELLEE

-------------------------

Appeal from the United States District Court

for the District of Columbia

(No. 1:17-cv-00150)

-------------------------

Karen Donnelly argued the cause for appellant.

With her on the briefs was Errol Copilevitz. Daniel W.

Wolff, entered an appearance.

Matthew M. Hoffman, Attorney, Federal Trade

Commission, argued the cause for appellee. With him

on the brief were David C. Shonka, Acting General

Counsel, and Joel Marcus, Deputy General Counsel.

Michele Arington and Leslie R. Melman Assistants

General Counsel, and Bradley Grossman, Attorney, entered appearances.

Thomas C. Bennigson was on the brief for amicus

curiae Public Good Law Center in support of appellee.

Before: ROGERS, MILLETT and WILKINS, Circuit Judges.

Opinion for the Court filed by Circuit Judge WILKINS.

Dissenting Opinion filed by Circuit Judge MILLETT.

WILKINS, Circuit Judge: This appeal arises from

Appellant Soundboard Association’s (“SBA’s”) challenge

to a November 10, 2016 informal opinion letter (the

“2016 Letter”) issued by Federal Trade Commission

(“FTC” or “Commission”) staff. The 2016 Letter stated

it was the FTC staff ’s opinion that telemarketing technology used by SBA’s members is subject to the FTC’s

regulation of so-called “robocalls,” and it announced

the rescission of a 2009 FTC staff letter (the “2009 Letter”) that had reached the opposite conclusion.

SBA filed suit seeking to enjoin rescission of the

2009 Letter. It argued the 2016 Letter violated the Administrative Procedure Act (“APA”) because it was a

legislative rule issued without notice and comment

and because the FTC’s robocall regulation unconstitutionally restricted speech on the basis of content. The

FTC opposed both these arguments and also disputed

that the 2016 Letter was reviewable final agency action. The District Court concluded the 2016 letter qualified as reviewable final agency action, but the court

granted summary judgment for the FTC on the

grounds that the 2016 Letter was an interpretive rule

not subject to notice and comment and that the interpretation stated in the letter survived First Amendment scrutiny.

We conclude that because the 2016 staff opinion

letter does not constitute the consummation of the

Commission’s decisionmaking process by its own

terms and under the FTC’s regulations, it is not final

agency action. As SBA concedes, its speech claims are

pleaded as APA claims under 5 U.S.C. § 706(2)(B) and

cannot proceed without final agency action. We therefore vacate the decision below and dismiss the case for

failure to state a cause of action under the APA.

SBA is a trade association for companies that

manufacture or use “soundboard” telemarketing technology (“soundboard”). 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 prerecorded clip to ask questions of or respond to a customer, while retaining the ability to break into the call

and speak to the customer directly. Soundboard also

enables agents to make and participate in multiple

calls simultaneously. According to SBA, soundboard

provides many advantages to telemarketers, including

ensuring accurate communication of information and

disclaimers, improving call-center performance and

cost-effectiveness, and employing individuals who

would otherwise have difficulty being understood over

the phone due to accent or disability. J.A. 85-86.

The FTC regulates telemarketing pursuant to the

Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994, which directs the Commission to

“prescribe rules prohibiting deceptive . . . and other

abusive telemarketing acts or practices.” 15 U.S.C.

§ 6102(a)(1). In 1995, the Commission promulgated

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. 60 Fed. Reg. 43842 (Aug. 23, 1995); 16 C.F.R.

§ 310.4(b)(ii), (c). In 2003, the Commission amended

the TSR to more closely regulate “predictive dialing,”

which places multiple simultaneous calls for a single

call-center agent and, therefore, can result in “call

abandonment” – i.e., abruptly hanging up – when too

many customers answer the phone. The 2003 amendment prohibited telemarketers from failing to connect

a customer to an agent within two seconds of the customer’s completed greeting. 16 C.F.R. § 310.4(b)(1)(iv).

The amendment thus effectively prohibited outbound

telemarketing campaigns consisting “solely of prerecorded messages” – colloquially known as robocalls –

because “consumers who receive a prerecorded message would never be connected to a sales representative.” 73 Fed. Reg. 51,164, 51,165 (Aug. 29, 2008).

In 2008, the Commission amended the TSR to

prohibit telemarketers from “initiating any outbound

telephone call that delivers a prerecorded message”

without “an express agreement, in writing” from the

consumer with language demonstrating the individual

customer’s consent to receiving such calls from that telemarketer. Id. at 51,184; 16 C.F.R. § 310.4(b)(1)(v)(A).

The express-written-consent requirement does not

apply to calls made on behalf of charitable organizations intended to “induce a charitable contribution

from a member of, or previous donor to,” the organization, as long as the donor can opt out of such calls. 16

C.F.R. § 310.4(b)(1)(v)(B). The Commission justified

this exception on the grounds that members and prior

donors have consented to receiving future charitable

solicitation calls and, as a result, have a reduced privacy interest vis-à-vis a charitable organization’s

speech interest. See 73 Fed. Reg. at 51,193-94.

In promulgating the 2008 amendments, the Commission explained that the comments it received from

customers and industry showed “the reasonable consumer would consider interactive prerecorded telemarketing messages to be coercive or abusive of such

consumer’s right to privacy. The mere ringing of the

telephone to initiate such a call may be disruptive; the

intrusion of such a call on a consumer’s right to privacy

may be exacerbated immeasurably when there is no

human being on the other end of the line.” Id. at

51,180. The Commission also rejected the industry’s

argument that an interactive opt-out mechanism for

robocalls would adequately protect consumer privacy,

reasoning that the “volume of telemarketing calls from

multiple sources is so great that consumers find even

an initial call from a telemarketer or seller to be abusive and invasive of privacy.” Id. (quotation marks

omitted).

Before the TSR went into effect in September

2009, a telemarketer and soundboard user, Call Assistant LLC (“Call Assistant”), submitted a “request for a

FTC Staff Opinion Letter” regarding whether Call Assistant’s use of soundboard was subject to the 2008

amendments. J.A. 230 (emphasis in original). In its request, Call Assistant represented that “[a]t all times”

during a soundboard call, “even during the playing of

any recorded segment, the agent retains the power to

interrupt any recorded message.” J.A. 37. It also represented that during soundboard calls, “live agents hear

every word spoken by the call recipient, and determine

what is said” in response. J.A. 38.

On September 11, 2009, FTC staff responded with

an “informal staff opinion” letter from Lois Griesman,

the FTC’s Associate Director of the Division of Marketing Practices (the “2009 Letter”). J.A. 37. The 2009 Letter stated that “[b]ased on the description of the

technology included in [Call Assistant’s] letter,” “the

staff of the [FTC] has concluded that the 2008 TSR

Amendments . . . do not prohibit telemarketing calls

using” soundboard. J.A. 38. Griesman explained that

the robocall regulation “prohibit[s] calls that deliver a

prerecorded message and do not allow interaction

with call recipients in a manner virtually indistinguishable from calls conducted by live operators. Unlike the technology that [Call Assistant] describe[s],

the delivery of prerecorded messages in such calls does

not involve a live agent who controls the content and

continuity of what is said to respond to concerns,

questions, comments – or demands – of the call recipient.” Id. Griesman quoted the FTC’s justification for

the TSR’s prohibition on robocalls, which “convert the

telephone from an instrument for two-way conversations into a one-way device for transmitting advertisements.” Id. Given Call Assistant’s assertions that

soundboard calls featured a “live human being continuously interact[ing] with the recipient of a call in a

two-way conversation,” “in Staff ’s view,” soundboard

use did not implicate the purposes of the TSR. Id.

The 2009 Letter expressly conditioned this conclusion on the factual representations in Call Assistant’s

request for a staff opinion, and Griesman advised Call

Assistant that the letter did not represent the views of

the Commission:

Please be advised that this opinion is based on

all the information furnished in your request.

This opinion applies only to the extent that

actual company practices conform to the material submitted for review. 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.

J.A. 39.

After issuing the 2009 Letter, the Commission

began to receive consumer complaints and to observe

media reports about the use of soundboard that

conflicted with factual representations made by Call

Assistant. This included complaints that consumers

“are not receiving appropriate recorded responses to

their questions or comments,” that “no live telemarketer intervenes to provide a human response when

requested to do so,” and that “the call is terminated

in response to consumers[’] questions.” J.A. 30-31.

FTC staff also collected evidence from consumers

and industry stakeholders that “some companies are

routinely using soundboard technology” to “conduct

separate conversations with multiple consumers at the

same time,” and observed that companies engaging in

these practices were using the 2009 Letter as a defense

against consumer lawsuits. J.A. 31; 225.

The FTC staff began to reconsider the 2009 Letter.

In early 2016, FTC staff contacted telemarketing industry groups for input and held meetings at which industry representatives made presentations about

soundboard. In a February 2016 meeting, “representatives of [a telemarketing trade group] acknowledged

that soundboard technology is frequently utilized in a

matter to allow one live agent to handle multiple calls

simultaneously.” J.A. 226. A trade group representative also told FTC staff “that if the FTC enforced a requirement that one agent could only manage one call

at a time, no call center would use soundboard technology because it would not be cost effective – i.e., the capital expenditure in implementing soundboard . . . only

made business sense if a call center could increase the

volume of calls its agents could handle.” Id. During this

time SBA argued to FTC staff that the practices

described in consumer complaints were contrary to the

trade groups’ code of conduct, and that bad actors

should be punished instead of the entire soundboard

industry. J.A. 147-48.

On November 10, 2016, FTC staff issued a letter

(the “2016 Letter”) concluding that the TSR did apply

to soundboard calls and rescinding the 2009 Letter

effective May 12, 2017. The 2016 Letter was from

Griesman, as well. It noted the 2009 Letter was premised on factual representations made by Call Assistant.

But based on consumer complaints, media reports,

meetings with industry representatives, and other

data points, by 2016 the FTC staff believed the factual

bases of the 2009 Letter were faulty. Specifically,

A fundamental premise of [the] September

2009 letter was that soundboard technology

was a surrogate for the live agent’s actual

voice. A human being cannot conduct separate

conversations with multiple consumers at the

same time using his or her own voice. Nonetheless, some companies are routinely using

soundboard technology in precisely this manner [of enabling an agent to handle multiple

simultaneous calls] . . . Indeed, Call Assistant

noted publicly that one of the advantages of

its technology is that an agent can conduct

multiple calls simultaneously.

J.A. 31-32 (internal quotation marks omitted).

The 2016 Letter also stated that because soundboard users play prerecorded audio files to communicate with customers, soundboard calls fall within the

10a

plain language of the TSR’s prohibition on “any outbound telephone call that delivers a prerecorded message.” J.A. 30. Accordingly, the letter reasoned,

Given the actual language used in the TSR,

the increasing volume of consumer complaints, and all the abuses we have seen since

we issued the September 2009 letter, we have

decided to revoke the September 2009 letter.

It is now staff ’s opinion that outbound telemarketing calls that utilize soundboard technology are subject to the TSR’s prerecorded

call provisions because such calls do, in fact,

“deliver a prerecorded message” as set forth in

the plain language of the rule. Accordingly,

outbound telemarketing calls made using

soundboard technology are subject to the provisions of 16 C.F.R. § 310.4(b)(1)(v), and can

only be made legally if they comply with the

requirements [applicable to robocalls].

J.A. 32 (footnote omitted).

The 2016 Letter provided that “[i]n order to give

industry sufficient time to make any necessary

changes to bring themselves into compliance, the revocation of the September 2009 Letter will be effective

six months from today, on May 12, 2017. As of that

date, the September 11, 2009 letter will no longer represent the opinions of FTC staff.” J.A. 33. The 2016 Letter concluded by stating that “the views expressed in

this letter are those of the FTC staff, subject to the limitations of 16 C.F.R. § 1.3. They have not been approved

or adopted by the Commission, and they are not binding upon the Commission. However, they do reflect the

11a

views of staff members charged with enforcement of

the TSR.”1 Id.

SBA sought to enjoin the revocation of the 2009

Letter and what it characterized as a compliance deadline of May 12, 2017. It argued before the District

Court 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 to the extent the 2016 Letter

amends the TSR to apply to soundboard, it is a contentbased speech restriction that “treat[s] speech tailored

for first-time donors differently than speech tailored

for previous donors.” J.A. 191. The Commission moved

for summary judgment. It argued 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 Commission also argued that the SBA’s affirmative First Amendment challenge was barred by

the APA’s six-year statute of limitations, but that on

the merits the TSR was a reasonable time, place, and

manner restriction that survived intermediate scrutiny.

The District Court consolidated the motions as

cross-motions under Rule 56 and granted summary

16 C.F.R. § 1.3(c) provides that “[a]dvice rendered by the

staff is without prejudice to the right of the Commission later to

rescind the advice and, where appropriate, to commence an enforcement proceeding.”

12a

judgment for the Commission. 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. SBA timely appealed.

II.

This court “review[s] de novo a district court’s decision to grant summary judgment, viewing the evidence in the light most favorable to the non-moving

party. A party is entitled to summary judgment only if

there is no genuine issue of material fact and judgment

in the movant’s favor is proper as a matter of law.” Ctr.

for Auto Safety v. Nat’l Highway Traffic Safety Admin.,

452 F.3d 798, 805 (D.C. Cir. 2006) (quotation marks

omitted).

The APA limits judicial review to “final agency action for which there is no other adequate remedy in a

court.” 5 U.S.C. § 704. While the requirement of finality

is not jurisdictional, without final agency action, “there

is no doubt that appellant would lack a cause of action

under the APA.” Reliable Automatic Sprinkler Co. v.

Consumer Prod. Safety Comm’n, 324 F.3d 726, 731

(D.C. Cir. 2003); Flytenow, Inc. v. FAA, 808 F.3d 882, 888

(D.C. Cir. 2015). Agency actions are final if two independent conditions are met: (1) the action “mark[s] the

consummation of the agency’s decisionmaking process”

and is not “of a merely tentative or interlocutory nature;” and (2) it is an action “by which rights or

13a

obligations have been determined, or from which legal

consequences will flow.” Bennett v. Spear, 520 U.S. 154,

177-78 (1997) (internal quotation marks omitted); see

also Scenic Am. v. U.S. Dep’t of Transp., 836 F.3d 42, 5556 (D.C. Cir. 2016). “An order must satisfy both prongs

of the Bennett test to be considered final.” Sw. Airlines

Co. v. U.S. Dep’t of Transp., 832 F.3d 270, 275 (D.C. Cir.

2016).

In evaluating the first Bennett prong, this Court

considers whether the action is “informal, or only the

ruling of a subordinate official, or tentative.” Abbott

Labs. v. Gardner, 387 U.S. 136, 151 (1967) (internal citations omitted). The decisionmaking processes set out

in an agency’s governing statutes and regulations are

key to determining whether an action is properly attributable to the agency itself and represents the culmination of that agency’s consideration of an issue. See

Holistic Candlers & Consumers Ass’n v. FDA, 664 F.3d

940, 944 (D.C. Cir. 2012) (relying upon the FDA Manual’s description of warning letters as preceding enforcement action to conclude they “do not mark the

consummation of FDA’s decisionmaking”); Reliable

Automatic Sprinkler, 324 F.3d at 732, 733 (holding a

letter interpreting a safety regulation was not a final

agency action because “the Commission itself ha[d]

never considered the issue,” and “[t]he Act and the

agency’s regulations clearly prescribe a scheme

whereby the agency must hold a formal, on-the-record

adjudication before it can make any determination

that is legally binding.”); see also Sw. Airlines, 832 F.3d

at 275 (In evaluating finality, this Court also looks to

14a

“the way in which the agency subsequently treats the

challenged action.”).

Because each prong of Bennett must be satisfied

independently for agency action to be final, deficiency

in either is sufficient to deprive SBA of a cause of action under the APA. Sw. Airlines, 832 F.3d at 275.

III.

SBA argues, and the District Court concluded below,

that the extensive investigative efforts by FTC staff

and some definitive language in the 2016 Letter render

it the consummation of agency decisionmaking for “all

intents and purposes.” Soundboard Ass’n v. FTC, 251

F. Supp. 3d 55, 54 [sic] (D.D.C. 2017). We disagree.

There is no dispute that the 2016 Letter was “informal” and “only the ruling of a subordinate official,”

and not that of any individual Commissioner or of the

full Commission. Abbott Labs., 387 U.S. at 151 (citations omitted). It is readily distinguishable from the final agency action in Frozen Food Express v. United

States, relied upon by SBA and the decision below. That

case involved a formal, published report and order of

the Interstate Commerce Commission, not its staff, following an investigation and formal public hearing. 351

U.S. 40, 41 (1956). Similarly, unlike the jurisdictional

determination in U.S. Army Corps of Engineers v.

Hawkes Co., which was issued by the agency and expressly deemed “final agency action” by regulation,

15a

was “valid for a period of five years,” and was “bind[ing

on] the Corps for five years,” 136 S. Ct. 1807, 1814

(2016), the 2016 Letter is issued by staff under a regulation that distinguishes between Commission and

staff advice, is subject to rescission at any time without

notice, and is not binding on the Commission. 16 C.F.R.

§ 1.3(c). This factor also distinguishes this case from

Sackett v. EPA, 566 U.S. 120 (2012), in which a binding

enforcement order issued by the EPA Administrator

was deemed the consummation of the agency’s decisionmaking.

The 2016 Letter does not represent otherwise. It

explicitly and repeatedly states that it expresses the

views of “staff,” and it explains that such views do not

bind the Commission. While the letter does present a

conclusive view that “outbound telemarketing calls

made using soundboard are subject to [the TSR] . . .

and can only be made legally if they required with [sic]

[the TSR],” J.A. 32, it characterizes this as “staff ’s opinion” and nowhere presents this as the conclusive view

of the Commission. To the contrary, the 2016 Letter is

clear that agency staff is “merely expressing its view of

the law,” AT&T v. EEOC, 270 F.3d 973, 976 (D.C. Cir.

