A lawyer who faxed biweekly updates to more than 200 accountants containing “mundane advice” along with his specialties and contact information could be liable for millions of dollars in damages because the faxes were “unsolicited advertisements” that violated the federal Telephone Consumer Protection Act (TCPA). In this class action brought by recipients of the faxes, the district court ordered the lawyer to pay statutory damages of $500 for each of his 8,430 faxes, for a total of about $4.2 million. The 7th Circuit affirmed summary judgment against the lawyer, but remanded for reconsideration of how the statutory damages award should be allocated.
The defendant, an attorney, sent unsolicited faxes in the form of a newsletter, which consisted primarily of generic business advice. However, part of the transmissions contained the defendant’s name, business information, and logo, along with the fact that he was an attorney and his practice areas. The faxes were written and produced by a marketing firm and sent on the defendant’s behalf. The defendant did not review the faxes before they were sent to plaintiffs.
The TCPA prohibits the transmission of unsolicited fax advertisements. The Act contains a narrow exception for the sending of advertisements to those who have consented to receive them or to those individuals or entities with whom the sender has established business relations. However, even if a transmission is covered by this narrow exception, the fax must contain information about how to stop receiving the faxes.
Advertisements incidental to information
Here, the defendant’s faxes did not contain opt-out information and, thus, if they qualified as advertising, they violated the Act regardless of whether they satisfied the statutory exception. Therefore, the Court’s primary analysis centered on whether the defendant’s faxes were advertisements. The court below had deemed the transmissions advertisements and entered judgment against the defendant. An “unsolicited advertisement” is defined by the TCPA as material that promotes the commercial availability or quality of goods or services. While the lawyer’s faxes did not necessarily speak to the quality of the defendant’s legal practice, the Court considered it beyond dispute that they offered his availability, rendering the materials advertisements.
The defendant, however, argued that the majority of each transmission was composed of business advice, and that the faxes should therefore not be considered advertisements. Despite the defendant’s claim that the 25% of each fax that contained his name and contact information was “merely incidental” to the remaining 75% that offered business advice, the 7th Circuit affirmed the lower court’s ruling that the transmissions were advertisements as a matter of law. The panel reasoned that, if a retailer like Macy’s faxed potential customers the front page of The New York Times, but placed its advertisement on 25% of the document, the transmission would still qualify as an advertisement regardless of the content of the remaining portion of the document.
A regulatory reprieve?
Lastly, the Court rejected the defendant’s reliance upon regulations issued by the Federal Communications Commissioner (FCC), which has enforcement authority under the Act. The defendant claimed that the regulations provide that incidental advertisements are not barred by the Act. The Court, however, rejected that claim, noting that the FCC rules track the statutory language closely, and that the defendant failed to identify any particular regulation that exempted “incidental” advertisements. The Court further reviewed the regulation defining advertisement, concluded that the defendant’s faxes met that definition, and noted that the word “incidental” appears, not in that regulation, but in the explanation the agency gave when it adopted its rule. The Court considered this explanation to be akin to legislative history and noted that, while such history can help to illuminate ambiguous or confusing text, the statute and FCC regulation at issue are quite clear. Even if the FCC did intend to protect incidental communication, the Court maintained that the defendant’s advertisement was not merely included in an informational message that would have been sent anyway. Rather, the point of the transmission was to alert the recipients to the availability of defendant’s services. Therefore, the Court upheld the district court’s finding that the defendant’s faxes contained unsolicited advertisements and violated the law.