Soundboard Association v. FTC , 888 F.3d 1261 ( 2018 )

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
v.
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.
2
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
3
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.
I.
A.
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 pre-recorded 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
4
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,
5
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).
B.
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
6
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 Greisman, 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. Greisman 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. Greisman
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.
7
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
8
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 Greisman, 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
9
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 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
10
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 views of staff
members charged with enforcement of the TSR.”1 Id.
C.
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 content-based
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
1
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.”
11
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 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 obligations have been
determined, or from which legal consequences will flow.”
12
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, 55-56 (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 “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.
13
III.
A.
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
(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, 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
14
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
[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 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
15
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 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,
16
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 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
17
also constrains its future enforcement authority: It “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, 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 of its
2
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.”).
18
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 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.
19
§§ 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).
B.
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 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
3
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.
20
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 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
21
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
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
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 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.
22
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 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
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.
23
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 –
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 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.
24
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).
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
25
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.
IV.
SBA also argues the 2016 Letter violates its free-speech
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
***
Pursuant to FTC regulations and by its own terms, the
2016 Letter does not constitute the consummation of the
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,
26
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.
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. 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.
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 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.
2
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 Letter the end of
the agency’s process, I respectfully dissent.
A
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 non-finality. 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
3
Commission.” Letter from Lois C. Greisman, Assoc. Dir., Div.
Mktg. Practices, to Michael 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
1
Available at https://www.ftc.gov/system/files/documents/
advisory_opinions/letter-lois-greisman-associate-director-division-
marketing-practices-michael-bills/161110staffopsoundboarding.
pdf.
2
According to the regulations, a Commission opinion is warranted
only when the “matter involves a substantial or novel 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
4
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 of regulatory
Commission advice is of significant public interest.” 16 C.F.R.
§ 1.1(a).
3
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. Greisman, 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.
4
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/
system/ files/documents/advisory_opinions/federal-trade-
commission-advisory-opinion-clarifying-intersection-fair-debt-
5
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.”). 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
collection-practices-act/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/16-
c.f.r.part-433-federal-trade-commission-trade–regulation-rule-
concerning-preservation-consumers-claims/ 120510advisoryopinion
holderrule.pdf.
6
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 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
7
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. 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.”).
8
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
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
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.”).
9
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).
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
10
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 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
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
11
B
Consistent with that regulatory structure, the 2016
Division Letter itself speaks in final, conduct-altering, and
compliance-demanding terms, leaving the regulated businesses
to either knuckle under or face a penalty-seeking enforcement
action.
1
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 Division Letter, supra, at 4. That six-month
Commission opinion. See 16 C.F.R. § 1.3(b) (“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, 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.
12
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.”
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
13
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 (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).
14
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 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,
7
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).
8
See FED. TRADE COMM’N, Advisory Opinions,
https://www.ftc.gov/policy/advisory-opinions (last visited April 17,
2018).
15
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 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.
2
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
16
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
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
9
At oral argument, counsel for the Commission indicated that each
individual phone call “would be a violation,” which 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.
17
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 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
18
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 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 restraints “require ‘prompt
19
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);
Ciba-Geigy Corp., 801 F.2d at 435 (letters issued by director
of pesticide programs constitute final agency action).
*****
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
10
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).
20
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 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
21
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 some informal, take-it-
or-leave-it staff suggestion, then the law is being stingy with
reality. I respectfully dissent.