2001) (emphasis added). Indeed, nonbinding staff advice is precisely what Call Assistant sought in its specific “request for a FTC Staff Opinion Letter,” J.A. 230

(emphasis in original).

True, the fact that staff and not an agency head

has taken a challenged action does not end the finality

inquiry. But the 2016 Letter differs significantly from

decisions by subordinate officials we have deemed final

16a

agency action. Unlike the guidance at issue in Appalachian Power v. EPA, the 2016 Letter is not binding on

Commission staff “in the field” or on third parties such

as state permitting authorities. Cf. 208 F.3d 1015,

1022, 1023 (D.C. Cir. 2000) (“The short of the matter is

that the Guidance, insofar as relevant here, is final

agency action, reflecting a settled agency position

which has legal consequences both for State agencies

administering their permit programs and for companies like those represented by petitioners who must obtain Title V permits in order to continue operating.”).

Nor is SBA trapped without recourse due to the indefinite postponement of agency action. Cf. Her Majesty

the Queen in Right of Ontario v. EPA, 912 F.2d 1525,

1531 (D.C. Cir. 1990) (“[A]lthough . . . the EPA concededly made no final decision on petitioners’ request that

the section 115 remedial process be initiated, it clearly

and unequivocally rejected . . . petitioners’ requests for

a separate proceeding[.]”). SBA concedes it could, but

did not, seek an opinion from the Commission itself –

and SBA remains free to do so today. Cf. Sackett, 566

U.S. at 127 (holding an order issued by the agency itself

to be final when “not subject to further agency review”); Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 437 (D.C.

Cir. 1986) (“Having definitively stated its position that

Ciba-Geigy has no statutory right to a cancellation

hearing, EPA has provided its final word on the matter

short of an enforcement action.” (alterations, citation,

and quotation marks omitted)).

The dissent repeatedly cites Sackett as authority

for its conclusion that informal staff advice is final

17a

agency action. Sackett is a very different case. There,

the EPA Administrator issued a compliance order

against the Sacketts under the “Enforcement” section

of the Clean Water Act, 33 U.S.C. § 1319. The Administrator’s order made enforceable factual findings and legal conclusions that the Sacketts’ property included

“waters of the United States” subject to the Clean Water Act, and that the Sacketts therefore had committed

violations of the Clean Water Act. 566 U.S. at 124-25.

The order directed the Sacketts “immediately [to] undertake activities to restore” their property “in accordance with [an EPA-created] Restoration Work Plan”

and to provide to EPA employees “access to the Site . . .

[and] access to all records and documentation related

to the conditions at the Site.” Id. at 125 (alterations in

original). The Sacketts sought a hearing on the order

from the EPA, which EPA denied, prompting the Sacketts (having no other recourse) to bring suit in the district court.

The Supreme Court analyzed the Administrator’s

order separately under each prong of Bennett. Under

the first prong, the Administrator’s order was the consummation of the agency’s decisionmaking process because the Sacketts sought a hearing, and when that

request was denied, “the ‘Findings and Conclusions’

that the compliance order contained were not subject

to further agency review.’ ” 566 U.S. at 127. This alone

sufficiently distinguishes the informal staff opinion in

this case from the Administrator’s enforcement order

in Sackett, as the informal staff opinion is “subject to

further agency review” in at least two ways. First, SBA

18a

is and has always been able to request an opinion from

the Commission itself; given that Call Assistant specifically emphasized that they sought a “Staff Opinion

Letter,” a request for Commission advice remains an

available alternative of which the requestors of the

2009 Letter were well aware – and which they chose

not to pursue. Second, if at some future date the FTC

staff make the further decision to recommend a TSR

enforcement action against a soundboard user, proceeding on that recommendation would require the

Commission to decide – itself, for the first time –

whether the 2016 Letter’s interpretation of the TSR is

correct, and to vote on whether to issue a complaint. 16

C.F.R. § 3.11. SBA seeks a shortcut around both these

decision points, but unlike the Sacketts, SBA is neither

out of regulatory review options nor subject to an order

or enforcement action issued from the head of the

agency itself.

Further, the FTC regulations expressly delineate

between advice from the Commission and advice from

its staff. The manner in which an agency’s governing

statutes and regulations structure its decisionmaking

processes is a touchstone of the finality analysis. See

Holistic Candlers, 664 F.3d at 944. Under FTC rules,

when the Commission itself gives advice, it may only

rescind or revoke that advice upon “notice . . . to the

requesting party so that he may discontinue the course

of action taken pursuant to the Commission’s advice.”

16 C.F.R. § 1.3(b). Advice from the Commission also

constrains its future enforcement authority: It “will

not proceed against the requesting party with respect

19a

to any action taken in good faith reliance upon the

Commission’s advice under this section, where all the

relevant facts were fully, completely, and accurately

presented to the Commission. . . .” Id.

A separate provision governs “[a]dvice rendered

by the staff.” 16 C.F.R. § 1.3(c). Staff advice is given

“without prejudice to the right of the Commission to

later rescind the advice and, where appropriate, to

commence an enforcement proceeding,” and § 1.3(c)

has no notice requirement and provides no safe harbor

for reasonable reliance on the advice.2 Id. Unlike Commission opinions, staff advice cannot constrain the

Commission’s future enforcement authority. Thus, contrary to SBA’s assertions, the 2016 Letter’s disclaimer

is not fairly read as meaningless “boilerplate.” Rather,

the 2016 Letter reflects and cites specific FTC regulations that structure the agency’s decisionmaking processes. Cf. Scenic Am., 836 F.3d at 56 (dismissing as

“boilerplate” an agency’s vague statement that it “may

provide further guidance in the future as a result of

additional information”). While an opinion from the

Commission itself might constitute the consummation

We note a textual distinction between § 1.3(b), which

provides that the Commission may “rescind or revoke” its own

advice, and § 1.3(c), which provides only that the Commission

may “rescind” staff advice. We conclude this is a distinction without a difference. Courts and agencies frequently use the terms

“rescind”/“rescission” and “revoke”/”revocation” interchangeably,

e.g., Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 51-52 (1983), and we find no indication that “revoke”

must have an independent meaning here. See Lamie v. U.S. Trustee, 540 U.S. 526, 536 (2004) (“[O]ur preference for avoiding surplusage constructions is not absolute.”).

20a

of its decisionmaking process, the 2016 Letter from

FTC staff does not.

The dissent interprets the FTC’s regulations differently, concluding that the Commission has “delegated” – in the dissent’s terms – its advice function

such that the staff actually speaks directly for the

Commission, despite express disclaimers and regulatory distinctions between staff and Commission advice.

Dissenting Op. at 4. We do not agree.

Quoted in full, Section 1.3(a) provides, “[o]n the

basis of the materials submitted, as well as any other

information available, and if practicable, the Commission or its staff will inform the requesting party of its

views.” 16 C.F.R § 1.3(a) (emphasis added). The dissent’s theory of complete “delegation” of the Commission’s interpretation and enforcement authority, such

that staff and Commission advice are interchangeable

for finality purposes, is simply incorrect. When the

Commission delegates its authority to staff, it does so

expressly. Cf. 16 C.F.R. § 2.1 (“The Commission has

delegated to the Director, Deputy Directors, and Assistant Directors of the Bureau of Competition, the Director, Deputy Directors, and Associate Directors of the

Bureau of Consumer Protection and, the Regional

Directors and Assistant Regional Directors of the Commission’s regional offices, without power of redelegation, limited authority to initiate investigations.”)

(emphasis added); § 2.14(d) (“The Commission has delegated to the Directors of the Bureaus of Competition

and Consumer Protection, their Deputy Directors, the

Assistant Directors of the Bureau of Competition, the

21a

Associate Directors of the Bureau of Consumer Protection, and the Regional Directors, without power of redelegation, limited authority to close investigations.”)

(emphasis added). By contrast, 16 C.F.R. §§ 1.1 et seq.

say nothing about delegation. Rather, the Commission

“has authorized its staff to consider all requests for advice and to render advice, where practicable, in those

circumstances in which a Commission opinion would

not be warranted.”3 16 C.F.R. § 1.1(b). The fact that the

Commission “has authorized” staff to give advice on

matters of lesser importance does not transform staff

views into the Commission’s views. To the contrary, under the plain text of the 16 C.F.R. § 1.1, if “a Commission opinion [is] not [ ] warranted,” a Commission

opinion is not provided. Only a staff opinion is provided. See 16 C.F.R. § 1.3(b), (c).

The dissent criticizes the majority for “measur[ing] finality exclusively from the Commission’s vantage point” because we conclude that failure to meet

Bennett’s first prong is sufficient to dismiss for want

of finality. Dissenting Op. at 1. But it is undisputed

that both prongs of Bennett v. Spear must be satisfied

To authorize is “to empower; to give a right or authority to

act” generally. BLACK’S LAW DICTIONARY 122 (5th ed. 1979); see

also id. at 121 (defining “authority” as “permission”). Delegation

is narrower and more specific – to delegate is to give someone authority to act specifically on one’s behalf or in one’s stead. See id.

at 383 (defining “delegate” as “a person who is delegated or commissioned to act in the stead of another”). Delegation may be one

species of authorization, but the distinction is material.

22a

independently. Sw. Airlines, 832 F.3d at 275. Bennett

directs courts to look at finality from the agency’s perspective (whether the action represents the culmination of the agency’s decisionmaking) and from the

regulated parties’ perspective (whether rights or obligations have been determined, and legal consequences

flow). Deficiency from either perspective is sufficient to

dismiss a claim. Thus, there is no need to reach the second Bennett prong if the action does not mark the consummation of agency decisionmaking. We therefore

need not do so here.

We respond to some of the dissent’s concerns out

of respect for our colleague and to clarify the appropriate finality analysis. The dissent is troubled that

judicial review of informal agency advice would be unavailable here where, according to SBA’s characterization, companies have relied on the 2009 Letter in

conducting and growing their operations. Certainly,

reasonable reliance interests of regulated parties

should often be considered when an agency changes

course. But the facts matter. SBA’s members do not

have any significant or reasonable reliance interests in

the 2009 Letter, either by the letter’s own terms or under FTC regulations. Call Assistant specifically requested an informal “Staff Opinion Letter” (emphasis

Call Assistant’s) on the applicability of the TSR to

soundboard; in that request, Call Assistant made representations about how it used soundboard in order to

provide the staff with a factual basis for such an opinion. J.A. 230. In express reliance on these factual representations, the FTC staff stated its opinion that, if

these particular facts were true, the TSR would not

23a

prohibit the use of soundboard, at least for the uses described by Call Assistant: J.A. 38. The 2009 Letter emphasized that the staff opinion extended only to

soundboard use as factually portrayed in Call Assistant’s letter soliciting the opinion. Call Assistant did

not state anywhere in its letter or supporting materials that call-center agents would use soundboard to

field multiple simultaneous calls; instead, Call Assistant highlighted how the technology would allow an

agent to better interact with a caller and accurately

convey information to a caller. See J.A. 230-35. Thus,

even if the 2009 Letter had been binding on the Commission, it did not bless the practice of using soundboard to field multiple calls simultaneously, and it

therefore does not appear to be reasonable for a company to rely upon the 2009 Letter for such uses. SBA

members also did not take any affirmative steps to apprise the FTC that soundboard is frequently not used

in the manner represented by Call Assistant, even after the issuance of the 2009 Letter; instead, the FTC

had to learn that this from its own investigation after

receiving numerous consumer complaints and reviewing news reports. If industry actors such as Call Assistant had corrected the factual misrepresentations (by

omission) as proactively as they solicited the staff opinion, seven years might not have passed before FTC

staff reconsidered and rescinded the 2009 Letter.4

The possibility of immediate judicial review of informal advice in these circumstances might make guidance harder for industry to request and receive. Not only might staff be less willing

to give advice, the advice that is released may take longer and be

more costly to develop. Further, allowing informal staff opinions

of this sort to be brought into court immediately would cast judges

24a

Whether a regulated entity is a small business or

a large trade association, the bottom line is the same

for the finality of an agency’s action. Both prongs of

Bennett must be met. The dissent argues that somehow

the impact on industry should have been accounted for

in the staff ’s decisionmaking, and the failure to account for practical impacts somehow makes informal

staff advice more final. That approach bootstraps Bennett’s second prong into its first. The point where an

agency’s decisionmaking process is complete cannot be

pulled to and fro by the gravity of any particular decision for an industry. Such an unmoored approach to

evaluating the finality an agency’s decision would create uncertainty for everyone – the agency, the industry,

and the courts.

Indeed, if regulated entities could assert a dramatic impact on their industry no matter who issued

the advice or under what regulatory authority, the first

prong of Bennett would have little meaning. Say some

advice is issued by a paralegal, who writes a letter on

in a role for which they are particularly ill-prepared: providing

advisory opinions about the policy merits and applicability of

agency actions on an underdeveloped record. The broad interpretation of finality advocated for by the dissent would, contrary to

Abbott Labs., “entangle[e] [courts] in abstract disagreements over

administrative policies.” 387 U.S. at 148. While it may serve the

short-term interest of SBA’s members to bring this particular

grievance to court immediately, the incentives of such a result

would harm the interest of all regulated parties in access to informal advice and compliance help in general. These practicalities

are reflected in the plain text of the FTC regulations that distinguish Commission advice from staff advice and that provide staff

advice more flexibility by making it rescindable without notice

and giving it no precedential effect.

25a

no authority but his or her own personal opinion. And

say that advice – if adopted by the Commission itself –

could have significant industry consequences. Under

the dissent’s approach, it is unclear what would stop a

regulated party from claiming that what matters for

finality is potential industry impact, not whether a

paralegal’s opinion constitutes the culmination of

agency decisionmaking. This is one reason why precedent emphasizes the importance of who made a decision, and how an agency’s regulations delineate

responsibility for and the bindingness of such a decision. See Abbott Labs., 387 U.S. at 151; Holistic Candlers, 664 F.3d at 944. The fact that an opinion of

someone at an agency could potentially impact a regulated entity says nothing about whether that opinion

is the culmination of the agency’s decisionmaking.5

Our dissenting colleague appears to believe that FTC staff

has an obligation to proactively investigate whether the facts

being represented by an entity requesting advice are false or incomplete. Dissenting Op. at 20. This is mistaken. Commission

regulations provide that the Commission or the staff will provide

advice “[o]n the basis of the materials submitted.” § 1.3(a). There

is no obligation on the part of FTC staff to investigate further. In

fact, FTC regulations expressly provide that “a request for advice

will ordinarily be considered inappropriate where . . . [a]n informed opinion cannot be made or could be made only after extensive investigation, clinical study, testing, or collateral inquiry.” 16

C.F.R. § 1.1 (emphasis added). The fact that the regulations authorize “the Commission or its staff ” to use “any other information available” when providing advice “if practicable” simply

allows – but does not require – the use of any other information

that may be in the agency’s possession. A request for informal

staff advice is not a petition for rulemaking, nor is it an adjudication requiring investigative fact-finding by the agency. The onus

is on requestors of advice to provide accurate information to form

26a

In addition, we do not believe finality can be measured by what the industry claims it will do or stop doing. The test is what legal and practical consequences

will flow from the agency’s action. Here, it is unclear

that much, if any, of the claimed consequences for industry could properly be attributed to the 2016 Letter

at all. Even from this underdeveloped record it appears

that the practices that prompted the 2016 Letter –

such as soundboard agents handling multiple calls at

a time – may not be permissible under the 2009 Letter’s interpretation of the TSR. In addition, even if the

staff ’s interpretation were adopted or enforced by the

Commission, many permissible soundboard uses remain. More importantly, if the soundboard industry

built its business on practices that do not conform to

the facts as represented by Call Assistant, they have

no cause to complain about the impact of rescinding

the 2009 Letter on those practices. In any event, under

FTC regulations, the 2009 Letter is not and could not

be a basis for legally cognizable reliance interests because it was not issued by the Commission. 16 C.F.R.

§ 1.3(b).

the basis of that advice – notably, FTC regulations provide a safe

harbor against enforcement only “where all the relevant facts

were fully, completely, and accurately presented to the Commission.” 16 C.F.R. § 1.3(b). See also 16 C.F.R. § 1.2(a) (“Submittal of

additional facts may be requested [by the agency from the party

requesting advice] prior to the rendering of any advice.”). Therefore, as both the FTC’s regulations and the staff advice letters

make clear, staff or Commission advice is only as good as the facts

on which it is based, and at least in the circumstances here, the

primary responsibility for developing and presenting those facts

lies with the requestor.

27a

Finally, the dissent relies heavily again on Sackett

to argue that the 2009 and 2016 Letters constitute final agency action under Bennett’s second prong. While

we need not and do not conduct a full analysis of this

prong, we note significant differences between the EPA

Administrator’s order setting out express legal obligations in Sackett and the informal staff advice here. The

Sackett Court concluded that “through the order, the

EPA ‘determined’ ‘rights or obligations’ ” because, “[b]y

reason of the order, the Sacketts have the legal obligation to ‘restore’ their property . . . and must give the

EPA access to their property and to ‘records and documentation related to the conditions at the Site.’ ” Sackett, 566 U.S. at 126. In contrast, the informal staff

advice in the 2016 Letter offers an interpretation of the

TSR, but it fixes no specific, legally enforceable rights

or legal obligations of the kind created by the Administrator’s order in Sackett. As the FTC conceded, the

2016 Letter might be used to show an SBA member’s

knowledge regarding the meaning of the TSR and,

therefore, could be evidence of willfulness should an

SBA member violate the TSR. But, unlike a violation

of the Administrator’s order in Sackett, a so-called “violation” of the 2016 Letter does not independently trigger any penalties.

