Appellate Court Revives Fax Lawsuit

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The United States Court of Appeals for the Seventh Circuit recently reinstated a fax lawsuit that had been dismissed by a trial court in Illinois.  The lawsuit arose from allegations of violation of the Junk Fax Prevention Act (“JFPA”) amendments to the Telephone Consumer Protection Act (“TCPA”), The Appeals Court decision at issue resulted from a complex set of procedural developments at the trial court level. 

Why did the Appeals Court reinstate the fax lawsuit?

As many TCPA fax lawsuits go, this one started with a medical provider’s receipt of a series of faxes.  These faxes contained prescription request forms for a nebulizer that the medical supply company hoped health providers would prescribe to patients in need of the product. Upon receipt of the faxes, the medical provider filed a class action lawsuit against both the medical supply company and its individual owner, alleging that the faxes were sent in violation of the TCPA. The individual owner was named in the lawsuit because the medical provider claimed that he knew or was aware that the company’s procedures included sending these kinds faxes to health providers.  The medical supply company defaulted, and the healthcare provider was awarded a default judgment on liability, but not damages.  Subsequently, the individual moved for summary judgment to dismiss the claims against him, arguing that he could not be held personally liable because he neither directly participated in nor personally authorized the sending of the subject faxes. The trial court agreed with the individual and dismissed the suit against him, while also finding that the disputed faxes were not advertisements within the meaning of the TCPA.  The court also vacated the default judgment against the company and dismissed the claims against it. This decision was motivated by the trial court’s fear of inconsistent judgments given that the default judgment had the effect of the company admitting that the faxes were advertisements, which the court subsequently concluded was not the case.  The appeal ensued when the medical provider disagreed with the trial court’s handling of this procedural morass.

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On appeal, the Appeals Court ultimately concluded that the trial court was correct to dismiss the individual owner, who could not be held liable for any faxes that violated the statute without a heightened level of participation in their sending beyond general awareness that they were being sent.  However, it ruled that the claims against the medical supply company itself were improperly dismissed. The case was, therefore, remanded to the district court for a decision as to the measure of appropriate damages that the health care provider can recover against the supply company.   

Protect Your Business from a TCPA Fax Lawsuit

This case is yet another example of the pitfalls that companies and their owners can encounter for failing to adhere to the technical and nuanced rules governing fax marketing.  The ever-changing regulatory landscape for facsimile marketing mandates vigilance from companies that make use of the medium for their marketing needs.  Given the potentially devastating cost of non-compliance with these rules, such vigilance should, at a minimum, prioritize working closely with knowledgeable counsel prior to engaging in any fax marketing campaign.  

If you need to review your fax marketing practices and procedures or if you are the subject of a TCPA fax lawsuit, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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