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Soundboard Association v. U.S. Federal Trade Commission

United States District Court, District of Columbia

May 10, 2017

SOUNDBOARD ASSOCIATION, Plaintiff,
v.
U.S. FEDERAL TRADE COMMISSION, Defendant.

          MEMORANDUM OPINION AND ORDER

          Amit P. Mehta United States District Judge.

         On April 24, 2017, this court rejected Plaintiff Soundboard Association's challenge under the Administrative Procedure Act to a letter issued by the staff of Defendant Federal Trade Commission (“FTC”). The letter announced that the FTC staff now viewed telemarketing calls using soundboard technology-a technology by which telemarketers use a combination of prerecorded audio clips and live sales agents to contact and communicate with consumers-as subject to the same restrictions placed on traditional robocalls, in which a live sales agent never interacts with the consumer. Soundboard Ass'n v. U.S. Fed. Trade Comm'n, No. 17-cv-00150, 2017 WL 1476116, at *1 (D.D.C. Apr. 24, 2017). As pertinent here, the court held that the FTC staff's letter, dated November 10, 2016 (“November 2016 Letter”), was not a legislative rule requiring notice and comment, but instead was an interpretive rule that the agency was free to issue outside such formal process. Id. at *2.

         Plaintiff believes the court got it wrong, and now seeks to enjoin the November 2016 Letter pending review on appeal. Pl.'s Mot. for Inj., ECF No. 23 [hereinafter Pl.'s Mot.]. For the reasons explained below, the court denies Plaintiff's Motion for an Injunction Pending Appeal.

         I. LEGAL STANDARD

         Rule 62(c) of the Federal Rules of Civil Procedure authorizes a district court to issue an injunction pending appeal. Fed.R.Civ.P. 62(c). A motion brought under Rule 62(c) is subject to the same four criteria as a motion for preliminary injunction. Wash. Metro. Area Transit Comm'n v. Holiday Tours, Inc., 559 F.2d 841, 842-43 (D.C. Cir. 1977). The moving party “must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); accord Cuomo v. U.S. Nuclear Regulatory Comm'n, 772 F.2d 972 (D.C. Cir. 1985) (per curiam) (citing Holiday Tours, 559 F.2d at 843-44).

         It “remains an open question” in the D.C. Circuit how trial courts are to weigh those four factors in evaluating a motion for injunctive relief. Aamer v. Obama, 742 F.3d 1023, 1043 (D.C. Cir. 2014). This Circuit has long adhered to the “sliding scale” approach, whereby “a strong showing on one factor could make up for a weaker showing on another.” Sherley v. Sebelius, 644 F.3d 388, 392, 398 (D.C. Cir. 2011). In the context of a motion under Rule 62(c), that means a party may make up for a lesser showing of a likelihood of success as long as it presents a “substantial case” on appeal and makes a strong showing on the other three factors. Holiday Tours, 559 F.2d at 843-44; Sherley, 644 F.3d at 392-93. Ultimately, a court asks whether all four factors “taken together” favor a preliminary injunction. Davis v. Pension Ben. Guar. Corp., 571 F.3d 1288, 1292 (D.C. Cir. 2009).

         Some judges of the D.C. Circuit have expressed the view that the Supreme Court's decision in Winter supplants the “sliding scale” approach, and a movant cannot obtain an injunction without showing “both a likelihood of success and a likelihood of irreparable harm.” Sherley, 644 F.3d at 392. The Circuit has not, however, expressly disavowed adherence to the sliding scale approach. Thus, the open question remains “whether the ‘likelihood of success' factor is ‘an independent, free-standing requirement, ' or whether, in cases where the other three factors strongly favor issuing an injunction, a plaintiff need only raise a ‘serious legal question' on the merits.” Aamer, 742 F.3d at 1043 (quoting Sherley, 644 F.3d at 393, 398).

         This court need not resolve that question here, for whether the court treats Plaintiff's likelihood of success as an independent, freestanding requirement or evaluates all four injunction factors on a sliding scale, the result is the same: Plaintiff has not demonstrated that it is entitled to an injunction pending appeal.

         II. DISCUSSION

         A. Plaintiff Has Not Demonstrated a Likelihood of Success on the Merits

         Plaintiff advances two reasons why it has demonstrated a likelihood of success on the merits despite the court having ruled against it. First, it contends that the court failed to address its primary argument as to why the November 2016 Letter constituted a legislative, rather than an interpretive, rule. Second, Plaintiff submits that the case presents a close legal question in an ambiguous area of the law, which should cut in favor of granting injunctive relief pending appeal. The court addresses each argument in turn.

         1. Whether the FTC's November 2016 Letter Substantively Amends Prior Regulations

         Plaintiff asserts that it has made out a substantial case on the merits because the FTC's November 2016 Letter can only be properly understood as a legislative rule that worked a substantive change in the law governing the telemarketing industry. Plaintiff contends that “this [c]ourt did not squarely address [its] principal argument”: “Because the FTC's prohibition on any outbound telemarketing call that delivers ‘a prerecorded message' (the ‘robocall prohibition') cannot reasonably be interpreted to prohibit soundboard calls, the November letter cannot be justified as merely an interpretation of the robocall prohibition.” Pl.'s Mot. at 4. Stated another way, Plaintiff argues that “the [robocall] prohibition cannot fairly be understood to authorize the FTC to prohibit calls made using soundboard technology.” Id. at 6.

         Contrary to Plaintiff's contention, the court did not “stop[] short” of addressing Plaintiff's “principal argument.” Id. at 4, 8. The court recognized that the dividing line between legislative and interpretive rules-albeit not a bright one-is exactly where Plaintiff would draw it in this case. As the court wrote: “The distinguishing characteristic between the two [types of rules], therefore, is whether the new rule effects a ‘substantive' regulatory change to the statutory or regulatory regime.” Soundboard Ass'n, 2017 WL 1476116, at *10 (internal quotation marks omitted). Or, as the Circuit stated in U.S. Telecom Association v. FCC: “[F]idelity to the rulemaking requirements of the APA bars courts from permitting agencies to avoid those requirements by calling a substantive regulatory change an interpretative rule.” 400 F.3d 29, 35 (D.C. Cir. 2005).[1] By finding the November 2016 Letter to be an interpretive rule, the court correlatively concluded that the Letter did not effect a substantive change to the regulatory regime. Indeed, the ...


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