Robert W Mauthe MD PC v. Millennium Health LLC

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 20-2265
______
ROBERT W MAUTHE MD PC,
INDIVIDUALLY AND ON BEHALF OF ALL OTHERS
SIMILARLY SITUATED,
Appellant
v.
MILLENNIUM HEALTH LLC
____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 5-18-cv-01903)
District Judge: Honorable Edward G. Smith
____________
Argued: March 17, 2021
Before: KRAUSE, PHIPPS, and FUENTES, Circuit
Judges.
(Filed: January 19, 2023)
Phillip A. Bock [Argued]
BOCK LAW FIRM
820 West 41st Street
Suite 35
Miami Beach, FL 33140
David M. Oppenheim
BOCK HATCH LEWIS & OPPENHEIM
134 North La Salle Street
Suite 1000
Chicago, IL 60602
Richard E. Shenkan
SHENKAN INJURY LAWYERS
P.O. Box 7255
New Castle, PA 16107
Counsel for Appellant
Paul A. Werner, III [Argued]
SHEPPARD MULLIN RICHTER & HAMPTON
2099 Pennsylvania Avenue, N.W.
Suite 100
Washington, DC 20006
David M. Poell
SHEPPARD MULLIN RICHTER & HAMPTON
70 West Madison Street
Three First National Plaza, Suite 4800
Chicago, IL 60602
Counsel for Appellee
____________
OPINION OF THE COURT
____________
PER CURIAM
The Telephone Consumer Protection Act of 1991 made
unlawful many unsolicited faxes, and it created a civil action
for recipients of such faxes to recover handsomely: a minimum
of $500 for each junk fax received. 47 U.S.C. §§ 227, (b)(3).
In this case, a doctor’s office received a fax for a free
educational seminar, and it now pursues class-wide monetary
2
relief for itself and every other fax recipient. But liability under
the TCPA extends only to “unsolicited advertisement[s],”
id. § 227(a)(5), which this Court has interpreted to mean
communications that promote the sale of goods, services, or
property, Fischbein v. Olson Rsch. Grp., Inc., 959 F.3d 559,
562 (3d Cir. 2020). Because under an objective standard, no
reasonable recipient could construe the free educational
seminar fax as an unsolicited advertisement for goods,
services, or property, we will affirm the District Court’s grant
of summary judgment to Defendant.
I. BACKGROUND
A. Undisputed Material Facts
Millennium Health LLC operates a laboratory that provides
drug testing and medication monitoring services to healthcare
professionals. Robert Mauthe, a medical doctor with a private
practice in Center Valley, Pennsylvania, used Millennium
Health’s services on occasion to test his patients’ urine
samples. In doing so, Mauthe provided Millennium Health
with his practice’s fax number.
On May 2, 2017, Millennium Health faxed all of its
customers – including Mauthe’s office – a single-page flyer
promoting a free educational seminar. After reporting that a
large population of injured workers received opioids to treat
pain, the fax explained that the free seminar would “highlight
national trends in opioid misuse and abuse . . . and discuss the
role of medication monitoring as a valuable tool that provides
objective, actionable information during the care of injured
workers.” Fax (App. 224). Although Millennium Health
offered one type of urine testing that could detect opioids, the
fax did not mention that specific service or its availability from
Millennium Health. Nor did the fax provide any pricing
information, discounts, coupons, or product images.
Like the fax itself, the seminar, which was broadcast live
three weeks later, did not promote any goods, services, or
3
property for sale. Rather, through an oral presentation,
accompanied by PowerPoint slides, the seminar described
statistics on opioid abuse and the role of such drugs in chronic
pain management. It also explained that drug testing could
help detect or monitor opioid abuse, and the seminar assessed
the efficacy of several drug testing methods. One of those
methods was a type of urine drug testing that Millennium
Health offered, but the presentation did not indicate that
Millennium Health performed that type of drug testing. That
was consistent with the scope of the seminar, which did not
identify providers or prices for any of the drug testing methods
it reviewed. After the seminar, Millennium Health did not
follow up with any registrants or attendees.
B. Procedural History
Mauthe appreciates the opportunity presented by the
damages remedy created by the TCPA for junk faxes. Through
his office, he has sued fax senders in more than ten lawsuits
since 2015, each seeking damages for violations of the TCPA. 1
In this case, after receiving the free-seminar fax, Mauthe,
through his office, filed a putative class action in the Eastern
District of Pennsylvania against Millennium Health on behalf
of himself and all other recipients of the fax. In addition to the
TCPA claim, the complaint also contained a state-law
conversion claim for the misappropriation of paper, toner, and
employee time.
