Data & Privacy Law

On November 25, 2019, the Supreme Court of the United States denied plaintiff’s petition for certiorari, thereby upholding a decision by the Third Circuit Court of Appeals (the “Court” or “Third Circuit”) which held that an unsolicited fax sent to update a company’s database was not an advertisement within the meaning of the Telephone Consumer Protection Act (“TCPA”). The Supreme Court did not explain why it denied the petition to rule on the TCPA ad case. Therefore, the Third Circuit’s underlying opinion in Robert W. Mauthe, M.D., P.C., v. Optum Inc. continues to constitute binding precedent within the Third Circuit.

When is a fax considered an advertisement?

TCPA Ad Considerations

The defendant in the underlying case, Optum Inc. (“Optum”), maintains a national database of healthcare providers. Optum markets and sells its database to health care companies, who use it for a variety of purposes, including to validate information when processing insurance claims. As part of its effort to ensure the accuracy of its database, Optum sent an unsolicited fax to the plaintiff, a doctor, seeking to verify the plaintiff’s information. The fax message explained that it was not an advertisement. Specifically, it stated, “[t]here is no cost to you to participate in this data maintenance initiative. This is not an attempt to sell you anything.”

Although the plaintiff recognized that the fax was not intended to sell the doctor anything, he still argued that Optum’s unsolicited fax message constituted a commercial advertisement, or a TCPA ad. Accordingly, the Third Circuit analyzed the fax under a theory of “third-party liability,” in which the message could still be considered a TCPA ad because it sought commercial gain through the recipient’s interaction with a third party. To establish third-party liability, the Third Circuit held that a plaintiff must show that the subject fax: “1) sought to promote or enhance the quality or quantity of a product or services being sold commercially; (2) was reasonably calculated to increase the profits of the sender; and (3) directly or indirectly encouraged the recipient to influence the purchasing decisions of a third party.”

Plaintiff sought to assert a theory of third-party liability by arguing that, although he was not an intended purchaser of Optum’s products or services, the fax should still be considered a TCPA ad because Optum was motivated by profit in sending it. The Third Circuit rejected plaintiff’s argument. The Court recognized that Optum sent the fax to improve the information in its database and, thus, increase its profits. As the Court noted, Optum, like all businesses, takes almost all of its actions with a profit motivation. However, this did not mean that Optum’s fax constituted an advertisement requiring prior express written consent from the recipient. Indeed, the message explicitly stated that it was not an attempt to sell anything to the plaintiff. The message similarly did not encourage the plaintiff to influence the purchasing decisions of any third parties. Accordingly, the Third Circuit held that the fax sent to plaintiff did not constitute an advertisement and that Optum had, therefore, not violated the TCPA in sending it to the doctor without his requesting it.

Best Practices For Sending Commercial Faxes

By denying the petition for certiorari, the Supreme Court missed an opportunity to provide some much-needed guidance to the industry regarding fax messages and TCPA ads. While the Third Circuit’s decision was upheld, other circuits have come to different conclusions regarding what constitutes an advertisement under the TCPA. This ambiguous legal landscape means that TCPA compliance continues to be quite nuanced and technical. Please note that we have previously blogged about TCPA liability resulting from non-compliant fax ads.

Under existing TCPA rules, automated calls, texts, or faxes sent only for informational purposes require “prior express consent,” whereas advertisements contained in calls, texts, and faxes sent by automated means require “prior express written consent.” Due to the potential costs resulting from non-compliance with TCPA regulations, businesses operating in this space should work closely with knowledgeable counsel prior to engaging in any fax marketing campaign.

If you are interested in learning more about this topic or want to review your facsimile marketing practices, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational 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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