We respect our dissenting colleague’s concern for

consequences to the soundboard industry in this case,

but we cannot agree that these consequences are sufficient to render informal FTC staff advice final agency

action.

28a

IV.

SBA also argues the 2016 Letter violates its freespeech rights by subjecting it to the TSR’s alleged content-based restrictions on constitutionally protected

speech. As SBA’s counsel conceded at oral argument,

however, SBA pleaded the alleged free-speech violations as APA claims only, not standalone First Amendment claims. We therefore need not reach the FTC’s

arguments that SBA’s speech claims are either forfeited or time-barred, as these claims must also be dismissed for want of final agency action.6

We note a subtle but important distinction between prudential doctrines such as ripeness, where the presence of constitutional claims may favor judicial review, and the APA’s statutory

prerequisite of final agency action, without which no cause of action

or claim exists. See John Doe, Inc. v. DEA, 484 F.3d 561, 567 (D.C.

Cir. 2007) (opinion of Edwards, J.) (“[E]ven if exhaustion, ripeness,

and finality may be difficult to distinguish in some contexts, they

must be carefully delineated when, as here, finality is a statutory

jurisdictional prerequisite rather than merely a precaution related

to concreteness and institutional capacity.”); Ticor Title Ins. Co.

v. FTC, 814 F.2d 731, 745-46 (D.C. Cir. 1987) (opinion of Williams,

J.) (“[W]hile courts often mingle the three doctrines [of finality,

ripeness, and exhaustion], they are analytically distinct. . . . While

exhaustion is directed to the steps a litigant must take, finality

looks to the conclusion of activity by the agency.”). Unlike reviewability doctrines developed by courts, final agency action is a statutory requirement set by Congress. We have found no decision of

this Court, and no decision of any other circuit court, holding that

the presence of constitutional claims eases the Supreme Court’s

two-part Bennett test for final agency action. Cf. Unity08 v. FEC,

596 F.3d 861, 865 (D.C. Cir. 2010) (finding First Amendment chilling

concerns relevant to ripeness while explicitly distinguishing ripeness from finality of agency action); Chamber of Commerce v.

29a

Pursuant to FTC regulations and by its own terms,

the 2016 Letter does not constitute the consummation

of the Commission’s decisionmaking process regarding

the applicability of the TSR to soundboard technology.

Without final agency action, SBA lacks a cause of action under the APA. We therefore vacate the decision

below and dismiss the complaint for failure to state a

claim.

So ordered.

MILLETT, Circuit Judge, dissenting: Why let reality get in the way of a good bureaucratic construct? In

holding that the 2016 Letter from the Federal Trade

Commission’s Division of Marketing Practices is not a

judicially reviewable “final agency action,” the court’s

opinion focuses on the Commission’s structuring of its

own regulations to preserve its right to disagree (or

not) with the Division at some “later” date. 16 C.F.R.

§ 1.3(c). In so doing, the court’s opinion measures finality exclusively from the Commission’s vantage point.

But there are two sides to this story. Finality is

supposed to look at both whether “the agency’s decisionmaking process” has “consummat[ed],” and the reality of whether “rights or obligations have been

determined” by or “legal consequences will flow” from

FEC, 69 F.3d 603-04 (D.C. Cir. 1995) (finding the presence of First

Amendment speech claims to favor pre-enforcement ripeness

when finality was conceded). Regardless, SBA has not argued for

such a doctrinal shift.

30a

the challenged agency action. Bennett v. Spear, 520 U.S.

154, 178 (1997) (internal quotation marks and citations

omitted). And in deciding whether the agency process

has ended for purposes of Bennett’s first prong, courts

must look beyond the agency’s say-so to objective and

practical indicia of finality. See, e.g., Sackett v. EPA, 566

U.S. 120, 127 (2012) (holding that compliance order

that triggers potential penalties is final even though

agency provided for ongoing “informal discussion” and

consideration of the accuracy of its findings).

In this case, the agency’s emphatic and directive

language in the 2016 Division Letter, combined with

the absence of any avenue for internal administrative

review, unleashes immediate legal and practical consequences for the industry, forcing its members to choose

between complying by shuttering their businesses or

exposing themselves to potentially significant financial penalties. When agency action threatens such severe repercussions, the “mere possibility that an

agency might reconsider” does not deprive the action

of finality. Sackett, 566 U.S. at 127.

In my view, the Administrative Procedure Act

should not countenance an agency telling an individual or industry that its business must end, while fending off court review on the ground that its own internal

administrative processes have not ended. Because the

structure of the Commission’s regulations, the substantive content of the Division’s Letter, the absence of

an internal appeal mechanism, and the consequences

that flow from it together render the Division’s 2016

31a

Letter the end of the agency’s process, I respectfully

dissent.

Courts must examine finality in a “flexible” and

“pragmatic way,” considering the impact of delayed

review on both the agency action and the regulated

entities. Ciba-Geigy v. EPA, 801 F.2d 430, 435 (D.C. Cir.

1986) (internal quotation marks and citation omitted);

see United States Army Corps of Engineers v. Hawkes

Co., 136 S. Ct. 1807, 1815 (2016) (applying the “ ‘pragmatic’ approach we have long taken to finality”);

Federal Trade Comm’n v. Standard Oil Co., 449 U.S.

232, 239 (1980) (“[C]ases dealing with judicial review

of administrative actions have interpreted the ‘finality’

element in a pragmatic way.”) (quoting Abbott Laboratories v. Gardner, 387 U.S. 136, 149 (1967)).

Applying that pragmatic test, I acknowledge that

the Federal Trade Commission has dressed the Division’s advice up with some of the trappings of nonfinality. Commission regulations say that “[a]dvice

rendered by the staff is without prejudice to the right

of the Commission later to rescind the advice and,

where appropriate, to commence an enforcement proceeding.” 16 C.F.R. § 1.3(c). Also, the Division says in

its 2016 Letter that it is “express[ing]” only the views

of Commission “staff,” and that the Letter has “not

been approved or adopted by the Commission,” nor is

it “binding upon the Commission.” Letter from Lois C.

Griesman, Assoc. Dir., Div. Mktg. Practices, to Michael

32a

Bills, Former Chief Exec. Officer, Call Assistant 4 (Nov.

10, 2016) (“2016 Division Letter”).1

But a closer look at the Commission’s regulations

governing agency advice reveals the 2016 Division Letter to be, for all practical purposes, a definitive agency

position that concludes the administrative process for

the foreseeable future.

First, advisory opinions by different divisions of

the Commission are not some independent or detached

endeavor. Instead, all requests for advisory opinions

must first be submitted to the Secretary of the Commission. 16 C.F.R. § 1.2(a). Then, “[o]n the basis of the

materials submitted, as well as any other information

available,” the Commission “will inform the requesting

party of its views,” id. § 1.3(a), through either the issuance of an opinion by the Commission itself, id.

§ 1.1(a), or the Commission deputizing agency staff to

“render [the] advice,” id. § 1.1(b); see id. (“The Commission has authorized its staff to consider all requests for

advice and to render advice, where practicable, in those

circumstances in which a Commission opinion would

not be warranted.”); see 16 C.F.R. § 0.7 (“The Commission * * * may delegate, by published order or rule, certain of its functions to a division of the Commission

* * * or an employee * * * .”).2

Available at https://www.ftc.gov/system/files/documents/

advisory_opinions/letter-lois-greisman-associate-director-divisionmarketing-practices-michael-bills/161110staffopsoundboarding.pdf.

According to the regulations, a Commission opinion is warranted only when the “matter involves a substantial or novel

33a

As a result, when staff issues advisory opinions to

industry, it does so at the Commission’s direction and

as its delegate. For this case, that means the Commission itself has already decided that this matter does

not warrant a Commission decision and is best handled by delegating the decision to the enforcement Division.3 In fact, leaving Division staff to provide

regulatory advice appears to be par for the course with

the Commission. Of the 59 advisory opinions published

on the Commission’s website, 57 have been issued by

staff; only 2 were issued by the Commission itself. See

FED. TRADE COMM’N, Advisory Opinions, https://www.

ftc.gov/policy/advisory-opinions (last visited April 17,

2018). And neither of those Commission decisions purported to review a staff advisory opinion.4 That pattern

question of fact or law and there is no clear Commission or court

precedent,” or the “subject matter of the request and consequent

publication of Commission advice is of significant public interest.”

16 C.F.R. § 1.1(a).

In this case, an industry member requested staff advice

following the adoption of the Telemarketing Sales Rule, 16 C.F.R.

§ 310, and the Commission directed the staff to issue an opinion.

Staff initially advised in 2009 that the Rule would not apply to

soundboard technology. Letter from Lois C. Griesman, Assoc. Dir.,

Div. Mktg. Practices, to Michael Bills, Chief Exec. Officer, Call

Assistant (Sept. 11, 2009), https://www.ftc.gov/sites/default/files/

documents/advisory_opinions/opinion-09-1/opinion0901_1.pdf (“2009

Division Letter”). Staff revisited and “revoked” its advice in the

2016 Letter based on new fact findings about the nature of soundboard technology when used for telemarketing. See 2016 Division

Letter, supra, at 3.

One Commission letter addressed a matter in the first instance. See Letter from Donald S. Clark, Sec’y, FED. TRADE COMM’N,

to Rozanne M. Anderson, ACA Int’l & Andrew M. Beato, Stein,

Mitchell & Mezines, LLP (June 23, 2009), https://www.ftc.gov/

34a

of regulatory delegation of decisions to staff weighs in

favor of finality. See Kobach v. Election Assistance

Comm’n, 772 F.3d 1183, 1190 (10th Cir. 2014) (finding

that internal delegation to Executive Director of the

Election Assistance Commission rendered his decision

final).

That the regulation says it “authorize[s]” staff to

render advice, rather than “delegates” to staff, is neither here nor there semantically. See Op. at 17–18. The

ordinary meaning of “authorizes” is to empower a person to act or speak for another. See BLACK’S LAW DICTIONARY 123 (5th ed. 1979) (defining “authorize” as “[t]o

endow with authority or effective legal power, warrant,

or right.”); see also MERRIAM-WEBSTER (“[T]o endorse,

empower, justify, or permit by or as if by some recognized or proper authority.”) (emphasis added); THE

AMERICAN HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE 89 (New College ed. 1976) (“To grant authority

or power to.”). That is also what a delegation does. See

THE AMERICAN HERITAGE DICTIONARY OF THE ENGLISH

LANGUAGE 349 (New College ed. 1976) (defining “delegate” as “to commit to one’s agent or representative.”).

system/files/documents/advisory_opinions/federal-trade-commissionadvisory-opinion-clarifying-intersection-fair-debt-collection-practicesact/p064803facta-adop-1.pdf. The other came almost thirteen

years after an advisory opinion by agency staff had issued. See

Letter from Donald S. Clark, Sec’y, FED. TRADE COMM’N, to Jonathan Sheldon & Carolyn Carter, Nat’l Consumer Law Ctr. (May

3, 2012) (continuing the longstanding position adopted by staff ),

https://www.ftc.gov/system/files/documents/advisory_opinions/16c.f.r.part-433-federal-trade-commission-trade-regulation-ruleconcerning-preservation-consumers-claims/120510advisoryopinion

holderrule.pdf.

35a

Here, the Commission specifically decided that the Division was best suited to speak on this matter, and that

the Commission would not weigh in. It is that fact of

deputization that matters in determining finality, not

which synonym for conferring authority the agency

uses.

Second, nothing in the regulations governing advisory opinions labels those delegated decisions as

non-final or just a first round in the agency process.

Instead, the regulatory scheme treats the advisory letter as concluding the process for obtaining the agency’s

position on legal matters. 16 C.F.R. § 1.3(a) (request for

Commission advice will be answered by either “the

Commission or its staff * * * inform[ing] the requesting party of its views”).

Notably, the Commission’s regulations do not provide a process for appealing or obtaining any form of

internal review of staff opinions. Instead, the decision

whether to issue advisory opinions directly or through

agency staff rests exclusively with the Commission. 16

C.F.R. § 1.2(a), 1.3(a). Individuals seeking agency advice cannot control that decision, no matter how many

times they might try to get the Commission itself to

weigh in. See also Oral Arg. Tr. 31–32 (Commission

counsel acknowledges that, while the Association “certainly could make the request” for review of the Division’s decision, “the Commission [is] not certainly

bound to issue an opinion[.]”). And as mentioned, precious few requests succeed in prompting the Commission to weigh in. If the Commission itself answers only

3% of requests for advice, as its history suggests, and

36a

if the Commission has never once intervened to “review” the opinion of its subdivisions, the numbers

themselves evidence that the Division’s advice here

was the agency’s final word.

Like the Sacketts, Soundboard has no “entitlement

to further agency review.” Sackett, 566 U.S. at 127 (emphasis added). The court is unmoved, reasoning that

Soundboard could either request an advisory opinion

from the Commission or await enforcement. Op. at 15–

16. But the Commission has already decided that this

issue does not meet the criteria for a Commission opinion. Soundboard’s ability to keep knocking on a door

that will not open is as beside the point here as it was

in Sackett: “The mere possibility that an agency might

reconsider * * * does not suffice to make an otherwise

final action nonfinal.” Sackett, 566 U.S. at 127; see also

Hawkes Co., 136 S. Ct. at 1814 (where the agency decision is typically not revisited, the “possibility” of further consideration “does not make an otherwise

definitive decision nonfinal”).

Nor does the option to await a penalty-seeking

civil enforcement action strip agency action of finality.

The Supreme Court has repeatedly held that parties

need not “wait[ ] for [the agency] to drop the hammer

in order to have their day in court.” Hawkes Co., 136

S. Ct. at 1815 (internal quotation marks omitted); see

Sackett, 566 U.S. at 127 (“But the Sacketts cannot initiate [an enforcement] process, and each day they wait

for the agency to drop the hammer, they accrue, by the

Government’s telling, an additional $75,000 in potential liability.”); see also Free Enter. Fund v. Public Co.

37a

Accounting Oversight Bd., 561 U.S. 477, 490 (2010)

(“We normally do not require plaintiffs to bet the farm

by taking the violative action before testing the validity of the law.”) (internal quotation marks, citation, and

alteration omitted).

Third, while the Commission emphasizes that the

regulations expressly reserve its right “later to rescind

the advice” of staff, 16 C.F.R. § 1.3(c), that language

actually supports finality. To begin with, the same

qualification about potential rescission applies, almost

verbatim, to indisputably final Commission opinions.

Id. § 1.3(b) (“Any advice given by the Commission is

without prejudice to the right of the Commission to reconsider the question involved, and, where the public

interest requires, to rescind or revoke the action.”). Indeed, even without that regulatory reservation, the

ability of agencies to reverse course is well-settled, so

long as they reasonably explain themselves. See Telecommunications Research & Action Ctr. v. Federal

Communications Comm’n, 26 F.3d 185, 193 (D.C. Cir.

1994) (“We have long recognized that an agency’s

view of what is in the public interest may change

* * * . When that happens, we require only that the

agency changing its course supply a reasoned analysis

indicating that prior policies and standards are being

deliberately changed, not casually ignored.”) (internal

quotation marks, alterations, and citation omitted).5

See also Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State

Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57 (1983) (“An agency’s

view of what is in the public interest may change, either with or

without a change in circumstances.”).

38a

In addition, the regulation’s requirement that the

Commission “rescind” Division opinions underscores

that, unless the Commission takes that affirmative

step, the Division opinion operates as a statement of

the agency’s position. After all, “rescind” means “[t]o

make void; to repeal or annul” a legally operative document, as in to “rescind the legislation.” BLACK’S LAW

DICTIONARY 1499 (10th ed. 2009); see also THE NEW OXFORD AMERICAN DICTIONARY (2d ed. 2005) (defining “rescind” as to “revoke, cancel, or repeal (a law, order, or

agreement): the government eventually rescinded the

directive”). One does not “rescind” a mere suggestion or

informal advice.

Further, the regulation speaks only of the Commission reserving the power to rescind the staff opinion “later.” 16 C.F.R. § 1.3(c). Framed that way, the

ability to rescind is just a tool the Commission keeps

in its back pocket; it does not mean that Division advice that the Commission chooses to leave in place is

only half-baked or tentative. The opposite is true. Once

staff “inform[s] the requesting party of its views,” id.

§ 1.3(a), that is the agency’s final answer, unless and

until there is a later change of heart. The simple fact

that the Division’s decision could (or could not) “be altered in the future has nothing to do with whether it is

subject to judicial review at the moment.” Appalachian

Power Co. v. EPA, 208 F.3d 1015, 1022 (D.C. Cir. 2000);

see id. at 1023 (concluding that interpretive and policy

statements may constitute final, consummated action

if they are otherwise “final” in nature).

39a

Fourth, the Administrative Procedure Act is explicit that an agency action remains reviewable “final”

agency action notwithstanding the availability of appeal to a “superior agency authority,” unless agency

rules render the initial agency decision “inoperative”

pending such appeal. 5 U.S.C. § 704. Nothing in the

Commission’s regulations provide for appeal to the

Commission, let alone render the Division’s 2016 Letter inoperative until reviewed. To the contrary, the regulations are explicit that whatever opinion issues is

the Commission’s answer to the request for its views,

16 C.F.R. § 1.3(a), and the decision will take effect on

whatever date the staff decides—here, May 12, 2017.