Millennium Health unsuccessfully moved under Rule
12(b)(6) to dismiss those counts for failure to state a claim. In
1
See, e.g., Fischbein v. Olson Rsch. Grp., Inc., 959 F.3d 559(3d Cir. 2020) (consolidated with Robert W. Mauthe, M.D.,
P.C. v. ITG, Inc.); Robert W. Mauthe, M.D., P.C. v. Spreemo,
Inc., 806 F. App’x 151 (3d Cir. 2020); Robert W. Mauthe,
M.D., P.C. v. Optum Inc., 925 F.3d 129 (3d Cir. 2019); Robert
W. Mauthe, M.D., P.C. v. Nat’l Imaging Assocs., 767 F. App’x
246 (3d Cir. 2019).
4
denying that motion without prejudice, the District Court
allowed limited discovery “on the question of whether the fax
was an advertisement or a pretext, i.e., whether it was part of a
larger advertising scheme.” Robert W. Mauthe, M.D., P.C. v.
Millennium Health LLC, No. 5-18-cv-01903, Order, ECF
No. 43, at 1 (E.D. Pa. Jan. 10, 2019).
After completing discovery, Millennium Health
successfully moved for summary judgment. The District Court
explained that the fax did not constitute an unsolicited
advertisement because it “promote[d] a free seminar[] rather
than any commercially available product.” Robert W. Mauthe,
M.D., P.C. v. Millennium Health LLC, 2020 WL 2793954, at
*6 (E.D. Pa. May 29, 2020). In reaching that conclusion, the
District Court considered only the fax itself, and it did not
evaluate whether the free seminar was a pretext for
advertisement. See id. at *14. With the federal question
resolved, the District Court declined to exercise supplemental
jurisdiction over the state-law conversion claim and dismissed
it without prejudice. See id. at *20 (citing 28 U.S.C.
§ 1367(c)(3)). The District Court had federal-question
jurisdiction over the matter, 28 U.S.C. § 1331; Mims v. Arrow
Fin. Servs., LLC, 565 U.S. 368, 377 (2012), and through a
timely appeal, Mauthe invoked this Court’s appellate
jurisdiction, 28 U.S.C. § 1291.
II. DISCUSSION
The TCPA prohibits the transmission of unsolicited
advertisements by fax. See 47 U.S.C. §§ 227(a)(5), (b)(1)(C);
Fischbein, 959 F.3d at 561–62; Robert W. Mauthe, M.D. P.C.
v. Optum Inc., 925 F.3d 129, 132 (3d Cir. 2019). The statutory
definition of the term ‘unsolicited advertisement’ does not
depend on the subjective viewpoints of either the fax sender or
recipient, and thus an objective standard governs whether a fax
constitutes an unsolicited advertisement. See 47 U.S.C.
§ 227(a)(5); Optum, 925 F.3d at 133 (“[A] fax does not become
an advertisement merely because the sender intended it to
5
enhance . . . its profits.”). 2 Cf. 47 U.S.C. § 227(b)(3)(C)
(premising treble damages on the fax sender’s subjective
mental state, viz., a willful or knowing violation). And
substantively, to constitute an unsolicited advertisement, the
fax must “promote goods or services to be bought or sold” and
“have profit as an aim.” Fischbein, 959 F.3d at 562 (quoting
Optum, 925 F.3d at 133); 47 U.S.C. § 227(a)(5) (adding that a
fax may also promote the purchase or sale of “property”).
A. No Reasonable Recipient Would View the Free-
Seminar Fax as an Unsolicited Advertisement.
Here, under an objective standard, no reasonable recipient
of Millennium Health’s unsolicited free-seminar fax could
view it as promoting the purchase or sale of goods, services, or
property. The fax itself makes no mention whatsoever of
goods, services, or property. Instead, the fax mentions a
seminar. Nowhere in the fax is a discussion of anything that
can be bought or sold – the fax speaks only about a free event.
The fax does not contain testimonials, product images, or
coupons – things commonly associated with an advertisement.
It does not provide any email, phone number, or direct internet
link to purchase a Millennium Health product or service. The
fax is purely educational – it describes research about opioids,
invites attendance at an academic event, and introduces the
2
See also Fischbein, 959 F.3d at 566 (Jordan, J., dissenting)
(“[W]hat fax recipients think about the faxes they get is not
legally relevant. The meaning of a statutory term does not
depend on the subjective perception of litigants.”); BPP v.
CaremarkPCS Health, LLC, 53 F.4th 1109, 1113–14 (8th Cir.
2022) (holding that the fax must be “plainly understood as
promoting a commercial good or service,” and rejecting
argument based on the subjective intent of the sender); Gorss
Motels, Inc. v. Safemark Sys., LP, 931 F.3d 1094, 1102 (11th
Cir. 2019) (explaining that what the fax recipient “subjectively
thought is immaterial” where objective evidence yields a
contrary result).
