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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
)
In the Matter of
) File No. EB-03-TC-031
1 Home Lending Corporation
) NAL/Acct. No. 200732170002
d.b.a. Capital Line Financial, LLC
) FRN: 0015635519
Apparent Liability for Forfeiture
)
)
)
FORFEITURE ORDER
Adopted: March 9, 2009 Released: March 10, 2009
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Forfeiture Order ("Order"), we issue a monetary forfeiture in
the amount of $18,000 against 1 Home Lending Corporation d.b.a.
Capital Line Financial, LLC ("Capital Line") for willful or repeated
violations of section 227 of the Communications Act of 1934, as
amended ("Act"), and the Commission's rules and orders, by delivering
at least four unsolicited, prerecorded advertising messages to three
consumers.
II. BACKGROUND
2. The facts and circumstances surrounding this case are set forth in the
Commission's Notice of Apparent Liability for Forfeiture and need not
be reiterated at length.
3. Section 227(b)(1)(B) of the Act prohibits any person from initiating
"any telephone call to any residential telephone line using an
artificial or prerecorded voice to deliver a message without the prior
express consent of the called party, unless the call is initiated for
emergency purposes or is exempted by rule or order of the Commission."
Section 64.1200(a)(2) of the Commission's rules provides exemptions
for calls: 1) made for emergency purposes; 2) made for non-commercial
purposes; 3) made for commercial purposes that do "not include or
introduce an unsolicited advertisement or constitute a telephone
solicitation"; 4) to persons "with whom the caller has an established
business relationship at the time the call is made"; and 5) "made by
or on behalf of a tax-exempt nonprofit organization."
4. On April 22, 2003, in response to consumer complaints alleging that
Capital Line had delivered unsolicited, prerecorded advertising
messages to several consumers, the Commission staff issued a citation
to Capital Line pursuant to section 503(b)(5) of the Act. The staff
cited Capital Line for delivering one or more prerecorded, unsolicited
advertisements to a residential telephone line, in violation of
section 227 of the Act and the Commission's rules and orders.
According to the complainants, the unsolicited advertisements offered
information concerning home loans. The citation informed Capital Line
that subsequent violations could result in the imposition of monetary
forfeitures of up to $11,000 per violation and included a copy of the
consumer complaints that formed the basis of the citation. The
citation informed Capital Line that within 30 days of the date of the
citation, it could either request a personal interview at the nearest
Commission field office, or could provide a written statement
responding to the citation.
5. Capital Line filed a written response to the citation on May 21, 2003,
arguing that it placed calls only to established customers of its
title company subsidiary. Capital Line did not, however, provide any
evidence of an established business relationship ("EBR") with any of
the complainants whose complaints formed the basis of the citation. On
May 13, 2005, Capital Line filed a supplemental response in which it
requested that the Commission rescind the citation. To support its
request, Capital Line attached a decision from the Superior Court of
California, which had dismissed a claim, filed by one of the citation
complainants, for private damages under the Telephone Consumer
Protection Act. Capital Line argued that the Commission should rescind
the citation because the California court had found an EBR between the
complainant and an affiliate of Capital Line. The Enforcement Bureau
decided, however, that it was not bound by that court's decision
regarding that complainant's relationship with Capital Line.
Furthermore, the Bureau found that Capital Line did not provide any
independent evidence of an EBR with that complainant or with the other
two complainants whose complaints formed part of the basis for the
citation. Accordingly, the Bureau did not rescind the citation.
6. Following the issuance of the citation, the Commission received at
least 3 complaints from consumers alleging that Capital Line sent at
least 4 unsolicited advertisements to them. These violations, which
occurred after the Bureau's citation, resulted in the issuance of a
Notice of Apparent Liability for Forfeiture against Capital Line on
October 20, 2006 in the amount of $18,000. The NAL ordered Capital
Line to either pay the proposed forfeiture amount within thirty (30)
days or submit evidence or arguments in response to the NAL to show
that no forfeiture should be imposed or that some lesser amount should
be assessed. On November 21, 2006, Capital Line filed a response to
the NAL, arguing that the Commission should substantially reduce the
forfeiture.
