New Jersey Federal Court Grants Summary Judgment to Plaintiff Class in Blast Fax Case, Awards More Than $22 Million in Statutory Damages
In September, we reported that a court in the District of New Jersey denied the defendants’ motion for summary judgment in a “fax blast” class action, concluding that the defendants could be directly liable under the TCPA for fax advertisements they did not actually send, but rather that were sent by a third-party marketing firm to promote the defendants’ goods or services. See City Select Auto Sales, Inc. v. David Randall Associates, Inc., No. 11-2658, 2014 WL 4755487 (D.N.J. Sept. 24, 2014) (“City Select I”).
Six months later, relying heavily on that earlier ruling, the court has entered summary judgment on behalf of the plaintiff class and awarded it statutory damages of $22,405,000. City Select Auto Sales, Inc. v. David Randall Associates, Inc., et al., No. 11-2658, 2015 WL 1421539 (D. N.J. Mar. 27, 2015) (“City Select II”).
The court noted that its September decision adopted the reasoning of an amicus letter brief from the FCC submitted in Palm Beach Golf Center-Boca, Inc. v. Sarris, No. 13-14013 (11th Cir.), in which “the FCC emphasized that the junk-fax provisions of the TCPA clearly allow a plaintiff to recover damages [under a theory of direct liability] from a defendant who [transmitted] no facsimile to the plaintiff, but whose independent contractor did, provided that the transmitted fax constitutes an unsolicited facsimile advertisement promoting the defendant’s goods or services in accordance with the binding regulatory definition of ‘seller’ set forth in 47 C.F.R. §64.1200(f)(1).” Id. at *12 n.11 (internal citation and quotation marks omitted). The court also acknowledged that the Eleventh Circuit subsequently adopted the FCC’s position in Sarris. See Palm Beach Golf Center-Boca, Inc. v. Sarris, — F.3d –, No. 13-14013, 2015 WL 1004234 (11th Cir. Mar. 9, 2015).
Because the court had already ruled that there was no dispute that the third-party vendor sent the faxes on behalf of the defendants, it found that the defendants constituted “senders” of the faxes under the TCPA and that the plaintiffs were entitled to statutory damages.
As we noted in September, the FCC’s position stands in marked contrast to its decision inIn re Joint Petition Filed by Dish Network, LLC, 28 F.C.C. Rcd. 6574 (2013) (“Dish Network”), where the FCC had limited direct liability to only “telemarketers” that “initiate” calls, and otherwise applied agency principles to determine whether “sellers” might be vicariously liable for calls made on their behalf. Both the City Select I and Sarris opinions accepted the FCC’s position that Dish Network does not apply to faxes.
The distinction between faxes and calls has no support in the language of the TCPA and remains difficult to justify as a policy matter. With courts adopting this approach, however, more defendants may end up facing claims related to faxes involving third-party vendors.