6
event speaker. For these reasons, the fax does not promote the
purchase or sale of goods, services, or property.
B. The Pretext Theory, even if Applicable, Does Not
Transform the Free-Seminar Fax into an
Unsolicited Advertisement.
Nor would Mauthe’s TCPA claim fare any better under the
Federal Communications Commission’s pretext theory, which
he urges this Court to adopt. Although the FCC’s pretext
theory may be construed differently, see Physicians
Healthsource, Inc. v. Boehringer Ingelheim Pharms., Inc.,
847 F.3d 92, 101 (2d Cir. 2017) (Leval, J., concurring),
Mauthe advocates for the rebuttable presumption version
adopted by other circuits, which examines not only the fax for
a free seminar but also the contents of the free seminar to
determine whether the fax “turn[s] out to be [a] pretext for a
later solicitation.” Fulton v. Enclarity, Inc., 962 F.3d 882, 889
(6th Cir. 2020) (internal citation omitted); see also Physicians
Healthsource, 847 F.3d at 95. Here, Mauthe contends,
Millennium Health’s fax served as a pretext for a solicitation
at its later seminar. But the free, educational seminar did not
involve any such solicitation. It did not advertise any product,
service, or property. 47 U.S.C. § 227(a)(5). Neither the
presenter nor the slides discussed pricing for goods or services
offered by Millennium Health. Even after the seminar,
Millennium Health did not contact seminar registrants or
attendees to follow up about the drug-testing services
discussed at the seminar. Thus, nothing about the free seminar
would lead a reasonable recipient of Millennium Health’s fax
to believe that it was an advertisement for goods, services, or
property. For that reason, even assuming arguendo the
applicability of a version of the pretext theory allowing
7
consideration of the contents of the free seminar, the fax here
would still not be an unsolicited advertisement. 3
III. CONCLUSION
The District Court correctly concluded that the free-
seminar fax was not an unsolicited advertisement under the
TCPA, and therefore we will affirm its grant of summary
judgment to Millennium Health.
3
For the first time on appeal, Mauthe raises the nonobvious-
promotion theory of junk-fax liability. But it is unnecessary to
evaluate whether that theory differs substantively from the
FCC’s pretext theory because it would fail here for the same
reasons as would the pretext theory.
8
Robert W. Mauthe MD PC v. Millennium Health LLC,
No. 20-2265
PHIPPS, Circuit Judge, concurring.
In this appeal, Robert W. Mauthe, through his medical
practice, presents the question of whether the Federal
Communications Commission’s pretext theory can be used to
demonstrate that a fax is an unsolicited advertisement. Both
the Supreme Court and this Circuit have previously declined to
resolve that issue. See PDR Network, LLC v. Carlton & Harris
Chiropractic, Inc., 139 S. Ct. 2051, 2053 (2019); Robert W.
Mauthe, M.D. P.C. v. Optum Inc., 925 F.3d 129, 135 (3d Cir.
2019); Robert W. Mauthe, M.D., P.C. v. Nat’l Imaging Assocs.,
767 F. App’x 246, 250 & n.5 (3d Cir. 2019). Although the
Court’s opinion today continues that trend, I write separately
to explain why, in my view, the pretext theory should be
rejected.
I.
A. The Private Cause of Action under the TCPA
for Junk Faxes
Subject to exceptions not at issue in this appeal, the TCPA
makes it unlawful to fax unsolicited advertisements. See
47 U.S.C. § 227(b)(1)(C). As defined by Congress, the term
‘unsolicited advertisement’ refers to “any material advertising
the commercial availability or quality of any property, goods,
or services which is transmitted to any person without that
person’s prior express invitation or permission, in writing or
otherwise.” Id. § 227(a)(5) (emphases added).
To redress a violation of that junk-fax prohibition or the
FCC’s implementing regulations, the TCPA authorizes a
private right of action. See id. § 227(b)(3). Such an action may
seek to enjoin the violation. See id. § 227(b)(3)(A). It may
also pursue the greater of “actual monetary loss” or $500 in
damages for each violation. See id. § 227(b)(3)(B). The
amount of any such award may be trebled if the statutory or
regulatory violation was willful or knowing. See id.
§ 227(b)(3).
Together, these provisions enable a person receiving a fax
that qualifies as an unsolicited advertisement to initiate a civil
action to seek injunctive relief or damages from the fax sender.
B. The FCC’s Pretext Theory
In 2003, as part of its final rule implementing the Do-Not-
Call registry, the FCC first announced the principle that an
otherwise licit unsolicited communication would violate the
TCPA if it served as a pretext for a prohibited advertisement.
See Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991, 18 FCC Rcd. 14,014,
14,097–98 (July 3, 2003); see also Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991,
68 Fed. Reg. 44,144, 44,162 (July 25, 2003). The FCC
declared that “[o]ffers for free goods or services that are part
of an overall marketing campaign to sell property, goods, or
services” fall within the TCPA’s definition of ‘unsolicited
advertisements.’ 18 FCC Rcd. at 14,097–98; 68 Fed. Reg. at
44,162. It then applied that pretext theory to prerecorded
phone calls advertising free goods or services and concluded
that those calls constituted ‘unsolicited advertisements.’
18 FCC Rcd. at 14,097–98; 68 Fed. Reg. at 44,162. 1 These
FCC publications, however, did not apply the free-as-pretext
reasoning to faxes, and the FCC received 55 petitions seeking
1
In the same publications, the FCC also observed that several
classes of calls – surveys, market research, and political or
religious speech calls – would generally not qualify as
‘telephone solicitations.’ 18 FCC Rcd. at 14,039–40; 68 Fed.
Reg. at 44,147. But the FCC then stated that those types of
calls would be “prohibited if they serve as a pretext to an
otherwise prohibited advertisement.” Id. at 14,039–40 n.141;
68 Fed. Reg. at 44,147 n.1; see also 47 U.S.C. § 227(a)(4)
(defining the term ‘telephone solicitation’).
2
either clarification or reconsideration. See Petitions for
Reconsideration and Clarification of Action in Rulemaking
Proceedings, 68 Fed. Reg. 53,740, 53,740 (Sept. 12, 2003); cf.
47 C.F.R. § 1.429 (authorizing petitions for reconsideration). 2
The FCC invited oppositions to those petitions as well as
replies, and it set due dates for those filings. See 68 Fed. Reg.
at 53,740.
The FCC responded to those petitions and other comments
as part of its promulgation of regulations implementing the
Junk Fax Prevention Act of 2005, Pub. L. No. 109-21, § 2(h),
119 Stat. 359, 362 (July 9, 2005). 3 It did so through two
publications issued a month apart in 2006: the first, in April,
was labeled as a “Report and Order and Third Order on
Reconsideration,” 4 and the second, in May, was entitled a
2
See, e.g., Request for Expedited Clarification by Proximity
Marketing at 7, 12, CG Docket No. 02-278 (Aug. 6, 2003),
https://www.fcc.gov/ecfs/search/search-
filings/filing/5509535325; Request of Jobson Publishing
L.L.C. for Reconsideration and Clarification at 1, CG Docket
No. 02-278 (Aug. 25, 2003),
https://www.fcc.gov/ecfs/search/search-
filings/filing/5509934940.
3
See Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991; Junk Fax Prevention Act of
2005, 20 FCC Rcd. 19,758, 19,758 (Dec. 9, 2005) (explaining
that the Junk Fax Prevention Act requires enactment of
regulations within 270 days and inviting commentary about
unsolicited facsimile advertisements).
4
Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991; Junk Fax Prevention Act of
2005, Report and Order and Third Order on Reconsideration,
21 FCC Rcd. 3,787 (Apr. 6, 2006).
3
“Final Rule” 5 (collectively, the “2006 Publications”). In
virtually identical text, those 2006 Publications put forth a
similar pretext theory for free-seminar faxes:
The Commission concludes that facsimile
messages that promote goods or services even at
no cost, such as free magazine subscriptions,
catalogs, or free consultations or seminars, are
unsolicited advertisements under the TCPA’s
definition. In many instances, “free” seminars
serve as a pretext to advertise commercial
products and services. . . . Based on this, it is
reasonable to presume that such messages
describe the quality of any property, goods, or
services.
Rules and Regulations Implementing the Telephone Consumer
Protection Act of 1991; Junk Fax Prevention Act of 2005,
71 Fed. Reg. 25,967, 25,973 (May 3, 2006) (internal quotation
marks omitted); see also Rules and Regulations Implementing
the Telephone Consumer Protection Act of 1991; Junk Fax
Prevention Act of 2005, 21 FCC Rcd. 3,787, 3,814 (Apr. 6,
2006) (internal citation and quotation marks omitted). After
announcing the pretext theory and making other declarations
in its 2006 Publications, the FCC recognized that “facsimile
senders may need additional time beyond 30 days to comply
with the rules adopted herein.” 71 Fed. Reg. at 25,974; see
also 21 FCC Rcd. at 3,815–16. Accordingly, the FCC set an
effective date of August 1, 2006 – 90 days after the second
publication. See 71 Fed. Reg. at 25,974; see also 21 FCC Rcd.
at 3815–16.
5
Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991; Junk Fax Prevention Act of
2005, Final Rule, 71 Fed. Reg. 25,967 (May 3, 2006).
4
II.