III. DISCUSSION
7. Section 503(b) of the Act authorizes the Commission to assess a
forfeiture for each violation of the Act or of any rule, regulation,
or order issued by the Commission under the Act by a non-common
carrier or other entity not specifically designated in section 503 of
the Act. The maximum penalty for such a violation is $11,000 for a
violation occurring before September 2, 2008, and $16,000 for a
violation occurring on or after September 2, 2008. In exercising such
authority, we are to take into account "the nature, circumstances,
extent, and gravity of the violation and, with respect to the
violator, the degree of culpability, any history of prior offenses,
ability to pay, and such other matters as justice may require."
8. Capital Line first argues that it believed it had an established
business relationship ("EBR") with one of the complainants, Mark
Klein, at the time it sent the prerecorded messages. Capital Line
bases its EBR claim on the fact that Mr. Klein was a customer of
Washington Mutual Bank, and Capital Line is a broker for Washington
Mutual Bank. To support these assertions, Capital Line provided the
following documentation: 1) a title information document listing
American Savings Bank as the lender on property purchased by Mr. Klein
in 1996; 2) a 1996 news article discussing a proposed merger between
Washington Mutual, Inc. and American Savings Bank; and 3) a 1999
brokerage agreement in which Capital Line agreed to be the broker for
Washington Mutual, Inc.
9. Capital Line has not persuaded us that it had an EBR with Mr. Klein at
the time it sent the prerecorded advertisement. Under section
62.1200(f) of the Commission's rules, an EBR with a consumer does not
extend to a company's affiliate "unless the subscriber would
reasonably expect them to be included given the nature and type of
goods or services offered by the affiliate and the identity of the
affiliate." In the 2003 TCPA Report and Order, the Commission
emphasized that "a call from a company with which a consumer has not
formed a business relationship directly, or does not recognize by
name, would likely be a surprise and possibly an annoyance."
10. We do not believe that Mr. Klein would reasonably have expected to
receive a prerecorded message from Capital Line. According to the
information submitted by Capital Line, Mr. Klein purchased a home in
March 1996, with American Savings Bank as the lender. Sometime after
July 26, 1996, American savings Bank then merged with Washington
Mutual, Inc. Finally, Capital Line became a broker for Washington
Mutual in 1999. There was a three-year gap between when Mr. Klein took
out the home loan and when Capital Line became the broker for
Washington Mutual. This makes it implausible that Mr. Klein would have
considered himself to be in a direct business relationship with
Capital Line so that he would expect a prerecorded message from them.
Accordingly, we find that Capital Line has not met the requirements
for demonstrating an EBR with Mr. Klein under the Commission's rules.
11. In addition, Capital Line has not persuaded us to substantially reduce
the fine for the prerecorded messages it sent to the remaining
complainants from $4,500 to $500 per call. Capital Line first argues
that it has always honored the National Do-Not-Call Registry and
individual do-not-call requests. Complying with the Commission's
Do-Not-Call rules, however, does not provide an exemption for a
violation of our prerecorded message rules. And even in cases where a
company has taken remedial steps to correct its violation of the
Commission rules, the Commission has not seen that as sufficient
reason to reduce a forfeiture. So Capital Line's mere claim of past
compliance with the do-not-call rules does not persuade us to reduce
the forfeiture. Capital Line adds that it has never knowingly called a
consumer with whom it did not have an EBR, and that there is no way
for it to determine whether it had an EBR with the remaining
complainants. If Capital Line cannot prove that it had an EBR with the
remaining complainants, however, we cannot find that the messages left
for those complainants fall under the EBR exemption to the rules.
