Case of Note
Circuit Court Holds Fax Advertising free eBook to be "Commercial," Reverses Dismissal
The Fourth Circuit recently held that an unsolicited fax promoting a free eBook was "commercial" because the eBook contained information about products sold for profit. The Plaintiff, a chiropractic office, sued Defendant PDR Network under the TCPA for receipt of an unsolicited fax offering a free eBook with information about prescription drugs. The district court originally dismissed the complaint, holding that PlaintifAf had not alleged that the fax, which offered an eBook for free and not for sale, was sufficiently "commercial" to be an "unsolicited advertisement" prohibited by the TCPA. The Fourth Circuit disagreed, and reversed.
The Court undertook a review of the TCPA to determine the contours of what constitutes an "unsolicited advertisement." As defined by the statute, an "unsolicited advertisement" is "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." The central issue in this case, as the Court saw it, was whether the fax offering a free eBook with information about prescription drugs was a fax that "touted the 'quality' of a 'good.'"
Despite agreeing with Defendant and the district court that "unsolicited advertisements" only covered faxes of a "commercial nature," the Court held that the fax at issue in this case was indeed of a "commercial nature." As the Court saw it, Plaintiff's allegation that Defendant makes a commission off of the sale of the prescription drugs discussed in the eBook contributed to the "commercial nature" of the fax. Therefore, rather than a merely informational fax, the Court saw the fax as a "pitch" for the eBook. This therefore was not a situation, the Court held, where free products were offered "without hope of financial gain." Rather, there was a "commercial nexus" between the relevant fax and Defendant's business.
The Court therefore reversed the district court's dismissal of the case, but noted that the case was still "in its early stages" and that it was possible that discovery may reveal "no commission payments, nor anything else to support a finding that [Defendant's] free offer [was] commercial in nature."
Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, No. 22-1279, 2023 WL 5729236 (4th Cir. Sept. 6, 2023).
New Eleventh Circuit Standing Precedent Applies to FTSA Claims
The Eleventh Circuit recently affirmed that its reasoning in Drazen v. Pinto (discussed here) applies to claims brought under the Florida Telephone Solicitation Act ("FTSA"). Previous Eleventh Circuit precedent held that allegations of a single text message (or only a few text messages) was insufficient to confer Article III standing in federal court. Drazen overruled that precedent, holding that allegations of a single text message were sufficient when coupled with allegations of harms including "invasion of privacy" and "intrusion upon seclusion." Drazen involved alleged violations of the TCPA.
The Eleventh Circuit has now held that similar allegations, even if coupled with the alleged receipt of only a singular text message, are sufficient to confer standing upon plaintiffs alleging violations of the FTSA as well. The Court held that the Florida Legislature, like Congress did with the TCPA, "used its lawmaking powers to recognize a lower quantum of injury necessary to bring a claim under the FTSA." Therefore, allegations of receipt of just a single text message in violation of the FTSA are now sufficient to confer Article III standing upon plaintiffs in federal courts in the Eleventh Circuit."
Muccio v. Glob. Motivation, Inc., No. 23-10081, 2023 WL 5499968 (11th Cir. Aug. 25, 2023).
Fax Inviting Medical Professional to Join Network Found to Violate TCPA
On August 9th, the Seventh Circuit Court of Appeals reversed the dismissal of a TCPA suit triggered by a doctor's receipt of multiple faxes inviting him to join the Defendant-company's provider network, based on language in an Agreement attached to the faxes.
Defendant FSSolutions provides health monitoring and screening services through a network of medical providers who serve as independent contractors. Defendant faxed Plaintiff, Dr. Thalman, an Illinois-based chiropractor and medical examiner, asking him to join its network of medical providers. The fax included a cover letter which stated that the invitation was "not a solicitation," and instead that Defendant sought to utilize Plaintiff's services. The fax also included a Provider Agreement for Plaintiff to sign, which included proposed pricing for medical services for Defendant's clients. One month later, Defendant sent a second fax to Plaintiff asking him to confirm that he received the agreement. Following the receipt of these faxes, Plaintiff filed a class action lawsuit in the Southern District of Illinois, claiming that both faxes, which were allegedly part of a "mass broadcasting" to many Illinois medical providers, violated the TCPA because they constituted "unsolicited advertisements."
The district court granted Defendant's motion to dismiss the complaint, finding that the TCPA extends to unsolicited faxes that promote the sale of a sender's goods, services, or property, only if those products are available for purchase immediately. The district court held that a fax that contained an offer to purchase medical services from Plaintiff and to hire him as a contractor did not constitute such a solicitation.
On appeal, the Seventh Circuit agreed with the lower court that, to qualify as an "unsolicited advertisement," a fax "must directly or indirectly encourage recipients to buy goods, services, or property." However, the Circuit Court found that because Defendant's faxes promoted the company's network of preferred medical providers, and because that network would bring Plaintiff new business in exchange for a portion of the underlying client fees, the fax was an "unsolicited advertisement" prohibited by the TCPA.
The Court clarified that a fax is an unsolicited advertisement only if it promotes the sale, and not simply the purchase of goods, services or property. But, in some "narrow situations," a fax "offering to buy products or to do business with the recipient may also amount to an offer to sell services" to the recipient, such as those that declare services in a "promotional" way.
The Court found a portion of the faxes from Defendant in particular qualified them as promotional: the offer contained in the attached Provider Agreement that "if [Plaintiff] matched the company's suggested pricing, then [Defendant] would route new clients to him and invoice those clients directly for his services." But, Plaintiff could not bill clients directly or disclose his fees. A reasonable inference from these terms was that Plaintiff would gain new streams of revenue from new clients in exchange for paying Defendant a cut. Such an offer contained in the advertisement constituted an "unsolicited advertisement."
The Court was not convinced by Defendant's statement in the fax that it was not solicitation, as the TCPA "directs [the Court] to consider the portions of the faxes that indirectly encouraged Plaintiff to buy Defendant's services in exchange for economic value." In doing so, the Court reversed the district court's dismissal and remanded the case, but warned "opportunistic" plaintiffs' attorneys not to "overread" the holding.
Smith v. First Hosp. Labs., Inc., 2023 U.S. App. LEXIS 20712 (7th Cir. Aug 9, 2023).
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