A. The Specter of Hobbs Act Exclusive Jurisdiction
Although this Court ordinarily has subject-matter
jurisdiction over TCPA claims, see Mims v. Arrow Fin. Servs.
LLC, 565 U.S. 368, 377 (2012), any consideration of the FCC’s
pretext rule may be governed by the exclusive jurisdiction
provisions in the Administrative Orders Review Act. See
Administrative Orders Review Act, Pub. L. No. 81-901 § 2,
64 Stat. 1129, 1129 (1950) (currently codified at 28 U.S.C.
§ 2342). That federal statute, commonly referred to as the
‘Hobbs Act,’ grants exclusive jurisdiction to federal appellate
courts to “enjoin, set aside, suspend (in whole or in part), or to
determine the validity of,” among other things “all final orders
of the Federal Communications Commission [under the
Communications Act of 1934] made reviewable by [47 U.S.C.
§ 402(a)].” 28 U.S.C. § 2342(1) (emphasis added). To
challenge such an order requires a petition filed with a federal
appellate court within 60 days of the order. See id. § 2344.
The Supreme Court has outlined two circumstances in
which a TCPA claim based on the pretext theory would not fall
within the exclusive jurisdiction provision in the Hobbs Act.
See PDR Network, 139 S. Ct. at 2055. The first depends on
whether the pretext theory is an interpretive rule or a legislative
rule. See id. If the pretext theory is an interpretive rule, then
it would not be within the exclusive jurisdiction of the Hobbs
Act. See id.; Carlton & Harris Chiropractic, Inc. v. PDR
Network, LLC, 982 F.3d 258, 263 (4th Cir. 2020) (concluding
that the pretext theory is an interpretive rule outside of
exclusive jurisdiction of the Hobbs Act). The second
circumstance occurs when a party sued in a civil action under
the TCPA lacked a “prior, adequate, and exclusive opportunity
for judicial review.” PDR Network, 139 S. Ct. at 2055–56
(quoting 5 U.S.C. § 703) (emphasis omitted). Without such an
opportunity, the special statutory review provision in the
Administrative Procedure Act, see 5 U.S.C. § 703, would
prevent the Hobbs Act from applying to such a party’s
5
challenge to the FCC’s pretext theory in a private civil action
brought under the TCPA. See PDR Network, 139 S. Ct. at
2056.
B. This Case Does Not Fall Within the Exclusive
Jurisdiction of the Hobbs Act.
The first inquiry identified by the Supreme Court – the
interpretive-rule / legislative-rule question – need not be
answered in full to foreclose the application of the exclusive
jurisdiction provision in the Hobbs Act to the FCC’s pretext
theory. Critically, with respect to the FCC, the Hobbs Act’s
exclusive jurisdiction provision applies only to final orders.
See 28 U.S.C. § 2342(1). And in administrative law, orders are
not rules; the two are mutually exclusive. See 5 U.S.C.
§ 551(6) (defining orders to exclude rules). Thus, if the pretext
theory is a rule of any kind, then it is not an order subject to the
Hobbs Act. Cf. PDR Network, 139 S. Ct. at 2055 (assuming
without deciding that the pretext theory was announced in an
order not a rule because the parties did not dispute that point
below (citing Carlton & Harris Chiropractic, Inc. v. PDR
Network, LLC, 883 F.3d 459, 464 n.1 (4th Cir. 2018))).
Sometimes distinguishing a rule from an order can be “a
difficult exercise.” Lincoln v. Vigil, 508 U.S. 182, 197 (1993).
But in framing the inquiries about the Hobbs Act’s
applicability to the FCC’s 2006 Publications, the Supreme
Court strongly foreshadowed that the pretext theory is a rule,
not an order. By first asking whether the pretext theory is an
interpretive rule or a legislative rule, see PDR Network,
139 S. Ct. at 2055, the Supreme Court all but answered the
rule-order question since in neither scenario would the pretext
theory be an order. The Supreme Court also seemingly
revealed the answer to the rule-order issue through its second
inquiry, which concerned the applicability of special statutory
review. Under the Administrative Procedure Act, a party may
raise a challenge to agency action in an enforcement
proceeding if that party did not have a “prior, adequate, and
exclusive opportunity for judicial review.” 5 U.S.C. § 703.
6
But the availability of an opportunity for such pre-enforcement
judicial review is relevant only to agency rules because there
is no such thing as pre-enforcement review of an agency order
– an order is a form of enforcement. See PDR Network,
139 S. Ct. at 2062 (Kavanaugh, J., concurring) (“Congress
traditionally takes the extraordinary step of barring as-applied
review in enforcement proceedings only in those statutory
schemes where the regulated parties are likely to be well aware
of any agency rules and to have both the incentive and the
capacity to challenge those rules immediately.” (emphases
added)). Thus, by designing an inquiry that examines the
applicability of the special statutory review provision, which
applies only to rules, the Supreme Court again strongly implied
that the pretext theory announced in the FCC’s 2006
Publications is a rule, outside of the exclusive jurisdiction of
the Hobbs Act.