12. Capital Line has failed to identify facts or circumstances to persuade
us that there is a basis for modifying the proposed forfeiture, and we
are not aware of any further mitigating circumstances sufficient to
warrant a reduction of the forfeiture penalty. For these reasons, and
based on the information before us, we hereby impose a total
forfeiture of $18,000 for Capital Line's willful or repeated violation
of section 227 of the Act and the Commission's related rules and
orders, as set forth in the NAL.
IV. ORDERING CLAUSES
13. Accordingly, IT IS ORDERED, pursuant to section 503(b) of the Act, 47
U.S.C. S: 503(b), and section 180(f)(4) of the Commission's rules, 47
C.F.R. S:1.80(f)(4), and under the authority delegated by sections
0.111 and 0.311 of the Commission's rules, 47 C.F.R. S:S: 0.111,
0.311, that Capital Line IS LIABLE FOR A MONETARY FORFEITURE to the
United States Government in the sum of $18,000 for willful or repeated
violations of section 227(b)(1)(B) of the Act, 47 U.S.C. S:
227(b)(1)(B), section 64.1200(a)(2) of the Commission's rules, 47
C.F.R. S: 64.1200(a)(2), and the related orders described in the
paragraphs above.
14. Payment of the forfeiture shall be made in the manner provided for in
section 1.80 of the Commission's rules within thirty (30) days of the
release of this Order. If the forfeiture is not paid within the period
specified, the case may be referred to the Department of Justice for
collection pursuant to section 504(a) of the Act. Payment of the
forfeiture must be made by check or similar instrument, payable to the
order of the Federal Communications Commission. The payment must
include the NAL/Account Number and FRN Number referenced above.
Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payment by wire transfer may be made to ABA Number 021030004,
receiving bank TREAS/NYC, and account number 27000001. For payment by
credit card, an FCC Form 159 (Remittance Advice) must be submitted.
When completing the FCC Form 159, enter the NAL/Account number in
block number 23A (call sign/other ID), and enter the letters "FORF" in
block number 24A (payment type code). Capital Line will also send
electronic notification on the date said payment is made to
Johnny.drake@fcc.gov. Requests for full payment under an installment
plan should be sent to: Chief Financial Officer -- Financial
Operations, 445 12th Street, S.W., Room 1-A625, Washington, D.C.
20554. Please contact the Financial Operations Group Help Desk at
1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
regarding payment procedures.
15. IT IS FURTHER ORDERED that a copy of the Forfeiture Order shall be
sent by first class mail and certified mail return receipt requested
to 1 Home Lending Corporation d.b.a. Capital Line Financial, LLC in
care of Mr. William E. Raney, Esq., Copilevitz & Canter, LLC, 423 W.
Eighth Street, Suite 400, Kansas City, Missouri 64105; to 1 Home
Lending Corporation d.b.a. Capital Line Financial, LLC, Attention:
William J. Tessar, 23925 Park Sorrento, Suite 200, Calabasas, CA
91302-4010; and to 1 Home Lending Corporation d.b.a. Capital Line
Financial, LLC, Attention: William J. Tessar, 22801 Ventura
Boulevard, #205, Woodland Hills, CA 91367.
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief, Enforcement Bureau
See 47 U.S.C. S: 227(b)(1)(B); 47 C.F.R. S: 64.1200(a)(2). Throughout
this forfeiture order, we will be citing the Commission's rules as they
existed at the time of the violations; see also Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991, Report and
Order, 18 FCC Rcd 14014 (2003) (2003 TCPA Report and Order).
See 47 U.S.C. S: 503(b)(1). The Commission has the authority under this
section of the Act to assess a forfeiture against any person who has
"willfully or repeatedly failed to comply with any of the provisions of
this Act or of any rule, regulation, or order issued by the Commission
under this Act ...."; see also 47 U.S.C. S: 503(b)(5) (stating that the
Commission has the authority under this section of the Act to assess a
forfeiture penalty against any person who does not hold a license, permit,
certificate or other authorization issued by the Commission or an
applicant for any of those listed instrumentalities so long as such person
(A) is first issued a citation of the violation charged; (B) is given a
reasonable opportunity for a personal interview with an official of the
Commission, at the field office of the Commission nearest to the person's
place of residence; and (C) subsequently engages in conduct of the type
described in the citation).
