District Court Weighs in On TCPA Fax Liability Standards in the Eighth Circuit

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The Eastern District of Missouri recently granted a plaintiff’s motion for summary judgment against three defendants in a TCPA fax case.  Levine Hat Co. v. Innate Intelligence, LLC, No. 16-cv-01132, 2021 WL 1889869 (E.D. Mo. May 11, 2021).  The court’s opinion discusses two areas of law with limited Eighth Circuit authority and illustrates the uncertainty regarding how district courts in the jurisdiction may rule on these issues in the future.  Id. at *3-5.  Specifically, the opinion discusses the analysis a court may apply to determine if a fax is an “unsolicited advertisement.”  Id. at *3-4.  The opinion also enumerates the factors a court may consider when assessing whether a “fax broadcaster” demonstrates a sufficiently “high degree of involvement” in the transmission of a fax to render it liable for the transmission.  Id. at *3-5.

In Levine, the undisputed facts developed in discovery established that defendant Innate Intelligence, LLC (d/b/a Innate Wellness Centers), through “facsimile broadcaster defendant” ProFax, Inc., “sent plaintiff a fax advertising ‘a FREE Lunch ‘n Learn on Stress Management for your employees.’”  Id. at *1.  Plaintiff alleged that Innate contracted with ProFax to send “tens of thousands of unsolicited fax advertisements to persons with whom Innate had no preexisting relationship” and claimed that the faxes violated 47 U.S.C. § 227(b)(1)(C).  Id.  Plaintiff filed a motion for summary judgment.  Id. at *2.  ProFax opposed plaintiff’s motion and filed a cross-motion for summary judgment.  Id.  The other two defendants did not respond to plaintiff’s motion for summary judgment.  Id. at *1.

ProFax did not contest that it was the “broadcaster” of the subject faxes.  Id. at *2.  Instead, it argued that the faxes were not “advertisements” and disputed plaintiff’s claim that it had a “high degree of involvement in the unlawful activity.”  Id.

First, ProFax argued that the faxes at issue “lacked the commercial element necessary to render it an advertisement.”  Id. at *3.  The court initially observed that to be liable under the TCPA, “a fax broadcaster must have sent an ‘unsolicited advertisement,’” which the statute defines as “‘any 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.’”  Id. (quoting 47 U.S.C. § 227(a)(5)).  Next, the court noted that Eighth Circuit case law “does not provide much guidance” regarding what types of faxes qualify as “unsolicited advertisements.”  Id.  Consequently, the court adopted the Sixth Circuit’s holding in Sandusky, which concluded that ‘“to be an ad, the fax must promote goods or services to be bought or sold, and it should have profit as an aim.”’  Id. (quoting Sandusky Wellness Ctr., LLC v. Medco Health Solutions, Inc., 788 F.3d 218, 221-22 (6th Cir. 2015)).

Importantly, the Levine court appears to have overlooked (and appears not to have been apprised of) persuasive case law from other Missouri district courts (including a case affirmed by the Eighth Circuit) applying the term “unsolicited advertisement” in a more focused and limited manner.  See, e.g., Ameriguard, Inc. v. University of Kansas Medical Center Research Institute, Inc., No. 06-0369-CV-W-ODS, 2006 WL 1766812, at *1 (W.D. Mo. June 23, 2006), aff’d, 222 F. App’x 530 (8th Cir. 2007) (dismissing TCPA claim and holding that faxes were not “unsolicited advertisements” because they “announc[ed] the existence of a clinical drug trial” as well as “[d]efendant’s need for individuals willing to serve as test subjects” but did not “announce that [d]efendant [was] providing or otherwise [had] available goods, services, or property.”).

The court held that the faxes at issue were “commercial in nature” based upon the court’s reading of the statute and the Sandusky holding.  Id. at *4 (citing Sandusky, 788 F.3d at 221-22).  In reaching this conclusion, the court applied an unduly expansive definition of an advertisement and found that even though the faxes did not specifically mention goods or services, the faxes nevertheless were advertisements because they were “commercial in nature” and “clearly promote[d] the services provided by [Innate].”  Id.  Specifically, the court reasoned that the “fax[es] offer[ed] a free lunch seminar but [] also [made it] clear that [they were] sent by a ‘group of wellness consultants and clinicians dedicated to improving the health of a business one employee at a time.’”  Id.  The court further observed that the faxes stated that the “‘wellness consultants and clinicians’ have ‘offices around the country,’ and they ‘offer the highest quality, proactive wellness education and care on the planet, both on-site and in our offices.’”  Id.  The court held that this language “notwithstanding the ‘free lunch’ aspect of the fax[es] – suffices to render the fax[es] advertisement[s]” because the faxes “clearly promote[d] the services provided by [Innate].”  Id.

Second, ProFax argued that it did not have the “high degree of involvement” necessary for a fax broadcaster to violate the TCPA.  Id. at *4.  Initially, the court observed that a “facsimile broadcaster such as ProFax” is liable under the TCPA only “‘if it demonstrates a high degree of involvement in, or actual notice of, the unlawful activity and fails to take steps to prevent such facsimile transmissions.’”  Id. (quoting 47 C.F.R. § 64.12(a)(4)(v)).  However, the court stated that it was not able to find any applicable Eighth Circuit law regarding “what constitutes a high degree of involvement on the part of a fax broadcaster.”  Id.  Consequently, the court relied on case law from the Northern District of Illinois holding that a fax broadcaster “‘demonstrates a high degree of involvement in the transmission of a fax’” when it:

  1. supplies the fax numbers used to transmit the advertisement or a source of fax numbers;
  2. makes representations about the legality of faxing to those numbers;
  3. advises a client about how to comply with the fax advertising rules; or
  4. reviews, assesses, or determines the content of a fax message.

Id. at *4-5 (quoting Paldo Sign & Display Co. v. Unified Mktg., LLC, 13-cv-1896, 2017 WL 951313, at *7 (N.D. Ill. Mar. 10, 2017)).

The court rejected ProFax’s defense and held that it engaged in a “high degree of involvement” as a matter of law because ProFax:  1) “provided not just the opt-out provision’s details, but also provided the entire opt-out mechanism for the subject faxes”; and 2) “managed the list of opt-outs for Innate, including maintaining a website and phone number to receive opt-out requests and assign[ed] a unique PIN to identify those that had submitted opt-out requests.”  Id. at *5.

The Levine decision provides insight into the uncertainty of how a court in the Eighth Circuit may address these two TCPA fax liability issues.  Companies with potential TCPA exposure in the Eighth Circuit should assess whether a court could deem their fax transmissions to be “unsolicited advertisements” under the standards outlined in Levine.  Moreover, companies should review whether they have the “high degree of involvement” necessary to be held liable under the TCPA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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