A more formal analysis confirms that the FCC’s
announcement of the pretext theory for free-seminar faxes in
the 2006 Publications is a rule. The rule-order distinction is a
fault line in administrative law: it separates two adjacent
concepts that together comprise a continental foundation for
regulation by administrative agencies. See United States v.
Fla. E. Coast Ry. Co., 410 U.S. 224, 245 (1973) (recognizing
the “distinction in administrative law between proceedings for
the purpose of promulgating policy-type rules or standards, on
the one hand, and proceedings designed to adjudicate disputed
facts in particular cases on the other”). A rule has three
essential qualities: (i) future effect; (ii) the capacity for actual
general applicability, as opposed to merely the use of general
terms that would apply only to a small, discrete set of persons;
and (iii) an abstract statement “designed to implement,
interpret, or prescribe law or policy or describing the
organization, procedure, or practice requirements of an
agency.” 5 U.S.C. § 551(4); see also Columbia Broad. Sys. v.
United States, 316 U.S. 407, 418 (1942) (“Unlike an
administrative order or a court judgment adjudicating the rights
of individuals, which is binding only on the parties to the
7
particular proceeding, a valid exercise of the rule-making
power is addressed to and sets a standard of conduct for all to
whom its terms apply.”); Safari Club Int’l v. Zinke, 878 F.3d
316, 332–33 (D.C. Cir. 2017). By contrast, an order, which is
distinct from a rule, see 5 U.S.C. § 551(6), is an agency
“disposition” of a “matter,” id., arrived at through
“adjudication,” id. § 551(7), that is the concrete application of
legal principles to a specific party based on its particular
circumstances. Compare Londoner v. City & Cnty. of Denver,
210 U.S. 373, 385 (1908) (holding that a disposition is
sufficiently adjudicative to require procedural due process
protections if it results in an “irrevocably fixed” outcome), with
Bi-Metallic Inv. Co. v. State Bd. of Equalization, 239 U.S. 441,
446 (1915) (holding that a “general determination” dealing
only with a “principle” and not applying it based on “individual
grounds” is not sufficiently adjudicative to require due
process).
The FCC’s pretext theory possesses the essential qualities
of a rule. Announced in April and May of 2006 with an
effective date of August 1, 2006, it had a future effect. See
Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 221 (1988)
(Scalia, J., concurring) (“Adjudication deals with what the law
was; rulemaking deals with what the law will be.” (emphasis
omitted)); Safari Club, 878 F.3d at 332 (“[R]ules generally
have only ‘future effect’ while adjudications immediately bind
parties by retroactively applying law to their past actions.”). 6
The FCC’s pretext theory also has the capacity for general
applicability. The pretext theory applies to all fax senders and
6
Cf. Heartland Reg’l Med. Ctr. v. Sebelius, 566 F.3d 193, 196
(D.C. Cir. 2009) (observing that there was no dispute that “a
principle announced in adjudication is necessarily retroactive”
(citing Rivers v. Roadway Express, Inc., 511 U.S. 298, 311–12
(1994))); but cf. Ronald M. Levin, The Case for (Finally)
Fixing the APA’s Definition of “Rule”, 56 Admin. L. Rev.
1077, 1088 (2004) (arguing that the future-effect requirement
does little, if anything, to distinguish rules from orders).
8
is not limited to any specific parties, such as those who
petitioned for clarification or reconsideration of the FCC’s
prior publication. See Neustar, Inc. v. FCC, 857 F.3d 886, 893
(D.C. Cir. 2017) (“Rulemaking scenarios generally involve
broad applications of more general principles rather than case-
specific individual determinations.”). In addition, the pretext
theory is an abstract statement designed to implement,
interpret, or prescribe law or policy. See 5 U.S.C. § 551(4).
Instead of resolving a specific dispute or making an
individualized determination, the pretext theory states the
FCC’s position that free-seminar faxes should be treated as
unsolicited advertisements. See Ira Holtzman, C.P.A. v. Turza,
728 F.3d 682, 688 (7th Cir. 2013) (suggesting that the FCC’s
2006 Publications are “best understood as a declaration of the
Commission’s enforcement plans”).
As corroboration of the conclusion that the pretext theory
is a rule, the FCC’s actions, both before and after the 2006
Publications, treat it as such. To formulate the free-seminar
pretext theory, the FCC engaged in notice-and-comment
rulemaking, not an adjudicative hearing. See Rules and
Regulations Implementing the Telephone Consumer
Protection Act of 1991, 67 Fed. Reg. 62,667, 62,667, 62,679
(Oct. 8, 2002) (issuing “Notice of proposed rulemaking” and
seeking “comment on whether the Commission’s rules need to
be revised”); see also Rules and Regulations Implementing the
Telephone Consumer Protection Act of 1991, 17 FCC Rcd.