See 2016 Division Letter, supra, at 4 (“[T]he revocation

of the September 2009 letter will be effective six

months from today, on May 12, 2017.”). In short, as in

Sackett, the Commission’s regulations provide “no entitlement to further agency review,” 566 U.S. at 127, or

even a second bite at the advisory apple.

The opinion for the court also points out that staff

decisions do not afford regulated entities the same

“safe harbor” protections from enforcement as formal

Commission opinions do. Op. at 16–17; see 16 C.F.R.

§ 1.3(b) (providing that, when all relevant facts have

been disclosed and agency orders complied with, the

“Commission will not proceed against the requesting

party with respect to any action taken in good faith reliance upon the Commission’s advice under this section”).

The regulations certainly do make that formal distinction. But it bears noting that the Commission in an

40a

enforcement action cannot extract penalties unless the

defendant had “actual knowledge or knowledge fairly

implied * * * that [its] act is unfair or deceptive and is

prohibited by [Commission] rule.” 15 U.S.C. § 45(m)(1).

Reasonable reliance on a staff advisory opinion would

thus seem to inoculate the regulated entity against liability for penalties. Presumably that is why the

soundboard industry continued its business practices

without Commission challenge for seven years on the

basis of the 2009 Division Letter advising that the Telemarketing Sales Rule did not apply. And presumably

that is also why the Division felt obliged before reversing its legal position in the 2016 Letter to (i) undertake

a months-long investigation, (ii) conduct multiple

meetings with industry members, and (iii) afford industry members six months’ lead time to come into

compliance before enforcing the agency’s new position.

In other words, while the formal protections differ

for Commission-rendered advice, the differential in

practice seems small, and whatever delta remains says

nothing about the finality of the Division’s 2016 Letter

for purposes of judicial review.6

The court responds that Soundboard lacked any basis for

reasonable reliance here because the facts Call Assistant provided to the agency in 2009 did not reflect reality. That puts the

cart ahead of the horse since judicial review is where parties can

contest the accuracy and substantiality of agency factual determinations. 5 U.S.C. § 706 (providing for judicial review of final

agency action “unsupported by substantial evidence”). Anyhow,

that same point would be just as true if the Commission were to

issue an indisputably final Commission opinion. See 16 C.F.R.

§ 1.3(b) (“The Commission will not proceed against the requesting

41a

Consistent with that regulatory structure, the

2016 Division Letter itself speaks in final, conductaltering, and compliance-demanding terms, leaving

the regulated businesses to either knuckle under or

face a penalty-seeking enforcement action.

To begin with, the Letter states unqualifiedly that

telemarketing calls using soundboard technology “are

subject” to the “plain language of the [Telemarketing

Sales] [R]ule,” 16 C.F.R. § 310.4(b)(1)(v). 2016 Division

Letter, supra, at 3. So going forward, calls “can only be

made legally if they comply with the [rule’s] requirements.” Id. (emphasis added). For both agency officials

on the sending end and industry on the receiving end,

there is nothing preliminary, tentative, or qualified

about that message.

In case that shot across the industry’s bow were

not warning enough, the 2016 Division Letter then

gives notice that the newly announced application of

the Telemarketing Sales Rule to soundboard technology “will be effective six months from today.” 2016

party with respect to any action taken in good faith reliance upon

the Commission’s advice under this section, where all the relevant

facts were fully, completely, and accurately presented to the Commission[.]”). What matters to finality is that staff letters, even if

not formally granted safe harbor protection, functionally serve

the same purpose in that, by dint of the knowledge requirement,

they will generally preclude imposition of penalties where regulated entities have reasonably relied on the agency’s advice.

42a

Division Letter, supra, at 4. That six-month lead time,

the Letter explains, is to afford the industry sufficient

time to “make [the] necessary changes to bring themselves into compliance” with the law. Id. The agency

thus “views its deliberative process as sufficiently final

to demand compliance with its announced position.”

Ciba-Geigy, 801 F.2d at 436. And when agency action

is final enough that business-ending compliance is expected by a date certain, it should be final enough for

judicial review. What is final for the goose should be

final for the gander.

The 2016 Division Letter also identifies no avenue

for further Commission review on the question. Worse,

the Letter snuffs out any hope for a change of heart by

explaining that its broadside against the use of soundboard technology in telemarketing calls is commanded

by the “plain language” and “plain meaning” of the Telemarketing Sales Rule. 2016 Division Letter, supra, at

3. Specifically, the Division said:

The plain language of the [Telemarketing

Sales Rule] provision governing prerecorded

calls imposes restrictions on “any outbound

telephone call that delivers a prerecorded

message.” It is indisputable that calls made

using soundboard technology deliver prerecorded messages. As such, under the plain

meaning of the words in the [Telemarketing

Sales Rule’s] prerecorded call provision, outbound telemarketing calls using soundboard

technology are covered because such calls “deliver a prerecorded message.”

43a

Id. The Division’s position thus “admit[s] of no ambiguity” or possibility of modification. Ciba-Geigy, 801

F.3d at 437. If, as the Commission acknowledges, Appellee Br. 53–54, the Telemarketing Sales Rule on its

face plainly foreordains the 2016 Letter’s conclusion,

exactly what more is industry supposed to wait for?

Even more importantly, the consequences to industry that flow from compliance with the Division’s

2016 Letter are dire, “forc[ing] many users to downsize

or close their doors altogether.” Soundboard Br. 13. The

Division knew this when issuing the letter. The Soundboard Association told the Division that extending the

Telemarketing Sales Rule to soundboard technology

would “decimate[ ] an industry” and “[e]liminate[ ] jobs

for persons with a variety of disabilities[.]” J.A. 62. “Because the letter largely outlaws soundboard, the many

businesses that manufacture or distribute soundboard

technology will have no choice but to close down entirely or, at a minimum, dramatically scale back their

operations. That will lead to the loss of thousands of

jobs across those industries alone.” J.A. 113 (quoting

Declaration of Arthur F. Coombs III, Dkt. 2-2).

In addition, telling industry that telemarketing

can no longer “lawfully” be undertaken with their technology will require industry “to scrap the soundboard

technology systems in which they have invested millions of dollars and countless hours of development

and training,” and to “lay off many—and, in some

cases, all—of the thousands of people whom the companies have trained and, for years, paid good salaries

to[.]” Dkt. 2-2 at 11–12; see also Dkt. 2-2 at 10

44a

(compliance with the 2016 Division Letter will “eliminate 80% or more of [company] revenue,” and dampen

sales even in areas not subject to the Telemarketing

Sales Rule); Dkt. 2-3 at 3–4 (affirming that one company will be forced to make massive layoffs and will

lose over $3 million invested in soundboard technology

as a result of the Division’s 2016 letter).

Neither the Commission nor the Division denies

that those consequences will ensue.

To be sure, the 2016 Division Letter ends with the

caveat that the advisory opinion has “not been approved or adopted by the Commission,” and does “not

bind[ ]” it. 2016 Division Letter, supra, at 4. But the

2016 Letter then quickly intones that it nonetheless

“reflect[s] the views” of the Division “charged with enforcement of the [Telemarketing Sales Rule].” Id.7 And

the Commission, for its part, decided to publish the

2016 Letter on its website, right alongside Commission

advice (which also takes the form of a letter to the requesting party).8

Anyhow, such boilerplate qualifications are not

enough to fend off judicial review of otherwise final

agency action. In Appalachian Power Co., the EPA’s

See 16 C.F.R. § 0.16 (The Bureau “investigat[es] alleged

law violations, conducts compliance investigations and initiates

proceedings for civil penalties to assure compliance with final

Commission orders[.]”); id. § 2.1 (delegating authority to the Bureau to initiate investigations); id. § 2.5 (noting that delegated

agents conduct investigations).

See FED. TRADE COMM’N, Advisory Opinions, https://www.

ftc.gov/policy/advisory-opinions (last visited April 17, 2018).

45a

advisory guidance contained an even more forceful

caution, emphasizing that “[t]he policies set forth in

this paper are intended solely as guidance, do not represent final Agency action, and cannot be relied upon

to create any rights enforceable by any party.” 208 F.3d

at 1023. Such “boilerplate,” which the EPA—like Commission staff here—routinely included at the end of

guidance documents, was not enough “ ‘to keep the proceduralizing courts at bay.’ ” Id. (quoting Peter L.

Strauss, Comment, The Rulemaking Continuum, 41

DUKE L.J. 1463, 1485 (1992)); see FED. TRADE COMM’N,

Advisory Opinions, https://www.ftc.gov/policy/advisory-opinions (last visited April 17, 2018) (documenting that all of the Commission’s staff advisory opinion

letters contain the same or nearly identical cautionary

language as the 2016 Letter).

Likewise, in Her Majesty the Queen in Right of

Ontario v. EPA, 912 F.2d 1525 (D.C. Cir. 1990), we held

that an assistant EPA administrator’s letter constituted final agency action notwithstanding a concluding

demurral that the letter represented only the assistant’s personal thoughts and not those of the agency,

id. at 1532. What mattered was that the assistant, who

was the principal advisor for the matters at issue, laid

out a decidedly non-tentative interpretation of the governing statute that was “unambiguous and devoid of

any suggestion that it might be subject to subsequent

revision.” Id.

So too here. The Division’s 2016 Letter speaks

with the announced authority and expertise of the Telemarketing Sales Rule’s enforcer. There is nothing

46a

tentative or interlocutory about its declaration that

the plain meaning of federal law requires Association

members to shutter most if not all of their telemarketing business. Nor is there any administrative appeal

process. In other words, the writing is on the wall, and

a line of routine boilerplate cannot erase it.

The final straw that collapses the Commission’s

claim of non-finality is the “legal consequences [that]

flow” from the 2016 Division Letter. Sackett, 566 U.S.

at 126 (internal quotation marks, citation, and alterations omitted). Federal law empowers the Commission

to file civil enforcement actions for penalties against

those who violate Commission rules governing unfair

or deceptive trade practices, including the Telemarketing Sales Rule, if the defendants had “actual

knowledge or knowledge fairly implied” that their

conduct was “prohibited by such rule.” 15 U.S.C.

§ 45(m)(1); see 16 C.F.R. § 1.98 (addressing penalty

amounts). Each individual “violation” subjects the offender to up to a roughly $40,000 penalty, 16 C.F.R.

§ 1.98. And for ongoing violations, each day the conduct

continues “shall be treated as a separate violation,” 15

U.S.C. § 45(m)(1)(C). Penalties could thus quickly

snowball into more than $1 million a month or roughly

$14.5 million a year for each single contract held by a

soundboard company.9

At oral argument, counsel for the Commission indicated

that each individual phone call “would be a violation,” which

47a

As counsel for the Commission agreed at oral

argument, the specificity and directness of the 2016

Division Letter’s conclusion that the Telemarketing

Sales Rule outlaws the use of soundboard technology

“certainly[ ] * * * would be a factor” in establishing the

knowledge required to trigger an enforcement action

and financial penalties, and it is something that “a reasonable business would take into account.” Oral Arg.

Tr. 33. Given the 2016 Letter’s warning to industry

that the use of soundboard technology is “plain[ly]” unlawful, 2016 Division Letter, supra, at 3, any failure to

comply would put a business at substantial risk of not

only an enforcement action, but also significant penalties running back to the date of this so-called non-final

Letter. The 2016 Division Letter thus is not, as the

court’s opinion would have it (Op. 24), mere “evidence.”

Op. at 24. The Letter lights the liability fuse; it is the

difference between severe financial penalties and no

penalties at all. See Sackett, 566 U.S. at 120 (noting

would accumulate even more rapidly into crushing financial penalties. Oral Arg. Tr. 24. Like the Supreme Court in Sackett, this

court need not definitively resolve the amount of penalties that

the law might ultimately permit in these circumstances. 132 U.S.

at 126 & n.3 (assuming without deciding that government is correct about liability for penalties). What matters to finality analysis is the “Government’s current litigating position,” grounded in

statutory text, that failure to comply with the 2016 Division Letter could provide a legal basis for substantial civil penalties, id.

at 126. That risk is a specific and concrete legal consequence that

flows from the challenged agency action. See id. And because the

Division Letter spawns such legal exposure, the mere possibility

that prosecutorial discretion later down the road could reduce the

amount of penalties says nothing about the finality of agency action now.

48a

that legal consequences flow from the EPA’s order because it “exposes the Sacketts to double penalties in

future enforcement proceedings”).

The Division’s message to industry is clear: Proceed at your own peril. Finality principles will not

allow the Commission to brush off that “immediate

and practical impact” of the Division’s announcement.

Frozen Food Express v. United States, 351 U.S. 40, 44

(1956). The clear and explicit announcement in the

2016 Division Letter about the reach of the Telemarketing Sales Rule’s “plain language,” 2016 Division

Letter, supra, at 3, “warns” every member of the soundboard industry to either reshape “the manner in which

an important segment of the * * * business will be

done” or run the “risk” of civil penalties, Frozen Food

Express, 351 U.S. at 44. When an agency’s “authoritative interpretation” and demand for “compliance”

means business’s “only alternative to costly compliance” is “to run the risk of serious civil * * * penalties,”

finality attaches and the time for judicial review has

come. Ciba-Geigy, 801 F.2d at 437–439; see Hawkes Co.,

136 S. Ct. at 1815 (holding that parties “need not await

enforcement proceedings before challenging final

agency action where such proceedings carry the risk of

serious criminal and civil penalties”); Sackett, 566 U.S.

at 126 (finding that the Army Corps’ action had “all

of the hallmarks of APA finality that our opinions

establish” because, inter alia, it “exposes the Sacketts

to double penalties in a future enforcement proceeding”); Rhea Lana, Inc. v. Department of Labor, 824 F.3d

1023, 1025 (D.C. Cir. 2016) (“By notifying Rhea Lana

49a

that the company was in violation of its wage-and-hour

obligations, the letter rendered knowing any infraction

in the face of such notice, and made Rhea Lana susceptible to willfulness penalties that would not otherwise

apply.”).

Also, the risks to which the soundboard industry

is exposed in this case are magnified because the 2016

Letter threatens enforcement actions and substantial

penalties against speech. Given the Telemarketing

Sales Rule’s varied prohibitions and exceptions pertaining to the scope of outlawed speech, the “legal consequences [that] flow” from the 2016 Letter include the

chilling of potentially constitutionally protected speech.

Bennett, 520 U.S at 178; cf. Sorrell v. IMS Health Inc.,

564 U.S. 552, 580 (2011) (striking down selectively imposed content- and speaker-based burdens on the commercial speech of pharmaceutical manufacturers as

unconstitutional under the First Amendment).

Accordingly, the Division’s declaration that the

soundboard industry needs to shut up and shut down

by a date certain should weigh heavily in the finality

calculus. See Cox Broad. Corp. v. Cohn, 420 U.S. 469,

485–486 (1975) (finding state court decision “final” in

part because “[d]elaying final decision of the First

Amendment claim until after trial will leave unanswered an important question of freedom of the press

under the First Amendment, an uneasy and unsettled

constitutional posture [that] could only further harm

the operation of a free press”) (internal quotation

marks and alterations omitted); see also Blount v.

Rizzi, 400 U.S. 410, 416–417 (1971) (noting that prior

50a

restraints “require ‘prompt judicial review’ * * * to prevent the administrative decision of the censor from

achieving an effect of finality”).10

Given all of that, the Division’s 2016 Letter comfortably fits the mold of cases in which we have held

that the actions of subordinate agency officials qualify

as final agency action. See Safari Club Int’l v. Jewell,

842 F.3d 1280 (D.C. Cir. 2016) (Fish and Wildlife press

release adopting position of Division of Scientific Authority constitutes final agency action); Rhea Lana,

Inc., 824 F.3d at 1025 (letter from subordinate official

informing company of agency’s longstanding interpretation of the Fair Labor Standards Act is final agency

action); Appalachian Power Co., 208 F.3d at 1021–1022

(guidance drafted by subordinate EPA officials constitutes final agency action); Her Majesty the Queen, 912

F.2d at 1531 (letter of assistant EPA official—with explicit caveat that it contained only a personal opinion—constitutes final agency action); Natural Res. Def.

Council, Inc. v. Thomas, 845 F.2d 1088, 1093–1094

(D.C. Cir. 1988) (memorandum drafted by subordinate

EPA official constitutes final agency action); CibaGeigy Corp., 801 F.2d at 435 (letters issued by director

of pesticide programs constitute final agency action).

The opinion for the court cabins consideration of any potential chilling effect to the ripeness inquiry alone. Op. at 25 n.5.

But factors relevant to ripeness often bear on finality as well. See

Ciba-Geigy, 801 F.3d at 435 (considering finality as a component

of ripeness).

51a

As the opinion for the court notes, agency advice

that is genuinely advisory can play an important role

in allowing the regulators and regulated to communicate effectively and work together in coordinating voluntary compliance measures and improving the

effectiveness of regulatory programs.

But “such a ‘count your blessings’ argument is

not an adequate rejoinder to the assertion of a right to

judicial review[.]” Hawkes Co., 136 S. Ct. at 1816. If

agencies want to give advice, they should speak in advisory terms, allow for internal review, or not attach

substantial consequences to noncompliance with what

is supposed to be mere advice.

To be sure, allowing judicial review in this case

might increase the fact-finding burden on agencies issuing advisory opinions, but that will only be true for

a certain subset of decisions—those with unambiguous

pronouncements of a legal position, announced compliance dates, and substantial legal consequences for failure to fall in line. And those seem to be precisely the

cases in which the law should force agencies to take a

harder look, to substantiate their judgments, and to

submit their decisions to judicial review. If the agency

does not yet have all the facts or is not yet committed

to its position as a matter of statutory policy, perhaps

it should finish the job before telling an industry to

shutter its operations.

