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?
[Read More]The United States Court of Appeals for the Third Circuit recently issued a ruling on the issue of whether faxes sent on behalf of Cephalon, Inc. (“Cephalon”) were transmitted in violation of the Telephone Consumer Protection Act (“TCPA”). The TCPA fax decision focuses on: 1) whether the faxes were unsolicited; and 2) even if they were solicited, whether Cephalon nevertheless violated the statute by failing to include required opt-out language in its advertisements.
How did the Court resolve these TCPA fax law issues?
[Read More]December 27th, 2019
In an important decision concerning the Junk Fax portions of the Telephone Consumer Protection Act (“TCPA”), the Federal Communications Commission (“FCC”) recently issued a declaratory ruling clarifying the scope of the TCPA fax exemption. The ruling came in response to a petition filed by Amerifactors Financial Group, LLC (“Amerifactors”) requesting clarification from the FCC as to whether certain fax services can be fairly classified as fax machines within the meaning of the TCPA.
Like many other companies operating in the fax-based marketing space, Amerifactors utilizes online fax services to transmit its marketing communications. Such online fax services operate through use of “‘a cloud-based service consisting of a fax server or similar device that is used to send or receive documents, images and/or electronic files in digital format over telecommunications facilities’ that allows users to ‘access faxes the same way that they do email by logging into a server over the Internet or by receiving a pdf attachment [as] an email.’”
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?
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.
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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October 11, 2019
The United States Supreme Court (“SCOTUS” or the “Court”) recently began its new term and immediately issued an order involving the Telephone Consumer Protection Act (“TCPA”). Fast on the heels of a recent decision at the end of the last term in which the Court was presented with a dispute over the TCPA’s application to certain classes of unsolicited faxes, SCOTUS opining on the law once more is a matter of interest to all industry observers. Unfortunately, however, the Court again failed to provide clear guidance for future TCPA fax case proceedings in lower courts of law.
How did SCOTUS resolve the TCPA fax issue?
June 24, 2019
As the United States Supreme Court (“SCOTUS”) wraps up its term, it released a decision concerning whether a federal district court is obligated to follow a Federal Communications Commission Order (“FCC”) regarding the junk fax provisions of Telephone Consumer Protection Act (“TCPA”). Industry pundits had been patiently awaiting a decision on the TCA fax issue for some time.
How did SCOTUS resolve the TCPA fax issue?
April 16, 2018
In a fax lawsuit involving allegations against AT&T Mobility LLC and AT&T Mobility National Accounts LLC (“AT&T”) for violation of the Telephone Consumer Protection Act (“TCPA”), a federal judge in the United States District Court for the District of Connecticut recently denied a motion for class certification brought by the former corporate owner of a Super 8 Motel, a franchisee of Wyndham Hotel Group (the “Franchisee”).
Why was class certification denied in this fax lawsuit?
January 29, 2019
The United States District Court for the Western District of New York recently issued a decision interpreting the Telephone Consumer Protection Act (“TCPA”) with respect to whether a fax transmission violated the statute. In particular, the TCPA fax case required the court to decide whether the subject fax transmission constituted an advertisement within the meaning of the statute.
What were the issues before the Court in this TCPA fax case?