17,459, 17,496 (Sept. 18, 2002) (“This is a non-restricted
notice and comment rulemaking proceeding.”). Similarly, in
explaining its extension of the effective date, the FCC stated
that fax senders needed additional time to comply “with the
rules adopted herein.” 71 Fed. Reg. at 25,974 (emphasis
added); 21 FCC Rcd. at 3,816 (emphasis added). And the 2006
Publications also instructed that several of their provisions be
codified in regulation. See 71 Fed. Reg. at 25,977–79
(specifying the text of or amendments to regulations); 21 FCC
Rcd. at 3,819–21 (same).
9
For completeness, the FCC’s free-seminar pretext theory
also lacks the essential qualities of an order. It does not
concretely apply legal principles to any specific parties based
on their particular circumstances. Cf. Mallenbaum v. Adelphia
Commc’ns Corp., 74 F.3d 465, 468 (3d Cir. 1996) (explaining
that an FCC regulation is an order if it “requires a defendant to
take concrete actions”). More acutely, the 2006 Publications
do not mention Millennium Health or its May 2017 fax
promoting a free seminar.
Although the FCC titled the first of the 2006 Publications
as a “Report and Order and Third Order on Reconsideration,”
that does not alter the pretext theory’s status as a rule. 7 An
agency’s label for an action is not dispositive of the action’s
essence, and not everything labeled as an ‘order’ is actually an
order. See Columbia Broad. Sys., 316 U.S. at 416 (recognizing
that not everything the FCC labels as an ‘order’ is in fact an
order and explaining that “[t]he particular label placed upon
[the Commission’s action] by the Commission is not
necessarily conclusive, for it is the substance of what the
Commission has purported to do and has done which is
decisive”); New Eng. Tel. & Tel. Co. v. Pub. Utils. Comm’n of
Me., 742 F.2d 1, 8–9 (1st Cir. 1984) (Breyer, J.) (holding that
an FCC decision labeled as a ‘Memorandum Opinion and
Order’ was not actually an order); cf. Safari Club, 878 F.3d at
332 (“An agency may not escape the requirements of [notice-
and-comment rulemaking] by labeling its rule an
‘adjudication.’” (internal citations omitted)).
7
As matter of administrative procedure, the FCC is not bound
by a separate judgment rule, cf. Fed. R. Civ. P. 58(a), and the
title for the first publication seems to reflect its function of
resolving the petitions for clarification and reconsideration.
But after performing that operation, the remainder of that
publication, like the entirety of the near-identical second
publication, had the essential qualities of a rule. See 5 U.S.C.
§ 551(4); Bi-Metallic, 239 U.S. at 446.
10
For these reasons, the FCC’s free-seminar pretext theory is
a rule. As such, it falls outside of the Hobbs Act’s exclusive
jurisdiction provision, which applies only to “final orders” of
the FCC. 28 U.S.C. § 2342(1). Thus, the Hobbs Act does not
prevent a district court (or this Court on direct appeal) from
evaluating the validity of the pretext theory in private civil
actions under the TCPA.
III.
Mauthe invokes the pretext theory to sustain his TCPA
claim. One problem with the FCC’s pretext theory is that it is
ambiguous. It may be construed as a rebuttable presumption 8
or as a categorical rule. 9 If the pretext theory is valid, then that
distinction could be dispositive in many cases. Here, for
instance, Millennium Health has rebutted the presumption that
its free-seminar fax served as a pretext to advertise commercial
products and services. The seminar itself did not advertise any
products or services, nor did Millennium Health contact
registrants or attendees afterwards to follow-up about the drug-
testing services discussed at the seminar. But under the
categorical application of the pretext theory, which Mauthe
does not advance, the free-seminar fax would be an unsolicited
advertisement without consideration of Millennium Health’s
8
See Physicians Healthsource, Inc. v. Boehringer Ingelheim
Pharms., Inc., 847 F.3d 92, 95 (2d Cir. 2017); see also 71 Fed.
Reg. at 25,973 (“[I]t is reasonable to presume that such
messages describe the ‘quality of any property, goods, or
services.’”); cf. Matthew N. Fulton, D.D.S., P.C. v. Enclarity,
Inc., 962 F.3d 882, 891 (6th Cir. 2020).
9
See Physicians Healthsource, 847 F.3d at 101 (Leval, J.,
concurring); see also 71 Fed. Reg. at 25,973 (“The
Commission concludes that facsimile messages that promote
goods or services even at no cost, such as . . . free consultations
or seminars, are unsolicited advertisements under the TCPA’s
definition”).