At bottom, finality is about agency accountability

for the decisions it makes and the consequences it unleashes. The Division’s 2016 Letter, after all, is not

52a

about just adjusting or modifying business behavior to

comport with regulatory standards. Rather, the Letter

announces that plain regulatory language broadly condemns as illegal an entire business model. The Letter

then assigns a date certain by which businesses are

expected to comply by largely ceasing their operations,

laying off employees, and writing off significant financial investments. Failure to toe the Division’s line will

expose the soundboard industry to potentially severe

penalties, with no right first to administrative appeal

or review. The Division Letter leaves the soundboard

industry whipsawed between abandoning its business

and facing potentially ruinous enforcement actions

and penalties. In these circumstances, the benefits of

informal and collaborative interchange between the

regulator and the regulated have evaporated. And the

agency should not be able to transmogrify the mantle

of “staff advice” into both a sharp regulatory sword and

a shield from judicial review.

No doubt a technology used for telemarketing

is hardly a sympathetic poster child for a dissenting

opinion. But the pride of our legal system is its

evenhandedness and fairness to all who come before it.

Plus the issue here is not whether the Commission can

regulate the soundboard industry or telemarketing. It

is only whether the Commission must own up to the

regulatory actions it has set in motion, and whether

those who are told to close up shop and discharge their

employees are entitled first to a day in court. In my

view, if the law requires us to treat the 2016 Division

Letter and its business-ending consequences as just

53a

some informal, take-it-or-leave-it staff suggestion,

then the law is being stingy with reality. I respectfully

dissent.

54a

APPENDIX B

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

SOUNDBOARD

ASSOCIATION,

Plaintiff,

U.S. FEDERAL

TRADE COMMISSION,

Defendant.

)

Case No. 17-cv00150 (APM)

MEMORANDUM OPINION

(Filed Apr. 24, 2017)

Almost every American who owns a telephone has

experienced it: The phone rings, you pick up, there is a

distinct pause, and then an automated voice begins to

make you an unsolicited sales offer. Such calls, popularly known as “robocalls,” are subject to heavy federal

regulation. Generally speaking, a telemarketer cannot

direct a robocall to a person unless that person first

consents in writing to receipt of the call. Thus, while

federal regulations do not absolutely bar robocalls, the

written-consent requirement, along with other restrictions—collectively, “the robocall regulation”—render marketing via robocall prohibitively expensive.

But not all automated voices are created the same.

The traditional robocall consists of a one-way telemarketing message that involves no live sales agent or

other human interaction. “Soundboard” technology—

55a

the subject of this case—is different. It involves

two-way communication between sales agent and consumer, in which the sales agent plays pre-recorded audio clips in response to the consumer’s statements.

Soundboard technology also allows the sales agent to

break into the call and speak directly to the consumer,

if needed. Say, for instance, a consumer asks for additional information about how to buy a product. A sales

agent using soundboard technology first attempts to

answer that inquiry by playing a pre-recorded audio

file. If the pre-recorded response is unsatisfactory, then

the sales agent can intervene and give the consumer a

direct response. So, like a traditional robocall, soundboard technology uses automated, pre-recorded messages to convey information. But, it differs markedly

from the traditional robocall in that a human being is

on the other end of the line, who is sometimes revealed

to the consumer and sometimes not.

Until recently, the robocall regulation did not

apply to calls using soundboard technology. In September 2009, the staff of Defendant Federal Trade Commission (“FTC”) issued an “informal” opinion letter,

concluding that, because calls using soundboard

technology enable the caller and recipient to have a

two-way conversation, such calls are not subject to the

robocall regulation. Seven years later, the agency

changed course. Citing “widespread use of soundboard

technology in a manner that does not represent a normal, continuous, two-way conversation between the

call recipient and a live person,” the FTC staff issued

a second opinion letter in November 2016—which the

court will refer to as the “November 2016 Letter”—that

56a

reversed its earlier position. The staff ’s view now was

that telemarketing calls using soundboard technology

are subject to the general prohibition placed on traditional robocalls. The FTC staff gave the telemarketing

industry until May 12, 2017, “to make any necessary

changes to bring themselves into compliance.”

Plaintiff Soundboard Association is a trade group

representing companies that manufacture and use

soundboard technology. It asserts that the November

2016 Letter is unlawful for two reasons. First, Plaintiff

asserts that the November 2016 Letter is a “legislative

rule” that the FTC failed to promulgate through notice

and comment, as required under the Administrative

Procedure Act (“APA”). Second, it contends that the

November 2016 Letter is an unconstitutional restriction on speech because the robocall regulation’s

written-consent requirement does not apply to prerecorded solicitation calls between a non-profit charitable organization and its existing donors, but it does

apply to such calls with potential first-time contributors. According to Plaintiff, that distinction renders the

robocall regulation a content-based regulation of

speech that cannot be justified under strict scrutiny.

The court rejects both claims. First, the court

finds that, although the FTC’s November 2016 Letter

is a final, reviewable agency action, the Letter is not a

legislative rule, but is, at most, an interpretive rule

that the FTC was not required to issue through notice

and comment under the APA. Second, the court concludes that the November 2016 Letter does no more

than subject soundboard calls to valid time, place, and

57a

manner restrictions. The exemption provided to prerecorded calls on behalf of charitable organizations to

existing donors, but not to charitable organizations’

calls to potential, first-time donors, is a contentneutral regulation of speech that easily satisfies the

requisite intermediate scrutiny. Accordingly, the court

denies Plaintiff ’s Motion for Summary Judgment and

grants Defendant’s Motion for Summary Judgment.

BACKGROUND

A. Factual Background

1. The “Robocall” Regulation

In 1994, Congress enacted the Telemarketing

and Consumer Fraud and Abuse Prevention Act to

protect consumers from deceptive and abusive telemarketing practices. See Telemarketing and Consumer

Fraud and Abuse Prevention Act, Pub. L. No. 103-297

§ 2, 108 Stat. 1545 (1994). The Act charges the U.S.

Federal Trade Commission (“FTC”) with prescribing

rules regulating the telemarketing industry. 15 U.S.C.

§ 6102(a)(1). Pursuant to that authority, in 1995, the

FTC promulgated the Telemarketing Sales Rule

(“TSR”). Telemarketing Sales Rule, 60 Fed. Reg. 43,842

(Aug. 23, 1995), codified at 16 C.F.R. pt. 310. The TSR

prohibits telemarketing calls at certain times of day,

allows consumers to request placement on a “do-notcall” list, and imposes other requirements on telemarketers. See id. § 310.4(b)(ii), (c).

58a

In 2008, the FTC amended the TSR to include

new regulations on robocalls. See Telemarketing

Sales Rule, Final Rule Amendments, 73 Fed. Reg.

51,164, 51,184 (Aug. 29, 2008). The amendments

barred telemarketers from “[i]nitiating any outbound

telephone call that delivers a prerecorded message”

without first obtaining “an express agreement, in writing” from the consumer. 16 C.F.R. § 310.4(b)(1)(v).

The written “express agreement” must include certain

elements, such as language demonstrating the consumer’s willingness to receive the robocalls, the consumer’s telephone number, and the consumer’s

signature. Id. § 310.4(b)(1)(v)(A)(i)–(iv). The 2008 TSR

Amendments further provide that, even when a telemarketer has an express agreement in hand, the telemarketer’s robocall must adhere to strict caller

disclosure and consumer opt-out notice requirements.

Id. § 310.4(b)(1)(v)(B). This opinion refers to these restrictions collectively as “the robocall regulation.”

The written consent requirement does not apply to

pre-recorded calls made on behalf of charitable organizations to past donors or current members. Instead,

the robocall regulation specifically provides that charitable organizations may place robocalls “to induce a

charitable contribution from a member of, or previous

donor to,” the organization without obtaining an express written agreement from the member or donor. Id.

In carving out this exception, the FTC explained that

it sought to balance the interest of non-profit organizations in seeking donations via telephone with the

privacy rights of consumers. It reasoned that prior

59a

donors had a reduced privacy interest because, by donating to the organization previously, they are deemed

to have consented to receiving future charitable solicitation calls. 73 Fed. Reg. at 51,193–94.

2. The FTC Applies the Robocall Regulation to Soundboard Technology

As noted, the traditional robocall is a one-way, prerecorded communication that does not involve any human interaction. Soundboard technology, on the other

hand, allows for a two-way conversation between the

caller and recipient. After initiating a soundboard call,

a live sales agent uses pre-recorded audio clips to respond to the recipient’s statements and can, if necessary, opt to engage in a live conversation with the

consumer. Thus, like a robocall, soundboard technology

uses pre-recorded messages to market a good or service, but ultimately differs from a robocall because it

depends on a live sales agent.

This technological distinction prompted questions

within the telemarketing industry as to whether

soundboard calls would be subject to the robocall regulation. Before the new regulations went into effect in

September 2009, see 73 Fed. Reg. at 51,164, a telemarketing firm, Call Assistant LLC, sent a letter to the

FTC seeking clarification of whether the technological

distinction placed soundboard calls outside of the scope

of the robocall regulation. Def.’s Opp’n to Pl.’s Appl. for

Prelim. Inj., ECF No. 11 [hereinafter Def.’s Opp’n], Ex.

2, ECF 11-2. Call Assistant’s letter specifically asked

60a

whether its “[soundboard] system conforms to the TSR

Amendment.” Id.

On September 11, 2009, the FTC responded with

an “informal staff opinion” signed by Lois Greisman,

the FTC’s Associate Director of the Division of Marketing Practices (“September 2009 Letter”). Compl., ECF

No. 1 [hereinafter Compl.], Ex. 2, ECF No. 1-3 [hereinafter Sept. 2009 Letter]. The September 2009 Letter

stated that “the staff of the [FTC] has concluded that

the 2008 TSR Amendments . . . do not prohibit telemarketing calls using this technology.” Id. Greisman

explained that the robocall regulation “prohibit[s] calls

that deliver a prerecorded message and do not allow

interaction with call recipients. . . . Unlike the technology that you describe, the delivery of prerecorded messages in such calls does not involve a live agent who

controls the content and continuity of what is said to

respond to concerns, questions, comments—or demands—of the call recipient.” Id. Quite naturally, the

September 2009 Letter led telemarketers to believe

that soundboard calls, unlike traditional robocalls, did

not have to conform to the written-consent component

of the robocall regulation. See Notice of Filing of Pl.’s

Corrected Appl. for Prelim. Inj., ECF No. 4, Mem. in

Supp., ECF No. 4-2 [hereinafter Pl.’s Mot.], Ex. 1, ECF

No. 4-3 [hereinafter Coombs Decl.], ¶ 18 (stating that

it has been “widely understood” since the September

2009 Letter that soundboard calls did not fall under

the robocall regulation, and “SBA member companies

relied on that assurance as we developed and grew our

businesses”); Pl.’s Mot., Ex. 2, ECF No. 4-4, ¶ 6; Pl.’s

61a

Mot., Ex. 3, ECF No. 4-5, ¶ 4; Compl., Ex. 7 (PACE

Soundboard Technology White Paper), ECF No. 1-8, at

7 (stating that relying on the September 2009 Letter,

“the contact center industry has continued using and

investing in Soundboard” and subjecting it now to the

robocall regulation will “detrimentally impact[ ]” the

soundboard industry).

The September 2009 Letter remained the FTC’s

position on soundboard technology for more than seven

years. Then the FTC changed its mind. According to

the FTC, sometime after September 2009, it began seeing an increased number of consumer complaints, as

well as press articles, about the improper use of soundboard technology. Specifically, they received complaints that consumers were not receiving appropriate

responses to their questions and comments and that

live operators were not intervening in calls. Def.’s

Opp’n, Ex. 1, ECF No. 11-1 [hereinafter Bandy Decl.],

¶ 5. Additionally, the FTC staff received evidence that

sales agents using soundboard technology were handling more than one call at a time, which made the

practice more like placing robocalls and therefore undercut the FTC staff ’s rationale behind the September

2009 Letter. Id.; Compl., Ex. 1, ECF No. 1-2 [hereinafter Nov. 2016 Letter], at 2–3.

These concerns about the technology’s use

prompted the FTC staff to reach out to telemarketing

trade groups to hear the industry’s perspective. Id. ¶ 6.

In the early part of 2016, the FTC staff had at least two

meetings with the trade groups, during which industry

representatives shared information about the use and

62a

operation of soundboard technology. Id. ¶¶ 7–9. The

FTC staff also collected data about soundboard technology’s use. Id. ¶¶ 5, 10.

On November 10, 2016, the FTC staff announced

that it now considered soundboard calls subject to the

robocall regulation. Nov. 2016 Letter at 2. The November 2016 Letter explained that the FTC had changed

its position on the applicability of the TSR to soundboard technology:

Given the actual language used in the TSR,

the increasing volume of consumer complaints, and all the abuses we have seen since

we issued the September 2009 letter, we have

decided to revoke the September 2009 letter.

It is now staff ’s opinion that outbound telemarketing calls that utilize soundboard technology are subject to the TSR’s prerecorded

call provisions because such calls do, in fact,

“deliver a prerecorded message” as set forth in

the plain language of the rule.

Id. at 3. The FTC staff added that the evidence it had

gathered showing the misuse of soundboard technology was “inconsistent with the principles we laid out

in our September 2009 letter as well as our understanding of the technology at the time we issued the

letter.” Id. at 2.

The FTC staff gave the telemarketing industry

time to adjust to its new position. It announced that,

“[i]n order to give industry sufficient time to make any

necessary changes to bring themselves into compliance,” the September 2009 Letter’s revocation would

63a

become effective in six months, on May 12, 2017. Id. at

4. The November 2016 Letter closed by stating that

“the views expressed in this letter are those of the FTC

staff ” and “have not been approved or adopted by” and

“are not binding upon” the Commission. Id. “However,

they do reflect the views of staff members charged with

enforcement of the TSR.” Id.

B. Procedural Background

The Soundboard Association (“SBA”) filed suit in

this court on January 23, 2017, advancing claims under the Administrative Procedure Act (“APA”), the

First Amendment, and the Declaratory Judgment Act

that the November 2016 Letter does not reflect lawful

agency action. Compl. ¶¶ 1, 79. Those claims are predicated on two theories. First, Plaintiff contends that

the November 2016 Letter is a legislative rule that the

FTC was required to promulgate through notice and

comment, which it did not do. Id. ¶¶ 65–66. Second,

Plaintiff claims that the November 2016 Letter unlawfully subjects telemarketers using soundboard technology to regulations that “treat[ ] speech tailored for

first-time donors differently than speech tailored for

previous donors,” id. ¶ 74, and that such a contentbased regulation does not survive strict scrutiny under

the First Amendment. Id. ¶¶ 70–79. Plaintiff also

seeks a declaration that the FTC violated the APA in

issuing the November 2016 Letter. Id. at ¶ 83.

Plaintiff simultaneously filed a Motion for Preliminary Injunction with its Complaint, asking the court

64a

to enjoin enforcement of the May 12, 2017, compliance

deadline until the court ruled on the merits. See Pl.’s

Mot. at 1. The parties agreed to consolidate the hearing

on the preliminary injunction motion with the “trial”

on the merits, pursuant to Rule 65(a)(2) of the Federal

Rules of Civil Procedure. Order, ECF No. 16, at 1; Fed.

R. Civ. P. 65(a)(2); Morris v. District of Columbia, 38

F. Supp. 3d 57, 62–63 (D.D.C. 2014). Thus, with their

consent, the court treats the parties’ pleadings as

cross-motions for summary judgment.

II.

LEGAL STANDARD

Ordinarily, cross-motions for summary judgment

are reviewed under the standard set forth in Rule 56

of the Federal Rules of Civil Procedure. Under Rule 56,

a court may grant summary judgment when a party

demonstrates that there is no genuine issue of material fact and shows it is entitled to judgment as a matter of law. However, in cases such as this one that

involve review of agency action under the APA, the

Rule 56 standard does not apply. See Stuttering Found.

of Am. v. Springer, 498 F. Supp. 2d 203, 207 (D.D.C.

2007). Instead, “the district judge sits as an appellate

tribunal” and “[t]he entire case on review is a question

of law.” Am. Biosci., Inc. v. Thompson, 269 F.3d 1077,

1083 (D.C. Cir. 2001) (internal quotation marks omitted) (collecting cases). In this posture, the court must

decide “whether as a matter of law the agency action

is supported by the administrative record and is otherwise consistent with the APA standard of review.” See

65a

Se. Conference v. Vilsack, 684 F. Supp. 2d 135, 142

(D.D.C. 2010).

III. DISCUSSION

A. Whether the November 2016 Letter is a

Final Agency Action

Before proceeding to the merits of Plaintiff ’s APA

claim, the court must address the vigorously contested

threshold issue of whether the November 2016 Letter

is a “final agency action,” within the meaning of the

APA. See Fund for Animals, Inc. v. U.S. Bureau of Land

Mgmt., 460 F.3d 13, 18 (D.C. Cir. 2006). If it is, then the

court may address the merits of Plaintiff ’s claims. If it

is not, then the Letter is not reviewable, and the court’s

inquiry comes to an end. See id.

The APA allows for judicial review of a “final

agency action.” 5 U.S.C. § 704. For an agency action to

be final, it must possess two characteristics. Bennett v.

Spear, 520 U.S. 154, 177–78 (1997). First, the action

must “mark the consummation of the agency’s decision-making process”—in other words, it cannot be

“tentative or interlocutory.” Id. (internal quotation

marks omitted). Second, it must determine “rights or

obligations” or have “legal consequences.” Id. at 178

(internal quotation marks omitted). Whether an

agency action is final is a “ ‘flexible’ and ‘pragmatic’ ”

inquiry. Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 435

(D.C. Cir. 1986) (quoting Abbott Labs. v. Gardner, 387

U.S. 136, 149–50 (1967)).

