[This decision has been published in Ohio Official Reports at
95 Ohio St.3d 505.]
CHARVAT, APPELLANT, v. DISPATCH CONSUMER SERVICES, INC. ET AL.,
APPELLEES.
[Cite as Charvat v. Dispatch Consumer Serv., Inc., 2002-Ohio-2838.]
Consumer protection—Telephone Consumer Protection Act—Existing customer
can terminate an “established business relationship” by requesting to be
placed on a “do not call” list.
(No. 2000-1725—Submitted October 3, 2001—Decided June 26, 2002.)
APPEAL from the Court of Appeals for Franklin County, No. 99AP-1368.
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SYLLABUS OF THE COURT
An existing customer can effectively terminate an “established business
relationship” for purposes of the Telephone Consumer Protection Act,
Section 227, Title 47, U.S.Code, by requesting to be placed on a “do not
call” list.
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PFEIFER, J.
{¶1} The issue in this case is whether in establishing a limited relationship
with a business, consumers waive their right to the protection of the Telephone
Consumer Protection Act (“TCPA”), Section 27, Title 47, U.S.Code. We find that
an existing customer can effectively terminate an “established business
relationship” for purposes of the TCPA by requesting to be placed on a “do not
call” list.
Factual Background
{¶2} Plaintiff-appellant Philip J. Charvat filed this action against
defendants-appellees Dispatch Consumer Services, Inc., and the Dispatch Printing
Company, Inc. (collectively, “the Dispatch”), alleging that the Dispatch had
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engaged in improper telephone solicitations in violation of the Telephone
Consumer Protection Act (“TCPA”), Section 227, Title 47, U.S.Code.
{¶3} Charvat claims that the Dispatch made unsolicited phone calls to him
asking him to purchase a weekday newspaper subscription. On August 2, 1996,
Charvat requested that the Dispatch cease making telemarketing sales calls to his
home. At the time, Charvat was already a Dispatch subscriber on a Sunday only
basis. After Charvat’s “Do Not Call” (“DNC”) demand, the Dispatch made at least
two additional calls in the next twelve months to Charvat’s household soliciting a
subscription to the Dispatch’s weekday newspaper.
{¶4} On August 4, 1998, Charvat filed suit against the Dispatch. Charvat
alleged that the Dispatch had violated the TCPA by continuing to solicit him by
telephone after his DNC request. Charvat also alleged other violations of state
consumer protection statutes.
{¶5} On September 8, 1998, the Dispatch filed a motion to dismiss and/or
for summary judgment seeking dismissal of all of Charvat’s claims. In its
September 15, 1999 decision, the trial court granted the Dispatch’s motion, finding
that the Dispatch was exempted from the TCPA as to Charvat because it enjoyed
an “established business relationship” with him. The Act, designed to protect
consumers from unwanted telephone solicitations, excludes from the definition of
“telephone solicitation” calls made to someone with whom the caller has an
“established business relationship.” Section 227(a)(3)(B), Title 47, U.S.Code. The
trial court also found in the Dispatch’s favor on Charvat’s state law claims.
{¶6} Charvat appealed only the portion of the decision concerning his
TCPA claim. The court of appeals affirmed the judgment of the trial court.
{¶7} The cause is before this court upon the allowance of a discretionary
appeal.
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January Term, 2002
Law and Analysis
{¶8} Telemarketing has become a garish billboard planted firmly in the
center of the cultural landscape, and has become the target of professional and
water-cooler social commentators throughout the nation:
{¶9} “ ‘SEINFELD: (PHONE RINGING) Hello.
{¶10} “ ‘(TELEMARKETER): Hi. Would you be interested in switching
over to TMI long-distance service?
{¶11} “ ‘SEINFELD: Oh, gee, I can’t talk right now. Why don’t you give
me your home number and I’ll call you later?
{¶12} “ ‘…
{¶13} “ ‘(TELEMARKETER): Well, I’m sorry. We’re not allowed to do
that.
{¶14} “ ‘SEINFELD: I guess you don’t want people calling you at home.
{¶15} “ ‘(TELEMARKETER): No.
