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Behind the Faxes: Sixth Circuit Holds That Plaintiff in TCPA Junk Fax Class Action Adequately Pled That Informational Fax Violated TCPA Because It Was a “Pretext” For Solicitation

Late last week, the Sixth Circuit held that a plaintiff in a junk fax class action alleged sufficient facts to establish that a fax – which was seemingly informational on its face – was nonetheless an “unsolicited advertisement” within the meaning of the TCPA.  So what kind of sorcery did the Sixth Circuit use to reach this conclusion?

Before diving in, let’s orient ourselves on the statutory definition of “unsolicited advertisement”. The TCPA defines the term as:

[A]ny 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, in writing or otherwise.

47 U.S.C. § 227(a)(5).

Seems straightforward enough…  At least compared to the ATDS definition.  But,  TCPAland, right?

In Matthew N. Fulton, D.D.S., P.C. v. Enclarity, Inc., No. 17-1380, 2018 U.S. App. LEXIS 31077 (6th Cir. Nov. 2, 2018), the defendant sent a fax to a dentist office for the purpose of verifying certain information relating to the dental practice such as address, phone number, and secure fax numbers.  Defendant maintained a database of medical provider business and professional demographic data that it licensed to its customer base of health insurance plans, pharmacies, life science companies, and the like.  According to the fax, the purpose of the request was to “help preserve the privacy and security,” of patient information, and to facilitate sensitive communications.  The fax also contained the phone number and a link to the FAQ page on the defendant’s website.

Plaintiff sued Defendant in a nationwide putative class action claiming this fax was an unsolicited advertisement that violated the TCPA.  But the District Court dismissed Plaintiff’s complaint under Fed.  R. Civ. P. 12(b)(6) because “nothing mentioned in the fax is available to be bought or sold,” and the fax “lacked the commercial components inherent in ads.” Makes sense.  On its face this fax doesn’t contain any sort of advertising material.  I mean, it’s literally asking to verify information, so this would seem to be pretty clearly informational in nature.  Right?

But according to the Sixth Circuit, that’s wrong… At least judging from the face of the Plaintiff’s complaint and construing it in the light most favorable to Plaintiff.

The court goes through some machinations in reaching its holding which I won’t belabor here.  But at the heart of the decision was the court’s finding that an “unsolicited advertisement” as defined under the TCPA includes “faxes that serve as pretext for a commercial solicitation.” This was based on the Sixth Circuit’s prior holding Sandusky Wellness Ctr., Ltd. Liab. Co. v. Medco Health Sols., Inc., 788 F.3d 218 (6th Cir. 2015), as well as FCC guidance on the issue which states:

[F]acsimile messages that promote goods or services even at no cost, such as free magazine subscriptions, catalogs, or free consultations or seminars, are unsolicited advertisements under the TCPA’s definition. In many instances, “free” seminars serve as a pretext to advertise commercial products and services. Similarly, “free” publications are often part of an overall marketing campaign to sell property, goods, or services. For instance, while the publication itself may be offered at no cost to the facsimile recipient, the products promoted within the publication are often commercially available. Based on this, it is reasonable to presume that such messages describe the “quality of any property, goods, or services.” Therefore, facsimile communications regarding such free goods and services, if not purely “transactional,” would require the sender to obtain the recipient’s permission beforehand…

In light of the pretextual fax rule – the Sixth Circuit had a problem with the District Court concluding on the face of Plaintiff’s complaint that the fax at issue wasn’t an “unsolicited advertisement”.  It said “[f]inding a fax to be pretext for a subsequent advertising opportunity would require looking into what came after the fax.  A court could not possibly resolve a claim that a fax was pretextual if it confined its evaluation to the fax itself.”  In other words, the court is allowed to “peek behind the curtain” so to speak and evaluate circumstances beyond just the face of the fax to determine whether it falls within the definition of an “unsolicited advertisement”.  According to the court, “a fax could be an advertisement without overtly offering a product or service for sale, such as offers for free seminars that turn out to be pretext for a later solicitation.”

The Sixth Circuit therefore held that the District Court erred in granting the defendant’s motion to dismiss.  The complaint contained certain allegations that “the fax was a pretext to increase awareness and use of Defendants’ proprietary database service and increase traffic to Defendants’ website,” and that Defendant uses the verified contact information it was seeking from Plaintiff to compile a commercially available product or service that Defendants sell or lease to their subscribers and licensees.”  Plaintiff was able to reinforce the plausibility of these allegations – in part – with some of the content from Defendant’s own website as well.  On that record, therefore, the Sixth Circuit held that Plaintiff had “adequately alleged that the fax received was an unsolicited advertisement because it served as a commercial pretext for future advertising opportunities. Fulton has therefore stated a plausible TCPA claim under the fax-as-pretext theory.”

The Sixth Circuit’s holding reinforces just how careful businesses need to be when creating and sending these sorts of faxes.  Under Fulton, the fact that the fax appears informational on its face may not be enough to defeat liability where the Plaintiff can establish it was a pretext for downstream solicitation.  And, at the very least, it’s likely not going to cut it to defeat a nationwide TCPA class action at the pleading stage.

It’s a perilous landscape out there.

Copyright © 2018 Womble Bond Dickinson (US) LLP All Rights Reserved.

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About this Author

Artin Betpera, Class action litigation lawyer, Womble
Senior Counsel

Artin serves as a chief lieutenant on one the nation’s most experienced and powerful class action defense teams.  Precise and analytic, Artin brings over a decade of experience to bear on complex litigation problems.

Artin adeptly manages significant volumes of litigation for some of the country’s largest banks and financial institutions, never losing sight of providing an exceptional level of service to his clients.  He has been a dedicated financial services litigator since starting the practice of law at ground-zero of the financial crisis, affording him with...

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