66a

The D.C. Circuit has identified three additional

factors for courts to consider in assessing the finality

of an agency action—factors it has characterized as

“complementary” to the two-part Bennett inquiry. CSI

Aviation Servs., Inc. v. U.S. Dep’t of Transp., 637 F.3d

408, 412 (D.C. Cir. 2011). Those factors, as articulated

by the court in Ciba-Geigy Corp. v. EPA, are: (1)

whether the agency “ha[s] taken a ‘definitive’ legal position concerning its statutory authority”; (2) whether

the case presents “ ‘a purely legal’ question of ‘statutory interpretation’ ”; and (3) whether the agency action imposes “an immediate and significant practical

burden” on Plaintiff. Id. (quoting Ciba-Geigy, 801 F.2d

at 435–37).

On occasion, the D.C. Circuit has applied the three

Ciba-Geigy factors as a proxy for the two-part Bennett

inquiry, particularly in cases that involve a preenforcement challenge to agency action. For example,

in CSI Aviation Services v. U.S. Department of Transportation, the court relied primarily on the Ciba-Geigy

factors to find that a Department of Transportation

cease-and-desist letter was a reviewable final agency

action. See 637 F.3d at 411–13. It reached the same

conclusion in Reckitt Benckiser Inc. v. EPA, holding

that an EPA-issued misbranding notice qualified as a

final agency action. 613 F.3d 1131, 1136–41 (D.C. Cir.

2010). Cf. John Doe, Inc. v. Drug Enf ’t Admin., 484

F.3d 561, 566–67 (D.C. Cir. 2007) (holding that “[b]oth

Bennett and Ciba-Geigy firmly support a finding of finality” where DEA affirmatively denied drug manufacturer’s permit application to import generic version of

67a

FDA-approved drug for testing, blocking manufacturer’s plans to market the generic version).

Whether this court applies either the two-part

Bennett test or the three Ciba-Geigy factors, the result

is the same: the November 2016 Letter constitutes a

final agency action.

1. The Bennett Test

a. The First Element of the Bennett Test

The court finds that the November 2016 Letter

represents the “consummation” of the FTC’s decisionmaking process. See 520 U.S. at 177–78. The November

2016 Letter was the culmination of months of investigation and deliberation by the FTC’s Division of Marketing Practices, which is charged with enforcing the

TSR. The FTC staff not only considered consumer complaints, but also proactively sought out and received

input from the telemarketing industry. Nov. 2016 Letter at 2 (“During the last few months, we have had

multiple productive discussions and meetings with [industry groups]” and “[s]taff carefully considered the input” of these groups); see also Bandy Decl. ¶¶ 5–10.

Neither the FTC staff nor the Commission itself presently is reviewing the position announced in the November 2016 Letter; nor is any review anticipated in

the near future. See Oral Argument Tr. (rough draft),

at 33 (FTC counsel stating, “[FTC rules] certainly allow[ ] the Commission to rescind the guidance at any

time, but I’m unaware of any action suggesting it’s

doing so.”). Thus, for all intents and purposes, the

68a

agency’s review of whether the robocall regulation applies to soundboard calls is at an end.

The FTC disputes that the November 2016 Letter

constitutes the consummation of the agency’s decisionmaking because it is “an informal, tentative assessment of the law by a subordinate official.” Def.’s Opp’n

at 17. It is merely “staff advice,” the FTC contends, issued by a subordinate official, who “do[es] not speak

for the agency,” and is not binding on the Commission.

Id. (citing 16 C.F.R. §§ 1.26(d), 1.3(c), 2.14(a), 3.11(a))

(alteration omitted). That argument is unavailing. The

fact that a lower-level agency official issued the November 2016 Letter, rather than the Commission itself,

is not dispositive. The D.C. Circuit has made clear that

legal positions announced, as here, by subordinate officials responsible for oversight can constitute final

agency action. See, e.g., Her Majesty the Queen in Right

of Ontario v. EPA, 912 F.2d 1525, 1531–32 (D.C. Cir.

1990) (finding that letters from the “Acting Assistant

Administrator for Air and Radiation” were final agency

actions, given that the author was “clearly speaking in

an official rather than a personal capacity” and there

was no reason to question his authority to speak for

the EPA); Nat. Res. Def. Council, Inc. v. Thomas, 845

F.2d 1088, 1094 (D.C. Cir. 1988). And, while the Commission does have the power to rescind the Letter, see

Def.’s Opp’n at 17 (citing 16 C.F.R § 1.3(c)), the mere

prospect that it might do so does not insulate the Letter from judicial review. See U.S. Army Corps of Engineers v. Hawkes Co., Inc., 578 U.S. ___, 136 S. Ct. 1807,

1813–14 (2016) (observing that the mere possibility of

69a

revision “is a common characteristic of agency action,

and does not make an otherwise definitive decision

nonfinal”); accord Safari Club Int’l v. Jewell, 842 F.3d

1280, 1289 (D.C. Cir. 2016).

Moreover, contrary to the FTC’s position, the November 2016 Letter is not a mere “ruling” or “recommendation” from a subordinate official that is still

subject to review and therefore not a final agency action. See, e.g., Abbott Labs., 387 U.S. at 151; Anglers

Conservation Network v. Pritzker, 809 F.3d 664, 669–70

(D.C. Cir. 2016). Rather, it reflects the “views of staff

members charged with enforcement of the TSR.” Nov.

2016 Letter at 4. The court has no reason to believe

that the FTC staff ’s “considered determination” on the

use of soundboard technology does not, as a practical

matter, reflect the position of the agency itself. Safari

Club Int’l, 842 F.3d at 1289.

The Supreme Court’s decision in FTC v. Standard

Oil of California does not, as the FTC argues, compel a

different result. Def.’s Opp’n at 18. There, the Court

held that the FTC’s decision to commence an enforcement action was not a final, reviewable action. 449 U.S.

232, 242–43 (1980). Such an action, the Court reasoned, was not final because “[i]t had no legal force or

practical effect upon [the company’s] daily business

other than the disruptions that accompany any major

litigation. And immediate judicial review would serve

neither efficiency nor enforcement of the [law].” Id. at

243. Based on Standard Oil, the FTC argues that, if

the decision to initiate an actual enforcement action is

not a final agency act, then it is “impossible to see how

70a

it can be a final action when FTC staff issues a letter

indicating how it might make recommendations for

Commission enforcement.” Def.’s Opp’n at 18.

Though the FTC’s argument has some intuitive

appeal, it is wrong as a matter of law. The Supreme

Court has taken different approaches on the question

of finality as between the pre- and post-enforcement

contexts. For example, in Frozen Food Exp. v. United

States, the Court addressed an agency order specifying

that certain commodities were not considered “agricultural” commodities, which would make motor vehicles

transporting them exempt from permitting and certification requirements. 351 U.S. 40, 41 (1956). Although

the agency had yet to initiate or threaten an enforcement action, the Court held that the agency’s order

was final because it “had an immediate and practical

impact on carriers who are transporting the commodities, and on shippers as well.” Id. at 43–44. The order,

the court explained, forms “the basis for carriers in ordering and arranging their affairs. . . . [and] sets the

standard for shaping the manner in which an important segment of the trucking business will be done.”

Id. The agency’s order also “warns every carrier, who

does not have authority from [the agency] to transport

those commodities, that it does so at the risk of incurring criminal penalties.” Id.; cf. Abbott Labs., 387 U.S.

at 153 (holding reviewable prior to enforcement FDA

regulations that forced drug manufacturers to “risk serious criminal and civil penalties” for noncompliance,

or incur large expenses to come into compliance).

71a

Though over 60 years old, Frozen Food remains vibrant today. Recently, the Court in U.S. Army Corps of

Engineers v. Hawkes Co., Inc., relying on Frozen Food,

held that an Army Corps of Engineers’ “jurisdictional

determination” that subjected property to the Clean

Water Act was a final reviewable action. 136 S. Ct. at

1811, 1814. The Court explained that, because the

Corps’ jurisdictional determination “warns that if [the

companies] discharge pollutants onto their property

without obtaining a permit from the Corps, they do so

at the risk of significant criminal and civil penalties,”

it is a final agency action. Id. at 1815.

The November 2016 Letter at issue in this case

bears all of the hallmarks of final agency action present in Frozen Food and Hawkes. Acting through its

staff, the FTC has taken a definitive position that telemarketing calls deployed with soundboard technology

are subject to the robocall regulation. The Letter also

puts companies on notice and gives them time “to bring

themselves into compliance.” Nov. 2016 Letter at 4. The

upshot of the Letter could not be clearer: telemarketing companies either must undertake the expense of

coming into compliance with the agency’s new position

or risk enforcement action. Thus, the Letter has an

“immediate and practical impact” on the telemarketing industry and “sets the standard for shaping the

manner in which” it does business. Frozen Food, 351

U.S. at 44. The November 2016 Letter, therefore, constitutes a reviewable final action.

72a

b. The Second Element of the Bennett

Test

Having concluded that the November 2016 Letter

has a “immediate and practical impact” on the telemarketing industry, the Letter also then satisfies the second element of the Bennett test—the agency’s action

determines “rights or obligations.” 520 U.S. at 178; see

also Hawkes, 136 S. Ct. at 1814 (citing the “definitive

nature” of the Corps’ decision as giving rise to “direct

and appreciable legal consequences” (quoting Bennett,

520 U.S. at 178)).

The FTC contends that the November 2016 Letter

fails the second prong, arguing that, at most, it requires telemarketers to “choose ‘between voluntary

compliance’ and the ‘prospect of having to defend

[themselves]’ in FTC enforcement litigation.” Def.’s

Opp’n at 19 (quoting Reliable Automatic Sprinkler Co.

v. Consumer Prod. Safety Comm’n, 324 F.3d 726, 732

(D.C. Cir. 2003)). The FTC relies primarily on two cases

to support its position: Reliable Automatic Sprinkler

Co. v. Consumer Product Safety Commission, 324 F.3d

726, and Holistic Candlers and Consumers Association

v. Food & Drug Administration, 664 F.3d 940 (D.C. Cir.

2012). In each case, the D.C. Circuit held agency letters

to manufacturers to be nonfinal. Both, however, are

distinguishable from the facts presently before the

court.

Reliable Automatic Sprinkler differs from the present case because, whereas the letter there announced

the agency’s investigation into whether its rule applied

73a

to the plaintiff ’s product, the November 2016 Letter

reflects the FTC’s conclusion that soundboard technology is subject to the robocall regulation. In Reliable Automatic Sprinkler, the Consumer Product Safety

Commission issued a letter to a sprinkler manufacturer communicating “the intention of the Compliance

staff to make the preliminary determination that these

sprinklers present a substantial product hazard, as defined by . . . 15 U.S.C. § 2064(a).” 324 F.3d at 730. The

D.C. Circuit held that the Commission’s letter was not

a reviewable agency action because “[t]he agency’s conduct thus far amounts to an investigation of appellant’s sprinkler heads, a statement of the agency’s

intention to make a preliminary determination that

the sprinkler heads present a substantial product hazard, and a request for voluntary corrective action.” Id.

at 731. Unlike the letter in Reliable Automatic Sprinkler, the November 2016 Letter does not request mere

“voluntary corrective action.” Rather, it conclusively

states that soundboard calls must comply with the robocall regulation. Indeed, the FTC staff acknowledged

that its new position effectively meant that telemarketers no longer would be able to use soundboard calls

to induce the purchase of any good or service. See Nov.

2016 Letter at 3. That much is clear from the FTC

staff ’s pointing out that other uses of soundboard technology—such as for non-telemarketing calls, including

political, survey, and pure informational calls, and for

responding to in-bound calls—remain permissible under the TSR, as well its observation that those other

uses constitute a “significant percentage” of overall

soundboard technology use. Id. at 4. Thus, the Letter

74a

does not seek mere voluntary compliance; it effectively

prohibits a use of soundboard technology. Cf. Safari

Club Int’l, 842 F.3d at 1289 (holding that agency’s “de

facto denial of permits” “leads inexorably to the conclusion that [the plaintiff ’s] ‘rights . . . have been determined’ ” (second alteration in original) (quoting

Bennett, 520 U.S. at 178)).

Holistic Candlers is distinguishable for similar

reasons. In Holistic Candlers, the D.C. Circuit considered warning letters the FDA had issued to manufacturers of “ear candles,” advising that the agency

considered the products to be adulterated and misbranded medical devices. 664 F.3d at 942. The FDA’s

warning letters did not, however, conclusively determine whether the ear candles actually were medical

devices. Instead, the letters

advise[d] the recipients that ‘it appears your

ear candles are intended to mitigate or treat’

the listed disorders, explain[ed] where to get

the ‘information you need to submit in order

to obtain approval or clearance for your device,’ and state[d] that ‘FDA will evaluate the

information you submit and decide whether

your product may be legally marketed.’

Id. at 944. In light of this language, the D.C. Circuit

found that the letters failed to reflect the consummation of the FDA’s decision-making process. Id. The

court also held that the letters could not determine

rights or obligations, or constitute a decision from

which legal consequences flow, because they prompted

only voluntary compliance with the FDA’s preliminary

75a

assessment of the ear candles; the FDA’s decisionmaking process plainly remained ongoing. Id. at 944–

45. The same cannot be said of the November 2016

Letter. The Letter definitively finds that soundboard

technology is subject to the robocall regulation, and it

does not invite industry to submit additional information to inform an ongoing decision-making process.

Cf. id. at 942, 946. The FTC staff already has taken industry input into consideration, and the November

2016 Letter announces the staff ’s final decision that

the robocall regulation applies to soundboard technology. Accordingly, the warning letters at issue in Holistic Candlers are distinguishable from the November

2016 Letter, and that case does not change the court’s

analysis.

2. The Ciba-Geigy Factors

A review of the three “complementary” Ciba-Geigy

factors only bolsters the court’s conclusion that the

FTC staff ’s change in position constitutes a reviewable, final agency action. The first factor—whether the

agency has stated a “definitive” position as to its statutory authority—is satisfied because the FTC staff has

taken the “definitive” legal position that soundboard

calls are subject to the robocall regulation. See CSI Aviation, 637 F.3d at 478. Like the agency actions at issue

in both Ciba-Geigy and CSI Aviation, the November

2016 Letter “admit[s] of no ambiguity” and “[gives] no

indication that it [is] subject to further agency consideration or possible modification.” Ciba-Geigy, 801 F.2d

at 436–37. Although the Letter recites the truism that

76a

the Commission is not bound by the staff ’s position,

such text is mere boilerplate and does not create doubt

about the finality of the agency’s position. See Appalachian Power Co. v. EPA, 208 F.3d 1015, 1022–23 (D.C.

Cir. 2000) (rejecting the argument that “boilerplate”

language in an agency guidance document is dispositive as to whether an agency action has legal consequences); compare Sept. 2009 Letter at 3, with Nov.

2016 Letter at 4.

This case also presents a purely legal question. See

Ciba-Geigy, 801 F.2d at 437. Although this case does

not involve a “pure legal” question of “statutory interpretation,” as in Ciba-Geigy and CSI Aviation, the

question presented—whether November 2016 Letter

is a “legislative rule” under the APA—would not “benefit from a more concrete setting.” Id. at 435. The answer to that legal question depends entirely on the

context in which the Letter was adopted, and it does

not depend on further development of the administrative record. See CSI Aviation, 637 F.3d at 412.

Finally, as already discussed, the November 2016

Letter imposes “an immediate and significant practical

burden” on the telemarketing industry, thereby satisfying the third Ciba-Geigy factor. Id. The FTC staff ’s

reversal effectively bars the use of soundboard technology to place outgoing calls to promote the sale of goods

or services. See id. (finding agency’s cease-and-desist

letter that “effectively declared the company’s operations unlawful” to be a final agency action). Even if

not an effective prohibition, at a minimum, the

agency’s action “cast[s] a cloud of uncertainty” over

77a

the continued use of soundboard technology for telemarketing purposes. Id. As noted, it puts the telemarketing industry to the “painful choice” between “costly

compliance and the risk of prosecution at an uncertain

point in the future.” Id.

In summary, the three Ciba-Geigy factors all point

to the conclusion that the November 2016 Letter is a

final, reviewable agency action. The D.C. Circuit’s observation in CSI Aviation—“[h]aving thus flexed its

regulatory muscle, [the agency] cannot now evade judicial review”—is equally applicable here. Id. at 413.

In light of the November 2016 Letter’s conclusive determination that soundboard technology falls within

the purview of the robocall regulation, which will take

effect in a matter of weeks, the court concludes that the

Letter constitutes final agency action subject to judicial review.

B. Whether the November 2016 Letter is a

Legislative or Interpretive Rule

The court now arrives at the merits of Plaintiff ’s

APA claim. The narrow question presented is whether

the November 2016 Letter is a “legislative” as opposed

to an “interpretive” rule.1 If it is a legislative rule, then

the FTC was required to issue the Letter pursuant to

notice-and-comment rulemaking under the APA; on

The FTC also has argued that the November 2016 letter is

not a “rule” as defined by the APA. Def.’s Opp’n at 21–22. Because

the court concludes the November 2016 Letter is not a legislative

rule, it need not reach that issue.

78a

the other hand, if it is an interpretive rule, then the

FTC’s direct issuance of the Letter to an industry representative did not run afoul of the APA. See 5 U.S.C.