{¶16} “ ‘SEINFELD: Well, now you know how I feel.’ ” Shannon,
Combating Unsolicited Sales Calls: The “Do-Not-Call” Approach to Solving the
Telemarketing Problem (2001), 27 J. Legis. 381, fn. 1.
{¶17} We are not called upon to judge the telemarketing industry. We are
not asked to balance its obvious failings against the employment it creates and the
economic efficiencies it can engender. Instead, we are called upon simply to apply
a statute, and in turn to determine what level of deference this court owes to the
governmental agency that has created regulations based upon the statute.
{¶18} In response to the burgeoning use of telephone solicitations to market
goods and services in the United States, and the concomitant frustration of the
American public, Congress passed the TCPA in 1991. P.L. No. 102-243, 105 Stat.
2394. At that time, Congress found that 18 million Americans each day received a
telephone solicitation. Not surprisingly, Congress also determined that “[m]any
consumers are outraged over the proliferation of intrusive, nuisance calls to their
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homes from telemarketers.” 137 Cong.Rec. 518781-02; 137 Cong.Rec. H11307-
01. The federal government stepped in to address the problem because individual
states were unable to regulate telemarketers’ interstate operations. P.L. No. 102-
243 Section 2, 105 Stat. 2394.
{¶19} The TCPA was the result of Congress’s effort to balance individual
privacy with freedom of speech and trade. The teeth of the Act, which allows
consumers to sue overzealous telemarketers, is at issue in this case. Section
227(c)(5), Title 47, U.S.Code provides a private right of action to “[a] person who
has received more than one telephone call within any 12-month period by or on
behalf of the same entity in violation of the regulations prescribed under this
subsection.” The regulations prescribed under the statute include Section
64.1200(e)(vi), Title 47 C.F.R, which forbids telemarketers from soliciting by
telephone anyone who has previously requested to be put on a DNC list. In this
case, Charvat alleges that the Dispatch made telephone solicitations at least twice
after his DNC request.
{¶20} Congress created an exception to the purview of the Act as a part of
its balancing of commerce and privacy. Section 227(a)(3)(B), Title 47, U.S.Code
excludes from the definition of “telephone solicitation” a call made “to any person
with whom the caller has an established business relationship.” Thus, a consumer
has no right of action under Section 227(c)(5) against a caller with whom he has an
“established business relationship” (“EBR”). The trial and appellate courts in this
case found that an EBR existed between Charvat and the Dispatch because Charvat
subscribed to the Sunday Dispatch at the time of the telephone calls at issue.
{¶21} The TCPA itself does not define what constitutes an EBR. That
question is central to this case, as well as the issue of how an EBR can be
terminated. The Federal Communications Commission (“FCC”) has undertaken to
resolve both of those issues pursuant to its rulemaking authority delegated by
Congress. But is this court bound by how the FCC has resolved these issues?
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January Term, 2002
{¶22} The United States Supreme Court instructs us that courts do owe
deference to an agency’s rulemaking authority. In Chevron U.S.A., Inc. v. Natural
Resources Defense Council, Inc. (1984), 467 U.S. 837, 843-844,
104 S.Ct. 2778,
81 L.Ed.2d 694, the court held:
{¶23} “ ‘The power of an administrative agency to administer a
congressionally created … program necessarily requires the formulation of
policy and the making of rules to fill any gap left, implicitly or explicitly, by
Congress.’ Morton v. Ruiz, 415 U.S. 199, 231 [
94 S.Ct. 1055,
39 L.Ed.2d 270]
(1974). If Congress has explicitly left a gap for the agency to fill, there is an express
delegation of authority to the agency to elucidate a specific provision of the statute
by regulation. Such legislative regulations are given controlling weight unless they
are arbitrary, capricious, or manifestly contrary to the statute. Sometimes the
legislative delegation to an agency on a particular question is implicit rather than
explicit. In such a case, a court may not substitute its own construction of a
statutory provision for a reasonable interpretation made by the administrator of an
agency.” (Footnote omitted; ellipses sic.)
{¶24} Here, the TCPA is the skeleton of a system designed to rein in the
proliferation of telemarketing calls. Much of the detail was left to the FCC.