11
marketing practices or the details or character of the free
seminar that the fax promoted.
Taking a step back, however, reveals that the FCC’s pretext
theory, under either formulation, involves consideration of
facts extrinsic to the fax itself. Both versions rely on the FCC’s
assessment of prevalent marketing practices for commercial
products and services. See 71 Fed. Reg. at 25,973; 21 FCC
Rcd. at 3,814. And the rebuttable presumption version also
examines whether the free seminar was used to advertise
products or services. See Physicians Healthsource, Inc. v.
Boehringer Ingelheim Pharms., Inc., 847 F.3d 92, 97 (2d Cir.
2017). But the TCPA confines the meaning of the term
‘unsolicited advertisement’ to the material transmitted,
defining it in relevant part as “any material advertising the
commercial availability or quality of any property, goods, or
services, which is transmitted to any person.” 47 U.S.C.
§ 227(a)(5) (emphases added); BPP v. CaremarkPCS Health,
LLC, 53 F.4th 1109, 1113 (8th Cir. 2022) (“The fax itself, and
not just the underlying property, good, or service, must have a
commercial component . . . .”). Consistent with that limiting
principle, this Circuit, even in recognizing other novel strands
of junk-fax liability under the TCPA, such as liability for paid
responses to market research surveys and third-party seller
liability, has tethered the meaning of ‘unsolicited
advertisement’ to the text of the fax itself. See Fischbein v.
Olson Rsch. Grp., Inc., 959 F.3d 559, 562–63 (3d Cir. 2020)
(concluding that a fax offering to pay for market research
responses constituted an unsolicited advertisement by
examining only the contents of a fax to assess whether it
highlighted the availability of a transaction); Optum, 925 F.3d
at 132–33 (articulating three elements of third-party seller
liability that can be determined from an “examination of the
fax,” and which all related to the core showing that “the fax
must convey the impression . . . that a seller is trying to make
a sale” (emphasis added) (internal citation and quotation marks
omitted)). Similarly, the Supreme Court, in more recently
interpreting the term ‘autodialer,’ focused on the text of the
12
TCPA, and rejected the argument that the term’s meaning
should account for broad concerns about “intrusive
telemarketing practices.” Facebook, Inc. v. Duguid, 141 S. Ct.
1163, 1169–72 (2021).
Yet, in formulating the pretext theory, the FCC relied on its
assessment of prevalent marketing practices to enlarge the
statutory definition of ‘unsolicited advertisement.’ See 71 Fed.
Reg. at 25,973 (finding that “in many instances” free-seminar
faxes operate as a pretext). But even sound agency factfinding
cannot justify a rule that contravenes statutory text. See
Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81, 86
(2002) (“A regulation cannot stand if it is ‘arbitrary, capricious,
or manifestly contrary to the statute.’” (quoting United States
v. O’Hagan, 521 U.S. 642, 673 (1997))); LaVallee Northside
Civic Ass’n v. V.I. Coastal Zone Mgmt. Comm’n, 866 F.2d 616,
623 (3d Cir. 1989) (“[A]n administrative agency’s regulation
that conflicts with the parent statute is ineffective.”); see also
CaremarkPCS, 53 F.4th at 1113 (explaining that courts are not
required to defer to the FCC’s interpretation of ‘unsolicited
advertisement’ and noting that the statute’s definition “is not
ambiguous”). Accordingly, because both variations of the
FCC’s pretext theory expand the meaning of the term
‘unsolicited advertisement’ so that it depends on facts beyond
those contained in the fax, they cannot be reconciled with the
TCPA, which defines that term in reference to only the material
13
transmitted. 10 As a rule in contravention of statutory text, the
FCC’s free-seminar pretext theory has no legal effect. 11
***
For the foregoing reasons, this Court may consider and
should reject the FCC’s pretext theory as a valid basis for
liability under the TCPA.
10
Unlike the term, ‘unsolicited advertisement,’ other elements
of TCPA claims and defenses are not limited to the material
transmitted. For instance, proof of an established business
relationship is not confined to the contents of a fax. See
47 U.S.C. § 227(a)(2); 47 C.F.R. § 64.1200(f)(5), (6). Nor is
proof that a prohibited communication was sent knowingly and
willfully for purposes of treble damages limited to the material
transmitted. See 47 U.S.C. § 227(c)(3).
11
As an alternative to the pretext theory, Mauthe advances the
very similar nonobvious-promotion theory, which this Circuit
has never endorsed. That theory, too, looks beyond the
contents of the fax to determine whether the fax is an
‘unsolicited advertisement,’ and due to that flaw, it
contravenes the text of the TCPA and cannot be a basis for
junk-fax liability. See id. § 227(a)(5).
14