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Don't Send That Fax!

In many offices, fax machines now seem like ancient relics, but fax machines still generate significant litigation because of a federal statute called the Telephone Consumer Protection Act (“TCPA”) that, among other things, prohibits specified “junk faxes.”

McGrath North won one of the earliest published decisions by a United States Court of Appeals involving an alleged “junk fax” case brought under the TCPA, and although litigation involving the TCPA has taken many twists since then, a recent decision by a United States Court of Appeals highlights the types of problems that defendants currently face in cases brought under the TCPA. In that recent case, a dentist hired a marketing manager who was given “free rein” to market the dental practice. Two years later, the marketing manager was approached by a company that offered to send out mass fax advertisements. That company eventually sent out over 7,000 fax advertisements relating to the dental practice, and an alleged class action lawsuit was filed against the dentist’s office asserting claims under the TCPA and state law.

The Court of Appeals held that the named plaintiff had standing to assert claims under the TCPA even though the plaintiff did not have any evidence that it had printed or seen the fax. The Court concluded that it was sufficient that there was evidence indicating that there had been a successful fax transmission. The Court based its conclusion, among other things, on the fact that Congress intended for the TCPA to be a “bounty” statute providing a successful plaintiff with $500 in statutory damages for each unlawful fax received and authorizing, under certain circumstances, treble damages for intentional violations.

Those facts regarding the “bounty” damages potentially available under the statute explain why plaintiffs try to bring TCPA cases as class actions. At $500 per fax, the approximately 7,000 faxes sent in that case created a potential exposure of approximately $3.5 million, even ignoring any additional potential liability.

The Court further held that the dental practice potentially could be liable even though it did not physically transmit the faxes. Relying on an FCC Memorandum Opinion And Order, the Court concluded that the “entity or entities on whose behalf facsimiles are transmitted are ultimately liable for compliance with the rule banning unsolicited fax advertisements,” and  fax broadcasters are not liable for compliance with the TCPA. As the Court summarized the rule, “the TCPA provided for direct liability for an entity on whose behalf goods or services were promoted by unsolicited fax advertisement.”

The Court concluded that a jury should decide factual disputes regarding whether the faxes in question were sent on behalf of the dental practice.

That recent ruling demonstrates two important points:

  1. Any business considering a marketing campaign that could involve faxes should consult a lawyer to see if the faxes might create potential liability under the TCPA; and
  2. Any business hiring a company to conduct a marketing campaign should consult a lawyer to make sure that, to the maximum extent feasible, the business will be protected from liability if the marketing campaign violates the TCPA or other laws.