Congress’s delegation was both explicit and implicit. In Section 227(c), Congress
explicitly set forth the FCC’s role in implementing the overarching aim of the Act:
{¶25} “[T]he Commission shall initiate a rulemaking proceeding
concerning the need to protect residential telephone subscribers’ privacy rights to
avoid receiving telephone solicitations to which they object.”
{¶26} This explicit delegation of the FCC’s role creates implicit powers
where Congress fails to fill in the blanks. Congress did not define “established
business relationship” within the TCPA, either in its definitional section, Section
U.S.C. 227(a), or elsewhere. The FCC stepped into that breach and defined what
constitutes an EBR in Section 64.1200(f)(4), Title 47, C.F.R.:
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{¶27} “The term ‘established business relationship’ means a prior or
existing relationship formed by a voluntary two-way communication between a
person or entity and a residential subscriber with or without an exchange of
consideration, on the basis of an inquiry, application, purchase or transaction by the
residential subscriber regarding products or services offered by such person or
entity, which relationship has not been previously terminated by either party.”
{¶28} Chevron requires this court to defer to the agency regulation as to the
definition of an EBR. Certainly, the FCC’s definition is a reasonable one given the
Act’s purpose of regulating telemarketing. The definition is not an exhaustive one
for use in all contexts, but it reflects Congress’s purpose. It allows businesses to
contact individuals who have previously invited or acquiesced to calls without
violating the TCPA.
{¶29} While establishing that the EBR exemption exists only if the
“relationship has not been previously terminated by either party,” the FCC does not
explain within its regulations what it takes to terminate a relationship. However, in
interpreting its own rules, the FCC did undertake to set forth how an EBR can be
severed.
{¶30} The regulation defining an “established business relationship” first
appeared in the FCC’s Report and Order (1992), 7 F.C.C.R. 8752, 1992 WL
690928, Appendix B. In its Report and Order, the FCC discussed public comments
it had received on the proposed rule and its own interpretation of the rule as adopted.
As a part of that discussion and interpretation, the FCC directly addressed the issue
present in this case.
{¶31} “We emphasize, however, that a business may not make telephone
solicitations to an existing or former customer who has asked to be placed on that
company’s do-not-call list. A customer’s request to be placed on the company’s
do-not-call list terminates the business relationship between the company and that
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January Term, 2002
customer for the purpose of any future solicitation.” (Emphasis added.) Id. at fn.
63.
{¶32} The FCC makes clear that an existing customer who requests to be
put on a do-not-call list retains the same rights as a noncustomer who makes a
similar demand:
{¶33} “The definition of ‘telephone solicitation’ in §227(a)(3) also excludes
calls made to parties with whom the caller has an established business relationship
and calls for which the calling party has received the called party’s prior express
invitation or permission. We emphasize, however, that subscribers may sever any
business relationship, i.e., revoke consent to any future solicitations, by requesting
that they not receive further calls from a telemarketer, thus subjecting that
telemarketer to the requirements of § 64.1200(e).” Id. at fn. 47.
{¶34} Thus, the FCC, the agency entrusted with the development of rules
for the interpretation of the TCPA, has set forth its opinion that a consumer can
sever its EBR with a business such that the telemarketer loses its exemption from
the TCPA. The FCC firmly answers that current customers can gain the protection
of the TCPA by requesting to be put on a DNC list.
{¶35} But are an agency’s interpretations of its own regulations also subject
to deference by courts? In Stinson v. United States (1993), 508 U.S. 36, 44-45,
113
S.Ct. 1913,
123 L.Ed.2d 598, the court held that an agency’s commentary regarding
its own rules is due even greater deference than the court gives rules in Chevron:
{¶36} “Commentary … has a function different from an agency’s
legislative rule. Commentary, unlike a legislative rule, is not the product of
delegated authority for rulemaking, which of course must yield to the clear meaning
of a statute. … Rather, commentary explains the guidelines and provides concrete
guidance as to how even unambiguous guidelines are to be applied in practice.