§ 553(b); Perez v. Mortg. Bankers Ass’n, 575 U.S. ___,

___, 135 S. Ct. 1199, 1203 (2015). Plaintiff ’s challenge

to the November 2016 Letter is, therefore, purely procedural; the court is not tasked with evaluating its substance.2

The line separating a legislative rule from an interpretive rule is not always clear, and the task of classification is “quite difficult and confused.” Nat’l Min.

Ass’n v. McCarthy, 758 F.3d 243, 251 (D.C. Cir. 2014).

The Supreme Court has observed that the “prototypical example of an interpretive rule issued by an agency

[is one] [that] advise[s] the public of the agency’s construction of the statutes and rules which it administers.” Shalala v. Guernsey Mem’l Hosp., 514 U.S. 87, 99

(1995) (internal quotation marks omitted). More recently, acknowledging the difficulties attendant to

drawing the distinction between the two types of rules,

the Court reinforced that “it suffices to say that the

critical feature of interpretive rules is that they are issued by an agency to advise the public of the agency’s

construction of the statutes and rules which it administers.” Perez, 135 S. Ct. at 1204 (internal quotation

marks omitted).

Accordingly, the court does not address whether, under 5

U.S.C. § 706(2)(A), the FTC staff ’s decision to apply the TSR’s robocall regulation to soundboard technology-initiated calls and to

disavow the September 2009 Letter was an unlawful arbitrary

and capricious act. Plaintiff has not advanced that claim.

79a

The D.C. Circuit draws the line of demarcation between the two types of rules in a similar fashion. In

Mendoza v. Perez, the Circuit explained that “[a] rule

is legislative if it supplements a statute, adopts a new

position inconsistent with existing regulations, or otherwise effects a substantive change in existing law or

policy,” whereas an interpretive rule “describes the

agency’s view of the meaning of an existing statute or

regulation.” 754 F.3d 1002, 1021 (D.C. Cir. 2014) (quoting Batterton v. Marshall, 648 F.2d 694, 702 n.34 (D.C.

Cir. 1980). The distinguishing characteristic between

the two, therefore, “is whether the new rule effects a

‘substantive’ regulatory change to the statutory or regulatory regime.” Id. (citing Elec. Privacy Info. Ctr. v.

U.S. Dep’t of Homeland Sec., 653 F.3d 1, 6–7 (D.C. Cir.

2011). Stated another way, “[t]o be interpretative, a

rule ‘must derive a proposition from an existing document whose meaning compels or logically justifies the

proposition.’ ” Id. (quoting Catholic Health Initiatives

v. Sebelius, 617 F.3d 490, 494 (D.C. Cir. 2010)).

Applying those principles here, the November

2016 Letter is an interpretive rule. The Letter begins

with an explanation of why the FTC staff is revisiting

the September 2009 Letter. Nov. 2016 Letter at 1–2

(“[S]ince we issued the letter in 2009, staff has seen

evidence of the widespread use of soundboard technology in a manner that does not represent a normal, continuous, two-way conversation between the call

recipient and a live person.”). It then cites to the relevant TSR provision—the robocall regulation—barring

telemarketers from initiating “any outbound telephone

80a

call that delivers a prerecorded message” without prior

written consent from consumers, id. at 3 (quoting 16

C.F.R. § 310.4(b)(1)(v)), and announces that, in light of

newly acquired facts about soundboard technology,

“[soundboard calls] are subject to the TSR’s prerecorded call provisions because . . . [they] ‘deliver a prerecorded message’ as set forth in the plain language of

the rule.” Nov. 2016 Letter at 3. That determination

does not supplement or effect a change to the statutory

or regulatory scheme applicable to telemarketers. Rather, it communicates to the telemarketing industry

the agency’s view that an existing regulation now applies to a particular form of telemarketing technology

as currently used by the industry. That is a “quintessential interpretive rule.” Flytenow, Inc. v. Fed. Aviation Admin., 808 F.3d 882, 889 (D.C. Cir. 2016) (holding

that a FAA letter conveying the agency’s position that

a proposed flight-sharing service would be a “common

carrier,” as defined by the FAA’s regulations, and

therefore would require commercial pilot licenses, “is a

quintessential interpretative rule, as it was ‘issued by

an agency to advise the public of the agency’s construction of the statutes and rules it administers’ ” (quoting

Shalala, 514 U.S. at 99)).

That the November 2016 Letter announced a new

position—and, in so doing, took the telemarketing industry by surprise—does not render it a legislative

rule. It is beyond dispute that agencies are free to

adopt a position that reverses or substantially deviates

from an earlier one. See Perez, 135 S. Ct. at 1207. Such

a change does not subject the agency’s action to the

81a

APA’s notice-and-comment requirements. “Because an

agency is not required to use notice-and-comment procedures to issue an initial interpretive rule, it is also

not required to use those procedures when it amends

or repeals that interpretive rule.” Perez, 135 S. Ct. at

1206. Here, there can be little doubt that the FTC

staff ’s earlier opinion on soundboard technology, the

September 2009 Letter, was an interpretive rule. See

Flytenow, 808 F.3d at 889. The decision to rescind that

opinion did not change the fundamental character of

the agency’s action and transform an interpretive rule

into a legislative one.

Plaintiff advances three main arguments in opposition to this outcome. First, it asserts that the November 2016 Letter is a legislative rule because it has a

“practically binding” effect on the telemarketing industry—it all but compels telemarketers to abandon use

of soundboard technology to initiate calls. In doing so,

Plaintiff relies heavily on Appalachian Power v. EPA.

Specifically, Plaintiff seizes on the D.C. Circuit’s statement that, “if [an agency action] leads private parties

or State permitting authorities to believe that it will

declare permits invalid unless they comply with the

terms of the document, then the agency’s document is

for all practical purposes ‘binding.’ ” Pl.’s Mot. at 16

(citing Appalachian Power Co., 208 F.3d at 1021).

Although the denial of permits is not at issue here,

Plaintiff equates such specific agency authority with

an agency’s general enforcement power and argues

that the November 2016 Letter is interpretive because

82a

it “rigidly demands compliance . . . on pain of FTC enforcement action.” Pl.’s Mot. at 17.

Plaintiff ’s reliance on Appalachian Power, and the

“ ‘practically binding doctrine,” id. is unavailing for two

reasons. First, the above-cited quotation from Appalachian Power concerns whether an agency action is “final,” not whether it is an interpretive or legislative

rule. See 208 F.3d at 1020–21. That much is made clear

when, in the same section of the opinion in which the

quoted text appears, the court discusses the two Bennett finality factors and ultimately concludes that the

agency action at issue there “is final agency action.” Id.

at 1022–23. Second, to the extent post-Appalachian

Power cases have relied on the “practically binding”

formulation, they have done so when distinguishing,

not between interpretive rules and legislative rules,

but between legislative rules and a different category

of agency actions exempt from notice and comment—

policy statements. See, e.g., Elec. Privacy Info. Ctr., 653

F.3d at 7; General Elec. Co. v. EPA, 290 F.3d 377, 383

(D.C. Cir. 2002). Indeed, Plaintiff has cited no authority

for the proposition that whenever an agency action

puts a private party to the choice of either complying

with the agency’s interpretation of a statute or regulation or risking an enforcement action the agency is acting legislatively. Accordingly, the fact that the

November 2016 Letter puts the telemarketing industry to the unenviable choice of complying with the robocall regulation or inviting enforcement does not, by

itself, render the Letter a legislative rule.

83a

Next, Plaintiff argues that the November 2016

Letter is a legislative rule because “[t]he FTC’s newfound position on the reach of the robocall prohibition

is flatly inconsistent with that provision of the TSR.”

Pl.’s Mot. at 20. Plaintiff devotes considerable energy

to this argument, asserting that the November 2016

Letter is premised on a misreading of the TSR and a

misunderstanding of soundboard technology. Id. at 20–

30. These arguments read as if Plaintiff is challenging

the agency’s action on the merits, yet Plaintiff concedes

that its “point is not to persuade this Court to vacate

the November 10 letter as arbitrary and capricious.”

Pl.’s Reply, ECF No. 12, at 14 (emphasis added).3 Instead, Plaintiff says “it presented the counterpoint to

the FTC’s position on the merits of soundboard only for

the purpose of demonstrating why notice-andcomment rulemaking was required.” Id. Plaintiff, however, cites no authority for the proposition that courts

must consider the degree to which an agency would

benefit from the notice-and-comment process when deciding whether an agency action is a legislative rule.

Indeed, it is hard to conceive how such a “benefit standard” would operate in practice. That the FTC could

have derived some benefit from notice-and-comment

rulemaking does not render the November 2016 Letter

a legislative rule.

Although Plaintiff ’s counsel at oral argument raised the

possibility of amending the Complaint to add a claim under 5

U.S.C. § 706(2)(A), which would assert that the November 2016

Letter violates the APA because it is arbitrary and capricious,

Oral Arg. Tr. at 25, Plaintiff has yet to file a motion seeking leave

to amend.

84a

Finally, Plaintiff argues that the “ruinous consequences” of the FTC’s new position on the telemarketing industry warrants treating the November 2016

Letter as a legislative rule. Pl.’s Mot. at 30; Pl.’s Reply

at 15. Once more, Plaintiff cites no authority to support

its position, and it is hard to conceive how such a subjective criteria would operate in practice. Agency actions unquestionably can have a profound impact on

an industry’s operations. But the degree of impact does

not, as a legal matter, dictate whether an agency action

is legislative.

Accordingly, the court concludes that the November 2016 Letter is an interpretive rule under the APA

and, thus, the FTC need not have promulgated it

through notice and comment. Therefore, the court will

enter judgment in favor of the FTC on Plaintiff ’s APA

claim.

C. Whether the TSR Amendment as Applied to Soundboard Calls Violates the

First Amendment

The court now turns to Plaintiff ’s First Amendment claim. Plaintiff asserts that subjecting soundboard technology to the robocall regulation violates the

First Amendment because it constitutes an impermissible content-based restriction on the speech of Plaintiff ’s members who engage in charitable fundraising.

Pl.’s Mot. at 31–40; Pl.’s Reply at 16–21. Under the

First Amendment, “the government has no power to restrict expression because of its message, its ideas, its

85a

subject matter, or its content.” Police Dep’t of the City

of Chi. v. Mosley, 408 U.S. 92, 95 (1972). “Content-based

laws—those that target speech based on its communicative content—are presumptively unconstitutional

and may be justified only if the government proves

that they are narrowly tailored to serve compelling

state interests.” Reed v. Town of Gilbert, 576 U.S. ___,

___, 135 S. Ct. 2218, 2226 (2015). That level of review,

known as strict scrutiny, presents a high bar. Id. at

2227; Burson v. Freeman, 504 U.S. 191, 211 (1992) (describing it as a “rare case” for a law to survive strict

scrutiny). Government regulations related to speech

but not directed at the content of the speech are considered content-neutral regulations. Content-neutral

regulations are permissible, “so long as they are designed to serve a substantial government interest and

do not unreasonably limit alternative avenues of communication.” City of Renton v. Playtime Theatres, Inc.,

475 U.S. 41, 47 (1986). Permissible, content-neutral

regulations of speech include regulations of the time,

place, and manner in which speech is expressed in order to serve legitimate government interests. Clark v.

Cmty. for Creative Non-Violence, 468 U.S. 288, 293

(1984).

Plaintiff argues that the November 2016 Letter is

a content-based restriction on speech because the robocall regulation, to which soundboard calls are now

subject, is itself a content-based regulation. The robocall regulation bars all pre-recorded calls whose purpose is to induce the purchase of any good or service,

absent the call recipient’s prior written consent. 16

86a

C.F.R. § 310.4(b)(1)(v)(A). The written-consent requirement also applies to calls soliciting charitable donations from new donors, but does not apply to calls

soliciting donations from prior donors or members of

the non-profit organization on whose behalf the call is

made. Id. § 310.4(b)(1)(v)(B). Plaintiff claims that the

robocall regulation’s carve-out for solicitation calls

made to prior donors or members constitutes a content-based regulation of speech, because the FTC must

look at what is said during the call—whether the caller

requests a first-time charitable donation or a repeated

charitable donation—to determine if the writtenconsent requirement applies. Pl.’s Reply at 17–18. The

FTC responds that the restriction is content-neutral

because its applicability “turns on the caller’s relationship with the consumer rather than what may be said

in the calls.” Def.’s Opp’n at 29.

The FTC has the better argument. The robocall

regulation’s distinction between charitable solicitations to existing donors or members and potential new

donors is a content-neutral restriction. It distinguishes

calls based on who the recipient is—a prior donor or a

potential new donor—not on what is being said.

As the FTC correctly points out, every court that

has considered one of these types of robocall restrictions has held that a distinction based on the

caller-recipient relationship does not violate the First

Amendment. Def.’s Opp’n at 29–30; see Bland v. Fessler, 88 F.3d 729, 733–34 (9th Cir. 1996) (upholding

state anti-robocall statute because exemptions were

based on existing relationships and were therefore

87a

reasonable time, place, or manner restrictions); Van

Bergen v. Minnesota, 59 F.3d 1541, 1553, 1556 (8th

Cir. 1995) (upholding state statute with exemptions

for messages regarding school attendance, messages

about work schedules, and messages from companies

to current subscribers, as acceptable content-neutral

time, place, or manner regulation); Gresham v. Picker

(Picker), No. 16-01848, 2016 WL 5870809, at *3, 7–8

(E.D. Cal. Oct. 7, 2016) (holding state robocall regulation that exempted calls from schools about student attendance, calls from government agencies related to

emergencies, and other types of calls by certain entities

drew permissible relationship-based, consent-based, or

emergency-based distinctions), appeal docketed, No.

16-16829 (9th Cir. Oct. 12, 2016); Gresham v. Swanson

(Swanson), No. 16-1420, 2016 WL 4027767, at *1–2 (D.

Minn. July 27, 2016) (upholding statute at issue in Van

Bergen, 59 F.2d 1541, as a constitutionally permissible

time, place, and manner restriction), appeal docketed,

No. 16-3219 (8th Cir. July 28, 2016).

Most recently, in Patriotic Veterans v. Zoeller, the

Seventh Circuit held that exceptions to a state robocall

regulation for messages from school districts to students, parents, or employees, or messages to subscribers with whom the caller has a current relationship,

were valid time, place, and manner restrictions, not

content-based discrimination. 845 F.3d 303, 304–05

(7th Cir. 2017). “The . . . exceptions . . . depend on the

relation between the caller and the recipient, not on

what the caller proposes to say. . . . The exceptions collectively concern who may be called, not what may be

88a

said, and therefore do not establish content discrimination.” Id. at 305.

So it is here. The robocall regulation does not require the FTC to review a call’s content to determine

whether the written-consent requirement applies to a

pre-recorded charitable call. It need only determine

whether the call’s recipient is either a potential firsttime donor or a prior donor or member. If the recipient

falls into the first category, then the written-consent

requirement applies; if she falls into the second, then

it does not. The distinction is plainly relationshipbased and does not constitute a content-based restriction on speech.

Plaintiff relies on two cases—Cahaly v. Larosa,

796 F.3d 399 (4th Cir. 2015), and Gresham v. Rutledge,

198 F. Supp. 3d 965 (E.D. Ark. 2016)—to support its

claim that the robocall regulation is a content-based

restriction. Pl.’s Mot. at 34–39; Pl.’s Reply at 17–18.

Those cases are inapposite. In Cahaly, the court struck

down a state robocall regulation as facially contentbased because “it applies to calls with a consumer or

political message but does not reach calls made for any

other purpose.” 796 F.3d at 404–05. The robocall regulation at issue here does not contain a similar facially

content-based provision. Separately, in Gresham v.

Rutledge, the parties “agree[d] that the statute is a

content-based restriction on speech.” 198 F. Supp. 3d

at 969. Consequently, Gresham provides no guidance

as to whether the TSR’s robocall regulation is contentbased.

89a

Plaintiff ’s reliance on Reed v. Town of Gilbert likewise is misplaced. 135 S. Ct. 2218, 2222 (2015). Reed

does not hold, or even suggest, that a speech restriction

based upon the relationship of the speaker and the listener is a content-based restriction. See Patriotic Veterans, 845 F.3d at 305–06 (“Because Indiana does not

discriminate by content—the statute determines who

may be called, not what message may be conveyed—

these decisions have not been called into question by

Reed.”); Picker, 2016 WL 5870809 at *7 (finding that

Reed did not reach “relationship-based, consent-based,

or emergency-based distinctions”); Swanson, 2016 WL

4027767, at *2 (“The court does not interpret Reed to

expand the definition of content-based restrictions at

all, let alone to the extent required to render the [statute] a content-based restriction.”).

Having concluded that the TSR’s robocall regulation is content neutral, the regulation easily satisfies

intermediate scrutiny. See A.N.S.W.E.R. Coalition (Act

Now to Stop War and End Racism) v. Basham, 845 F.3d

1199, 1212–13 (D.C. Cir. 2017). The TSR’s restrictions

on charitable pre-recorded messages is “narrowly tailored to serve a significant governmental interest” and

“leave[s] open ample alternative channels” of communication. Ward v. Rock Against Racism, 491 U.S. 781,

791 (1989). By requiring telemarketers to obtain written consent from potential first-time donors, the robocall regulation plainly advances the government’s

recognized interest in protecting against unwarranted

intrusions into a person’s home or pocket. See Frisby v.

Schultz, 487 U.S. 474, 484 (1988) (“The State’s interest

90a

in protecting the well-being, tranquility, and privacy of

the home is certainly of the highest order in a free and

civilized society.” (quoting Carey v. Brown, 447 U.S.

