May 26, 2020

Monthly TCPA Digest Part II – TCPA: Class Action & Litigation Updates

Solicited Faxes: The Turning Tide in the Seventh Circuit

Earlier this year, the D.C. Circuit in Bais Yaakov v. FCC, 852 F.3d 1078 (D.C. Cir. Mar. 31, 2017) invalidated an FCC rule requiring opt-out language on solicited (i.e., sent with consent) faxes under the Telephone Consumer Protection Act. As the Sixth Circuit subsequently noted in Sandusky Wellness Ctr., LLC v. ASD Speciality Healthcare, Inc., 863 F.3d 460 (6th Cir. 2017), because the D.C. Circuit became “the sole forum for addressing . . . the validity of the FCC’s rule” in accordance with “the procedural mechanism Congress has provided for challenging agency rules,” the decision is binding throughout the country. Id. at 467 (internal quotations omitted).

Because of the challenges Bais Yaakov now creates – particularly at class certification – the plaintiffs’ bar has predictably contended that Bais Yaakov is not binding outside of the D.C. Circuit. Though fundamentally at odds with the Sixth Circuit’s reasoning in Sandusky, the argument initially gained some traction in the Seventh Circuit. In Physicians Healthsource, Inc. v. Allscripts Health Sols., No. 12 C 3233, 2017 U.S. Dist. LEXIS 84689 (N.D. Ill. June 2, 2017), for example, the Northern District of Illinois determined that as a result of a prior appellate holding that “did not even mention the FCC rule, but relied exclusively on the statute, itself,” the D.C. Circuit’s ruling was not controlling. Id. at *7 (relying on Ira Holtzman, C.P.A. v. Turza, 728 F.3d 682 (7th Cir. 2013)). Similarly, in Orrington v. Scion Dental, Inc., No. 17-CV-00884, 2017 U.S. Dist. LEXIS 104101 (N.D. Ill. July 6, 2017), the Northern District of Illinois again held that “under binding Seventh Circuit precedent, opt-out notices are still required under the TCPA, even for solicited faxes.” Id. at *6.

Two decisions in the Northern District of Illinois have now bucked the trend. Most recently, in Alpha Tech Pet, Inc. v. Lagasse, LLC, Nos. 16 C 513 and 16 C 4321, 2017 U.S. Dist. LEXIS 182499 (N.D. Ill. Nov. 3, 2017), the Northern District of Illinois granted a motion to deny class certification as a result of Bais Yaakov. Following Sandusky’s lead, the court concluded that because petitions challenging the Solicited Fax Rule had been consolidated in the D.C. Circuit, the D.C. Circuit’s decision striking down the Solicited Fax Rule became binding elsewhere. Id. at *7.

Notably, the court refused to follow Turza, on which Physicians Healthsource and Orrington relied, because its broad reading espoused by plaintiffs’ counsel “is not the law.” Alpha Tech, 2017 U.S. Dist. LEXIS 182499 at *9 (internal quotations omitted). And in doing so, Alpha Tech pointed to Brodksy v. Humanadental Ins. Co., No. 10-cv-03233, 2017 U.S. Dist. LEXIS 137608 (N.D. Ill. Aug. 28, 2017), the first decision in the Northern District of Illinois to disagree with Physicians Healthsource and Orrington. Quoting from Brodsky, the court pointed out that “[t]he absence of a specific cite to the Solicited Fax Rule [in Turza] cannot be read out of context.” Id. at *10. “The portions of the TCPA cited at this point in Turza never mention solicited messages at all; instead, they refer to the FCC’s ability to promulgate additional rules regarding opt-out notices (such as the Solicited Fax Rule).” Id. (internal quotations omitted). Moreover, “Turza did not even involve solicited faxes; ‘[t]he only question on the merits [wa]s whether’ unsolicited faxes ‘contained ads.’ Turza, 728 F.3d at 685.” Id. at *10.

Consequently, the Alpha Tech court determined that “[t]he holding in Bais Yaakov striking down the Solicited Fax Rule is controlling here. And even if it was not controlling, this Court finds its holding persuasive and would follow it.” Id. at *11. Applying Bais Yaakov, the court went on to find that “to determine whether any putative member of the proposed class had a TCPA claim, the Court would first be required to determine whether that proposed class member ‘solicited,’ or consented to, ‘the faxes it received.’” Id. at *12 (citations omitted). Relying on “consent-related evidence,” the court held that the requisite individualized inquiry doomed plaintiffs’ claim – “the evidence produced by defendants shows that assessing consent would require ‘manually cross-checking’ the thousands of identified ‘consent forms’ and 25,000 fax numbers in the . . . database [at issue] ‘against the [many thousands of] potential class members.’” Id. at *16. Though plaintiffs’ counsel may argue the law is unsettled, the tide in the Seventh Circuit at the district court level is shifting toward recognition that Bais Yaakov is binding there and across the country.

Grace Rosales also contributed to this post. 

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Joshua Briones Litigation Lawyer Mintz
Member / Managing Member, Los Angeles Office

Joshua, Managing Member of the firm’s LA office, is a highly experienced trial lawyer with a national practice. He has received awards and national recognition for his innovative approach and specializes in high-stakes, bet-the-company litigation. He represents clients in such industries as financial services, building products, retail, pharmaceuticals, automotive, professional sports, food and beverage, petroleum, chemical manufacturing, health care, high technology, and higher education. He frequently publishes and lectures before national and local bar and industry...

Nicole Ozeran Associate, Class Action, TCPA & Consumer Calling. Product Liability & Complex Tort, Complex Commercial Litigation

Nicole’s practice focuses on complex corporate litigation, with an emphasis on consumer fraud, online and telephone marketing, false advertising, and regulatory and statutory compliance issues. Nicole regularly advises clients in all stages of litigation, from pre-litigation counseling and investigation through discovery, dispositive motion practice, trial, and appeals. She has extensive experience successfully taking and defending depositions, arguing motions, and resolving matters through mediation and arbitration.

Nicole’s clients regard her as strategic and creative; they trust her common sense approach to problem-solving and appreciate her professional dedication and zealous advocacy of their interests.