{¶37} “The functional purpose of commentary … is to assist in the
interpretation and application of those rules, which are within the [Sentencing]
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Commission’s particular area of concern and expertise and which the Commission
itself has the first responsibility to formulate and announce. … As we have often
stated, provided an agency’s interpretation of its own regulations does not violate
the Constitution or a federal statute, it must be given ‘controlling weight unless it
is plainly erroneous or inconsistent with the regulation.’ ”
{¶38} Pursuant to Stinson, we must follow the FCC’s commentary unless it
is at odds with the regulation it explains. We find the agency’s interpretation to be
perfectly in line with the regulation. Section 64.1200(f)(4), Title 47, C.F.R. defines
an EBR, but also states that the privileges associated with an EBR exist only until
the relationship terminates. The agency commentary explains how that relationship
ends.
{¶39} The FCC opines that a person can sever an established business
relationship simply by asking to be put on a DNC list. The DNC does not destroy
every aspect of a relationship; instead, it “terminates the business relationship *
… for the purpose of any future solicitation.” 7 F.C.C.R. 8752, fn. 63, 1992 WL
690928. The FCC does not require that the subscriber stop purchasing from a
company associated with the telemarketer. It requires only that the consumer seek
to cease the “voluntary two-way communication” that is the definitional heart of
the “established business relationship.” Section 64.1200(f)(4), Title 47, C.F.R.
That is enough to overcome the assumed acquiescence to receiving telemarketing
calls.
{¶40} Appellees argue that giving established customers the benefit of the
Act after a DNC request list renders the EBR exception a nullity. They argue that
there is no distinction then between how telemarketers must treat established
customers and other people receiving telephone calls. It is true that after a DNC
request an established customer and a noncustomer enjoy the same protections
under the TCPA. However, as the FCC report points out, it is not until a person
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who has an EBR with a telemarketer requests to be placed on a DNC list that a
company must comply with the dictates of Section 64.1200.
{¶41} Without an EBR, telemarketers may not call before 8:00 a.m. or after
9:00 p.m. [Section 64.1200(e)(1), Title 47, C.F.R.], must provide the name and the
address or phone number of the caller [Section 64.1200(e)(2)(iv)], may not make
an unrequested prerecorded solicitation call [Section 64.1200(a)(2)], and may not
send an unsolicited advertisement to a telephone facsimile machine [Section
64.1200(a)(3)].
{¶42} By contrast, an entity making calls only to persons with whom it
already has an EBR does not have to comply with the DNC list requirements of
Section 64.1200(e)(2). A company that called only existing customers would not
have to have a written policy for maintaining a DNC list [64.1200(e)(2)(i)], would
not be required to train personnel regarding those lists [64.1200(e)(2)(ii)], and
would not have to maintain a DNC list [64.1200(e)(2)(vi)].
{¶43} Thus, an EBR does provide a business with tangible benefits that it
can enjoy prior to an existing customer’s DNC request. Only after an existing
customer ends the EBR do the requirements and restrictions of Section 64.1200,
Title 47, C.F.R. come into play as to that customer.
{¶44} The regulation and the commentary are both consistent with the
statute at issue. The purpose of the Act is to reduce the nuisance aspect of
telemarketing. Maintaining some limited commercial tie to a business should not
leave consumers at the mercy of unbridled telemarketing efforts. An EBR gives a
business the benefit of the doubt, not an unlimited license to call. It is not consistent
with the Act that a person who subscribes to the daily newspaper in a onenewspaper town must be prisoner to telephone pitches for a publisher’s panoply of
products.
{¶45} We defer to and agree with the positions of the FCC on these matters.
We accept its definition of an EBR as a relationship formed by a voluntary two-
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way communication. We agree that when that relationship becomes involuntary
and one-sided, the consumer can put an end to telephone solicitation calls.
Accordingly, we reverse the judgment of the court of appeals and remand the case
to the trial court.
Judgment reversed
and cause remanded.
MOYER, C.J., RESNICK, F.E. SWEENEY, COOK and LUNDBERG STRATTON,
JJ., concur.
DOUGLAS, J., dissents.
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Philip J. Charvat, pro se.
Zeiger & Carpenter, John W. Zeiger and Marion H. Little, for appellees.
Robert Biggerstaff, pro se, urging reversal as amicus curiae.
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