455, 471 (1980)); Patriotic Veterans, 845 F.3d at 305

(“No one can deny the legitimacy of the state’s goal:

Preventing the phone . . . from frequently ringing with

unwanted calls.”); Van Bergen, 59 F.3d at 1554 (“Residential privacy is a significant government interest.”).

The carve-out for calls made to prior donors and members is consistent with that purpose. By having made

a donation or becoming a member of the organization,

the recipient has effectively signaled her consent to receive a solicitation from the charity. Thus, as the FTC

puts it, the carve-out “allows charities to communicate

freely with their members and donors while sparing

other consumers from an onslaught of recorded solicitations by a ‘virtually infinite array’ of other organizations.” Def.’s Opp’n at 34 (quoting 73 Fed. Reg. at

51,194).

The robocall regulation also leaves “open ample alternative channels” of communication between charities and first-time donors. Charities can use, among

other things, media advertising, mailings, websites,

and in-person solicitations to reach new donors. They

also can use live callers instead of pre-recorded messages. Accordingly, the robocall regulation satisfies intermediate scrutiny and does not offend the First

Amendment.

91a

CONCLUSION

For the foregoing reasons, the court denies Plaintiff ’s Motion for Summary Judgment and grants Defendant’s Motion for Summary Judgment.

A separate Order accompanies this Memorandum

Opinion.

Dated: April 24, 2017

/s/ Amit Mehta

Amit P. Mehta

United States District Judge

92a

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

SOUNDBOARD

ASSOCIATION,

Plaintiff,

U.S. FEDERAL

TRADE COMMISSION,

Defendant.

)

Case No. 17-cv00150 (APM)

ORDER

For the reasons stated in the Memorandum Opinion, ECF No. 19, the court denies Plaintiff’s Motion for

Summary Judgment, grants Defendant’s Motion for

Summary Judgment, and enters judgment in favor of

Defendant.

This is a final, appealable Order.

Dated: April 24, 2017

/s/ Amit Mehta

Amit P. Mehta

United States District Judge

93a

APPENDIX C

UNITED STATES OF AMERICA

Federal Trade Commission

WASHINGTON, D.C. 20580

[SEAL]

Lois C. Greisman

Associate Director

Division of Marketing Practices

November 10, 2016

Michael Bills

132 S 600 East, Suite 204

Salt Lake City, UT 84102

Re: September 11, 2009 Staff Opinion

Letter on Soundboard Technology

Dear Mr. Bills:

We are writing to you regarding the informal staff

opinion letter we provided to your former company,

Call Assistant, LLC, on September 11, 2009.1 Our September 2009 letter responded to Call Assistant’s inquiry regarding whether the Telemarketing Sales

Rule’s (“TSR”) provisions governing outbound telemarketing calls that deliver prerecorded messages2 apply

to calls utilizing soundboard technology, which is

A copy of the September 11, 2009 staff opinion letter can be

found at http://www.ftc.gov/sites/default/files/documents/advisory_

opinions/opinion-09-1/opinion0901_1.pdf. Call Assistant, LLC,

filed for Chapter 7 bankruptcy on August 13, 2015. In re Call Assistant LLC, Case No. 15-11708 (KJC) (Bankr. D. Del. Aug. 13,

2015).

16 C.F.R. § 310.4(b)(1)(v).

94a

technology that allows a live agent to communicate

with a call recipient by playing recorded audio snippets

instead of using his or her own live voice. In the September 2009 letter, staff stated its opinion that the

technology, as described by Call Assistant, would not

be subject to the prerecorded message provisions of the

TSR. Staff ’s opinion was based on important features

that Call Assistant highlighted about its technology –

i.e., that for the entire duration of a call made using

the technology, a single live agent stays with the call

from beginning to end, listens to every word spoken by

the call recipient, determines what is heard by the call

recipient, and has the ability to interrupt recordings

and use his or her own voice to communicate with the

call recipient if needed. In our view at that time, these

features made the calls “virtually indistinguishable”

from normal two-way conversations with live operators and placed them outside the scope of the TSR’s

prerecorded message provisions.

Since the issuance of our September 2009 letter,

staff has received a steadily increasing volume of formal and informal complaints from consumers about

telemarketing calls utilizing soundboard technology.

Consumers complain that during these calls they are

not receiving appropriate recorded responses to their

questions or comments. Consumers further complain

that often no live telemarketer intervenes to provide a

human response when requested to do so, the recorded

audio snippets that are played do not adequately

address consumer questions, or the call is terminated

in response to consumers questions. Indeed, media

95a

reports also have taken note of this phenomenon,

which some in the press have dubbed telemarketing

“robot” calls.3 Simply put, since we issued the letter in

2009, staff has seen evidence of the widespread use of

soundboard technology in a manner that does not represent a normal, continuous, two-way conversation between the call recipient and a live person. This is

inconsistent with the principles we laid out in our September 2009 letter as well as our understanding of the

technology at the time we issued the letter.4 Moreover,

See, e.g.., Sean Gallagher, The New Spam: Interactive RoboCalls From the Cloud as Cheap as E-Mail, ARS TECHNICA, (Apr.

15, 2015), http://arstechnica.com/information-technology/2015/04/

the-new-spam-interactive-robo-calls-from-the-cloud-as-cheap-ase-mail; Alexis C. Madrigal, Almost Human: The Surreal, Cyborg

Future of Telemarketing, THE ATLANTIC, (Dec. 20, 2013), http://

www.theatlantic.com/technology/archive/2013/12/almost-humanthe-surreal-cyborg-future-of-telemarketing/282537/; Alexis C.

Madrigal, The Only Thing Weirder Than a Telemarketing Robot,

THE ATLANTIC, (Dec. 13, 2013), http://www.theatlantic.com/technology/

archive/2013/12/the-only-thing-weirder-than-a-telemarketingrobot/282282/; Zeke Miller & Denver Nicks, Meet the Robot Telemarketer Who Denies She’s a Robot, TIME, (Dec. 10, 2013),

http://newsfeed.time.com/2013/12/10/meet-the-robot-telemarketerwho-denies-shes-a-robot/; Kris Hundley, These Telemarketers

Never Stray From Script, TAMPA BAY TIMES, (Nov. 14, 2013), http://

www.tampabay.com/news/these-telemarketers-never-stray-from-thescript/2152303.

For example, Call Assistant highlighted the ability of its

agents to use their own voices during calls using its soundboard

technology: “Our technology merely substitutes sound files for the

agent’s voice (although the agent can interject with his or her voice

at any time). . . .” (emphasis supplied). See also September 2009

Letter at 1 (“In response to the greeting, the agent may elect to

speak to the call recipient using his or her voice, or may press a

button to play an appropriate recorded script segment. . . . At all

times, even during the playing of a recorded segment, the agent

96a

this type of use does not provide the consumer benefits

upon which we based our September 2009 opinion.

In response to rising complaints and concerns,

staff reached out to the Professional Association for

Customer Engagement (“PACE”), which is a trade association representing call centers, and the Soundboard Association, a trade organization representing

manufacturers and users of soundboard technology.

During the last few months, we have had multiple productive discussions and meetings with PACE and the

Soundboard Association to learn more about soundboard technology and obtain industry input regarding

the regulatory status of that technology. Both PACE

and the Soundboard Association were responsive to requests, provided meaningful input to assist staff in its

review of this technology, and highlighted the potential

benefits of responsible soundboard use. Staff carefully

considered the input of PACE and the Soundboard Association.

A fundamental premise of our September 2009

letter was that soundboard technology was a surrogate for the live agent’s actual voice. A human being

cannot conduct separate conversations with multiple

consumers at the same time using his or her own

voice. Nonetheless, some companies are routinely using soundboard technology in precisely this manner,

and these companies are improperly using our September 2009 letter to justify their actions in court

retains the power to interrupt any recorded message to listen to the

consumer and respond appropriately.”) (emphasis supplied).

97a

proceedings5 and in investigations. Indeed, Call Assistant noted publicly that one of the advantages of its

technology is that “an agent can conduct multiple calls

simultaneously.”6 Staff also has seen evidence that call

centers are using soundboard technology to increase

the number of outbound calls they can make. In addition, in our discussions and meetings, industry representatives acknowledged that call centers routinely

use soundboard technology to allow a single live agent

to handle more than one call at the same time.

The plain language of the TSR provision governing prerecorded calls imposes restrictions on “any outbound telephone call that delivers a prerecorded

message.”7 It is indisputable that calls made using

soundboard technology deliver prerecorded messages.

As such, under the plain meaning of the words in the

TSR’s prerecorded call provision, outbound telemarketing calls using soundboard technology are covered

because such calls “deliver a prerecorded message.”8

Given the actual language used in the TSR, the increasing volume of consumer complaints, and all the

abuses we have seen since we issued the September

2009 letter, we have decided to revoke the September

2009 letter. It is now staff ’s opinion that outbound

See, e.g., Fitzhenry v. ADT Corp., No. 9:14-CV-80180 (S.D.

Fla.); Barrett v. ADT Corp., No. 12:15-CV-1348 (S.D. Ohio).

Nougar, L.C., et al. v. Revocalize, LLC, et al., No. 2:11-cv127, DE 41 (D. Utah, Oct. 18, 2011).

16 C.F.R. § 310.4(b)(1)(v).

Id.

98a

telemarketing calls that utilize soundboard technology

are subject to the TSR’s prerecorded call provisions because such calls do, in fact, “deliver a prerecorded message” as set forth in the plain language of the rule.9

Accordingly, outbound telemarketing calls made using

soundboard technology are subject to the provisions of

16 C.F.R. § 310.4(b)(1)(v), and can only be made legally

if they comply with the requirements set forth in

Section 310.4(b)(1)(v)(A) (for calls selling goods or services), Section 310.4(b)(1)(v)(B) (for calls seeking charitable contributions from members or prior donors), or

Section 310.4(b)(1)(v)(D) (healthcare messages by a

covered entity or its business associate under HIPAA).

In reaching this conclusion, staff did consider

whether an express requirement that live agents using

soundboard technology only handle one call at a time

would change the analysis. Staff has concluded that it

would not. First, even with a 1-to-1 limitation in place,

such calls would still “deliver a prerecorded message”

and therefore would fall within the plain language of

16 C.F.R. 310.4(b)(1)(v). Moreover, in staff ’s view, a 1to-1 limitation would not stop abusive use of the technology. Based on preliminary information provided by

industry representatives, a significant percentage of

the total number of call center seats utilizing soundboard technology are used to make telemarketing or

lead generation calls. A 1-to-1 limitation would allow a

lead generation operation to use soundboard technology in which live operators simply press a button to

Id. Staff notes that representatives of both PACE and the

Soundboard Association disagree with this conclusion.

99a

play a prerecorded message offering a good or service

that asks the consumer to say “yes” or press 1 on their

phone if they are interested. If the consumer says yes

or presses 1, the live agent would then transfer the call

to the seller who makes a telemarketing pitch. Such

calls are indistinguishable from standard lead generation robocalls that are governed by the TSR and are

the subject of a large volume of consumer complaints

and significant telemarketing abuse. The fact that a

live operator, instead of a computer, “delivers” the prerecorded message and transfers interested consumers

to sellers makes little difference from the call recipient’s perspective.

Thus, even a 1-to-1 limitation would permit soundboard technology to be used to deliver calls that are indistinguishable from the telemarketing robocalls that

consumers consider to be abusive and that are illegal

under the TSR.

Finally, staff does recognize that when the Commission adopted the TSR’s robocall provisions TSR in

2008, it foresaw that technology could evolve to allow

the use of interactive prerecorded messages in telemarketing calls in a manner “essentially indistinguishable from conversing with a human being.”10

Indeed, soundboard technology, when used properly,

may one day approach that level of proficiency. If and

when such advances occur, the Commission noted that

parties could seek further amendment of the TSR

Telemarketing Sales Rule, 73 Fed. Reg. 51,164, 51,1180

(Aug. 29, 2008).

100a

or exemptions from the prerecorded message provisions.11

In order to give industry sufficient time to make

any necessary changes to bring themselves into compliance, the revocation of the September 2009 letter

will be effective six months from today, on May 12,

2017. As of that date, the September 11, 2009 letter

will no longer represent the opinions of FTC staff and

cannot be used, relied upon, or cited for any purpose.

In closing, staff notes that revocation of the September 2009 opinion letter does not mean that the TSR

prohibits all calls made using soundboard technology.

To the contrary, call centers can still use soundboard

technology for in-bound calls and to place a wide variety of outbound calls, such as non-telemarketing calls

(e.g., political calls, survey calls, and pure informational calls), telemarketing calls that fall within the

exemptions set forth in Section 310.4(B)(1)(v)(A), (B),

or (D), certain types of charitable donation calls, and

calls that are expressly exempt from the TSR under

Section 310.6 (e.g., business-to-business calls). In fact,

the preliminary data provided indicates that a significant percentage of call center seats that utilize soundboard technology are used for in-bound calls or to place

non-telemarketing calls, such as political or charitable

calls. As long as those calls remain outside the scope of

the TSR, companies can continue to use soundboard

Id. (“Accordingly, nothing in this notice should be interpreted

to foreclose the possibility of petitions seeking further amendment of

the TSR or exemptions from the provisions adopted here.”)

101a

technology for those types of calls without violating the

TSR. Please note, however, that we do not opine on

whether the use of such technology complies with state

or other federal laws, including the Telephone Consumer Protection Act, 47 U.S.C. § 227, or its corresponding regulations implemented by the Federal

Communications Commission, 47 C.F.R. § 64.1200.

Please be advised that the views expressed in this

letter are those of the FTC staff, subject to the limitations in 16 C.F.R. § 1.3. They have not been approved

or adopted by the Commission, and they are not binding upon the Commission. However, they do reflect the

views of staff members charged with enforcement of

the TSR.

Sincerely,

/s/ Lois C. Greisman

Lois C. Greisman

Associate Director

Division of Marketing Practices

Cc:

Michele A. Shuster, Esq.

General Counsel, PACE

6530 W. Campus Oval, Suite 210

New Albany, OH 43054

The Soundboard Association

c/o Peter B. Miller, Esq.

Crowell & Moring LLP

1001 Pennsylvania Ave., NW

Washington, DC 20004

Call Assistant, LLC

78-00 3rd Street N., Suite 900

St. Paul, MN 55128

102a

Ronald S. Gellert

Gellert Scali Busenkell & Brown, LLC

1201 N. Orange Street, Suite 300

Wilmington, DE 19801

Counsel for Debtor, Call Assistant, LLC

David Carickhoff

Jennifer L. Dering

Archer & Greiner, P.C.

300 Delaware Ave., Suite 1100

Wilmington, DE 19801

Bankruptcy Trustee for Call Assistant, LLC

Noguar

5286 S 320 West

Murray, UT 84107

Avatar Technologies, Inc.

138 Columbus Ave., 2nd Floor

Mount Vernon, NY 10553

Robby H. Birnbaum

Greenspoon Marder

One Boca Place, 2255 Glades Road, Suite 400-E

Boca Raton, FL 33431

Counsel for Avatar Technologies, Inc.

103a

APPENDIX D

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

-----------------------------------------------------------------------

No. 17-5093

September Term, 2017

1:17-cv-00150-APM

Filed On: August 3, 2018

Soundboard Association,

Appellant

Federal Trade Commission,

Appellee

BEFORE: Garland, Chief Judge, and Henderson,

Rogers, Tatel, Griffith, Kavanaugh*,

Srinivasan, Millett, Pillard, Wilkins,

and Katsas, Circuit Judges

ORDER

Upon consideration of appellant’s petition for rehearing en banc, the response thereto, and the absence

of a request by any member of the court for a vote,

it is

* Circuit Judge Kavanaugh did not participate in this matter.

104a

ORDERED that the petition be denied.

Per Curiam

FOR THE COURT:

Mark J. Langer, Clerk

BY: /s/

Ken R. Meadows

Deputy Clerk

105a

APPENDIX E

U.S. Const. amend. I provides:

Congress shall make no law . . . abridging the freedom

of speech, or of the press.

5 U.S.C. § 702 provides:

A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency

action within the meaning of a relevant statute, is entitled to judicial review thereof. An action in a court of

the United States seeking relief other than money

damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an

official capacity or under color of legal authority shall

not be dismissed nor relief therein be denied on the

ground that it is against the United States or that the

United States is an indispensable party.

5 U.S.C. § 704 provides:

Actions reviewable

Agency action made reviewable by statute and final

agency action for which there is no other adequate

remedy in a court are subject to judicial review. A preliminary, procedural, or intermediate agency action or

ruling not directly reviewable is subject to review on

the review of the final agency action. Except as otherwise expressly required by statute, agency action otherwise final is final for the purposes of this section

whether or not there has been presented or determined

106a

an application for a declaratory order, for any form of

reconsideration, or, unless the agency otherwise requires by rule and provides that the action meanwhile

is inoperative, for an appeal to superior agency authority.

5 U.S.C. § 551 provides:

For the purpose of this subchapter [5 U.S.C. §§ 551 et

seq.] –

(4) “rule” means the whole or a part of an agency

statement of general or particular applicability and future effect designed to implement, interpret, or prescribe

law or policy or describing the organization, procedure,

or practice requirements of an agency and includes the

approval or prescription for the future of rates, wages,

corporate or financial structures or reorganizations

thereof, prices, facilities, appliances, services or allowances therefor or of valuations, costs, or accounting, or

practices bearing on any of the foregoing;

(5) “rule making” means agency process for formulating, amending, or repealing a rule;

(13) “agency action” includes the whole or a part of an

agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act; and

107a

5 U.S.C. § 553 provides:

(b) General notice of proposed rule making shall be

published in the Federal Register, unles

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.