Day Pacer LLC, et al. v. Federal Trade Commission

The Federal Trade Commission’s (FTC’s) Telemarketing Sales Rule (TSR) makes it an “abusive telemarketing act or practice” for a telemarketer to “[i]nitiat[e] any outbound telephone call” to a person whose number appears on the National Do Not Call Registry. 16 C.F.R. § 310.4(b)(1)(iii)(B). The TSR defines “outbound telephone call” to mean “a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution.” Id. § 310.2(x). Violations of the TSR give rise to substantial civil monetary penalties. In this case, petitioners were held liable for millions of violations of the TSR, and jointly and severally hit with a $28.7 million civil penalty, for allegedly initiating “outbound telephone calls” to individuals on the National Do Not Call Registry. It is undisputed that the accused phone calls were not initiated to induce the recipients to purchase any goods or services or solicit any charitable contributions. The Seventh Circuit agreed with the FTC, however, that the relevant regulatory definition’s express limitation to calls “to induce the purchase of goods or services or to solicit a charitable contribution” could be disregarded. The court of appeals instead held that, despite the regulatory definition, the calls at issue were “outbound telephone calls,” and thus violations of the TSR, because they were phone calls placed by telemarketers. The question presented is: Whether a telephone call by a telemarketer that is not initiated to induce the purchase of goods or services or solicit a charitable contribution is an “outbound telephone call” for purposes of the TSR.