Wednesday, February 15, 2017

Unwanted commercial faxes can violate the law

If you own a fax machine, you've received junk faxes. Did you know you can sue over unwanted junk faxes?

The case is Physicians Healthsource, Inc. v. Boehringer Pharmaceuticals, decided on February 3. The Junk Fax Protection Act of 2005 makes it illegal for anyone in the United States to send an unsolicited fax advertisement unless the fax has an opt-out notice. The penalty is $500 for each unwanted fax, with treble damages. In this class action, a pharmaceutical company sent out faxes for a female sexual enhancement drug that the FDA had not yet approved. The fax promoted a free "dinner meeting" and discussion about the product.

As it happened, since the FDA had not yet approved this drug, the pharmaceutical company was forbidden to promote it. The district court rejected the case because the fax was not "a pretext for pitching a ... product or service" and that "the hypothetical future economic benefit that the ... defendants might receive someday does not transform the fax into an advertisement." This is interesting reasoning. The company was forbidden to promote the product, since the FDA had not yet approved it, so the unwanted fax cannot economically benefit the company.

The Second Circuit is not buying it. The statute defines offending advertisements as those promoting "the commercial availability or quality of the firm's property, goods, or services." At this stage of the case (it was dismissed for failure to state a claim under Rule 12), "there is a plausible conclusion that the fax had the commercial purpose of promoting those products or services. Businesses are always eager to promote their wares and usually do not fund presentations for no business purpose. The defendant can rebut such an inference by showing that it did not or would not advertise its products or services at the seminar, but only after discovery." So long as the unsolicited fax has a commercial nexus to a firm's business, it will violate the statute unless the recipient can opt-out of its receipt. Judge Winter gives us an example of how the law works:

Two fanciful examples illustrate the distinction. If a complaint alleged that the Handy Widget Company funded a professorship at a local law school in the name of its deceased founder and faxed invitations on its letterhead to an inaugural lecture entitled “The Relevance of Greek Philosophers to Deconstructionism,” the complaint would not state a claim under the [Telephone Consumer Protection Act of 1991] because the Handy Widget Company is not in the business of philosophical musings. In contrast, if the Handy Widget Company faxed invitations to a free seminar on increasing widgets’ usefulness and productivity, a claim under the TCPA would be validly alleged. Of course, the Handy Widget Company could rebut at the summary judgment stage with evidence showing that it did not feature its products or services at the seminar.

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