1 Home Lending Corporation d.b.a Capital Line Financial, LLC., Apparent
Liability for Forfeiture, 21 FCC Rcd 11852 (Enf. Bur. 2006) ("NAL").
47 U.S.C. S: 227(b)(1)(B).
"Unsolicited advertisement" means "any material advertising the commercial
availability or quality of any property, goods, or services which is
transmitted to any person without that person's prior express invitation
or permission." 47 C.F.R. S: 64.1200(f)(10).
"Telephone solicitation" means "the initiation of a telephone call or
message for the purpose of encouraging the purchase or rental of, or
investment in, property, goods, or services, which is transmitted to any
person," but "does not include a call or message: (i) to any person with
that person's prior express invitation or permission; (ii) to any person
with whom the caller has an established business relationship; or (iii) by
or on behalf of a tax-exempt nonprofit organization." 47 C.F.R. S:
64.1200(f)(9).
An "established business relationship" is defined as "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 the subscriber's purchase or transaction
with the entity within the eighteen (18) months immediately preceding the
date of the telephone call or on the basis of the subscriber's inquiry or
application regarding products or services offered by the entity within
the three months immediately preceding the date of the call, which
relationship has not been previously terminated by either party." 47
C.F.R. S: 64.1200(f)(3).
47 C.F.R. S: 64.1200(a)(2).
See Citation from Kurt A. Schroeder, Deputy Chief, Telecommunications
Consumers Division, Enforcement Bureau, issued to Capital Line on April
22, 2003.
See 47 U.S.C. S: 503(b)(5) (authorizing the Commission to issue citations
to non-common carriers for violations of the Act or of the Commission's
rules and orders).
See Complaints from Michele Robinson, Barbara Schneider, and Richard
Stahl, requesting Commission action against Capital Line, which were
attached to the citation.
See Letter from William Raney, Copilevitz & Canter, LLC (representing
Capital Line), to Kurt Schroeder, Deputy Chief, Telecommunications
Consumers Division, Enforcement Bureau, FCC, dated May 21, 2003.
See n.11, supra.
See Letter from William Raney, Copilevitz & Canter, LLC (representing
Capital Line), to Kurt Schroeder, Deputy Chief, Telecommunications
Consumers Division, Enforcement Bureau, FCC, dated May 10, 2005
("Supplemental Response").
See 47 U.S.C. S: 227(b)(3) (allowing a person or entity to bring, subject
to the laws or rules of the State court, an action in State court for
monetary damages resulting from violations of the Telephone Consumer
Protection Act of 1991).
See Supplemental Response, Attachment. The Court did not require Capital
line to pay damages for sending the prerecorded message to Ms. Schneider
because of an alleged established business relationship between her and an
alleged affiliate of Capital Line, "Countrywide." In particular, the Court
found that Countrywide had provided the first mortgage to Ms. Schneider's
residential property. Id.
NAL, 21 FCC Rcd at 11853-54, para. 3.
NAL, 21 FCC Rcd at 11854, para. 3.
See n.3 supra; see also 47 U.S.C. S: 503(b)(1).
Letter from Mr. William E. Raney, Copilevitz & Canter, LLC, to Enforcement
Bureau, Telecommunications Consumers Division, FCC, re: In the Matter of
One Home Lending Corporation, D.B.A. Capital Line Financial, LLC,
NAL/Account No. 200732170002, dated November 20. 2006 ("NAL Response").
Section 503(b)(2)(C) provides for forfeitures of up to $10,000 for each
violation in cases not covered by subparagraph (A) or (B), which address
forfeitures for violations by licensees and common carriers, among others.
