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Faxes from an attorney that were styled as newsletters but also alerted recipients to the availability of his services constituted unsolicited advertisements under the Telephone Consumer Protection Act, the U.S. Court of Appeals for the Seventh Circuit affirmed Aug. 26 (Ira Holtzman, C.P.A. & Assocs. Ltd. v. Turza, 7th Cir., No. 11-3188, 8/26/13).
According to the court, an attorney sent “Daily Plan-It” faxes containing business advice to more than 200 certified public accountants on more than one occasion. The plaintiff CPA filed suit, alleging that the faxes did not tell the recipients how to opt out of receiving future faxes in violation of the TCPA, 47 U.S.C. § 227.
In October 2009, the U.S. District Court for the Northern District of Illinois certified a class of fax recipients (8 PVLR 1538, 10/26/09). In August 2010, the court held that the faxes were unsolicited advertisements that violated the TCPA (9 PVLR 1222, 8/23/10). In August 2011, the court awarded some $4.2 million in damages on summary judgment (10 PVLR 1307, 9/12/11).
The Seventh Circuit concluded that the lower court had properly certified a class of the fax recipients, but it vacated a remedial order, finding that the lower court's declaration that any residue from the judgment would be turned over to a charity was premature.
The TCPA, at 47 U.S.C. § 227(a)(5), defines an “unsolicited advertisement” 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.”
Approximately 75 percent of the content of each fax at issue is devoted to “mundane advice,” while the remainder of each fax provides the attorney's name, address, and other business information, the Seventh Circuit said. It rejected the attorney's argument that the 25 percent portion of each fax is “merely incidental.”
“That 75% of the page is not an ad does not detract from the fact that the fax contains an advertisement,” the court said.
It rejected the attorney's reliance on a statement by the Federal Communications Commission that “[a]n incidental advertisement contained in such a newsletter does not convert the entire communication into an advertisement.” In the same Federal Register passage, the FCC said that the use of a newsletter format does not necessarily protect the sender under the TCPA.
The court held that the faxes are advertisements, noting that “promotion or marketing was the reason these faxes were transmitted.”
The district court did not err in concluding that questions of fact or law that are common to the class predominate over any individual issues pursuant to Federal Rule of Civil Procedure 23(b)(3), the Seventh Circuit also held.
The loss of time spent when one of the unsolicited faxes was received was the same for all recipients, even when the recipient did not print out the fax, the court said. A fax log clearly establishes which fax transmissions were received, the court added, concluding that there is no material dispute that requires a trial.
But the appeals court vacated the lower court's remedial order and remanded the case. It was premature for the lower court to direct any remainder of the $4.2 million to be turned over to a certain charity, especially without soliciting argument from the parties and without discussing the differences between actions creating common funds and actions stemming from individual injuries, such as the one at hand, the Seventh Circuit said.
“Only if [the attorney] pays more than enough to satisfy all claims by class members will it be necessary to decide whether the residue goes back to him or is put to some other use,” the court said.
Phillip A. Bock, of Bock & Hatch, in Chicago, and Brian J. Wanca, of Anderson & Wanca, in Rolling Meadows, Ill., represented the named plaintiff. Steven D. Pearson, of Meckler Bulger Tilson Marick & Pearson LLP, in Chicago, represented the defendant.
Full text of the court's opinion is available at http://www.bloomberglaw.com/public/document/IRA_HOLTZMAN_CPA__ASSOCIATES_LIMITED_individually_and_as_represen.
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