See 47 U.S.C. S: 503(b). In accordance with the inflation adjustment
requirements contained in the Debt Collection Improvement Act of 1996,
Pub. L. 104-134, Sec. 31001, 110 Stat. 1321, the Commission implemented an
increase of the maximum statutory forfeiture under section 503(b)(2)(C)
first to $11,000 and more recently to $16,000. See 47 C.F.R. S:1.80(b)(3);
Amendment of Section 1.80 of the Commission's Rules and Adjustment of
Forfeiture Maxima to Reflect Inflation, 15 FCC Rcd 18221 (2000)(forfeiture
maximum for this type of violator set at $11,000); Amendment of Section
1.80(b) of the Commission's Rules and Adjustment of Forfeiture Maxima to
Reflect Inflation, 19 FCC Rcd 10945 (2004) (amendment of section 1.80(b)
to reflect inflation left the forfeiture maximum for this type of violator
at $11,000); Amendment of Section 1.80(b) of the Commission's Rules,
Adjustment of Forfeiture Maxima to Reflect Inflation, 23 FCC Rcd 9845
(2008) (amendment of section 1.80(b) to reflect inflation increased the
forfeiture maximum for this type of violator to $16,000).
See 47 U.S.C. S: 503(b)(2)(D); see also The Commission's Forfeiture Policy
Statement and Amendment of Section 1.80 of the Rules to Incorporate the
Forfeiture Guidelines, Report and Order, 12 FCC Rcd 17087, 17100-01 para.
27 (1997) (Forfeiture Policy Statement), recon. denied, 15 FCC Rcd 303
(1999).
NAL Response at 2. See 47 C.F.R. S: 64.1200(a)(2)(iv).
NAL Response at 2.
NAL Response, Exhibit B.
47 C.F.R. S: 64.1200(f)(3)(ii).
2003 TCPA Report and Order, 18 FCC Rcd at 14083, para. 117.
NAL Response, Exhibit B.
NAL Response, Exhibit B. Capital Line attached an article dated July
26,1996 that discussed a "proposed" merger between American Savings Bank
and Washington Mutual. So the merger happened at some point after that
date.
NAL Response, Exhibit B.
47 C.F.R. S: 64.1200(f)(3)(ii).
NAL Response at 2. Capital Line included in its response to the NAL a
one-page flow chart outlining its do-not-call compliance procedures. NAL
Response, Exhibit B.
As we discuss above, under the Commission's rules exemptions for
prerecorded calls are limited to calls: 1) made for emergency purposes; 2)
made for non-commercial purposes; 3) made for commercial purposes that do
not include or introduce an unsolicited advertisement or constitute a
telephone solicitation; 4) to persons with whom the caller has an
established business relationship at the time the call is made; and 5)
made by or on behalf of a tax-exempt nonprofit organization. See para. 3,
supra.
See Coleman Enterprises, Inc. d/b/a Local Long Distance, Inc., Order of
Forfeiture, 15 FCC Rcd 24,385, 24,388, para. 8 (2000) (finding remedial
steps to address unauthorized preferred carrier changes and cessation of
telemarketing services insufficient to reduce forfeiture); America's
Tele-Network Corp., Order of Forfeiture, 16 FCC Rcd 22,350, 22,355-56,
para. 15 (2001) (finding remedial measures to be an insufficient basis to
reduce forfeiture).
NAL Response at 2. Capital Line explains that it no longer possesses the
infrastructure for prerecorded messages, having terminated its prerecorded
marketing campaigns as of March, 2006. Id.
In a related area of Telephone Consumer Protection Act enforcement,
unsolicited facsimiles, the Commission has stated that the sender of the
facsimile has the burden of proving the existence of an EBR. Rules and
Regulations Implementing the Telephone Consumer Protection Act of 1991,
Report and Order and Third Order on Reconsideration, 21 FCC Rcd 3787,
3794, para. 12 (2006).
47 U.S.C. S: 504(a).
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(continued....)
Federal Communications Commission DA 09-539
1
Federal Communications Commission DA 09-539