Antitrust Law Daily Wrap Up, ADVERTISING—7th Cir.: Unsolicited faxes found to be advertisements despite newsletter format, (Aug 28, 2013)

By Edward L. Puzzo, J.D.

Faxes in newsletter format sent by an attorney to certified public accountant (CPA) firms were unsolicited advertisements under the Telephone Consumer Protection Act, according to the U.S. Court of Appeals in Chicago (Ira Holtzman, C.P.A., & Associates, Ltd v. Turza, August 26, 2013, Easterbrook, F.).

A series of faxes containing business advice were sent under attorney Gregory Turza's name to various CPAs, including plaintiff Ira Holtzman. The content had been provided for Turza by a marketing firm as promotional material. Subsequently, Turza was sued by Holtzman and others in a class action, brought under §227 of the Telephone Consumer Protection Act of 1991, which prohibits unsolicited fax advertisements. The lower court entered summary judgment against Turza. He was ordered to pay $4,215,000— $500 in statutory damages for each of over 8,000 faxes and other damages. The district court’s decision on the merits was affirmed, but the remedial order was vacated. On remand, the lower court would reconsider the distribution of the funds.

Since no information was provided on the faxes to allow the recipient to opt-out of receiving future faxes, it was immaterial under the Act which recipients may have consented to the receipt of the faxes or may have had an established business relationship with Turza. The only question on the merits, the appellate court stated, was whether the faxes contained "unsolicited advertisements", defined in the act as material advertising the commercial availability of a good or service transmitted to a person without that person's prior invitation or permission.

Advertising incidental? The court discussed the FCC's explanation of the term "incidental" when it adopted regulations under §227(b)(2) of the Telephone Consumer Protection Act. At that time, the FCC stated that an incidental advertisement contained in a newsletter did not convert the entire communication into an advertisement. However, merely using a newsletter format to advertise a service will not protect a sender from liability for delivery of an unsolicited advertisement under the statute.

Here, the faxes, in a newsletter format, devoted about 75% of their content to mundane business advice (e.g. tips for a mobile office), and 25% to Turza's name, contact information and legal specialties. Despite the newsletter format, the court stated, the faxes here were not remotely like a trade association's newsletter to its members or a law firm's newsletter alerting clients to legal developments. The mention of Turza's services was not incidental to a message that would have been sent anyway; promotion or marketing was the reason the faxes were being transmitted. It was noted that the company that actually provided the fax content for Turza called the faxes a promotional device and that Turza's attorney in oral argument had referred to the faxes as marketing. Therefore, the court ruled, the faxes were unsolicited advertisements as a matter of law.

The case is Civil Action Nos. 11-3188 and 11-3746.

Attorneys: Phillip A. Bock (Bock & Hatch) for Ira Holtzman CPA & Associates, Ltd.. Steven D. Pearson (Meckler Bulger Tilson Marick & Pearson LLP) for Gregory P. Turza

Companies: Ira Holtzman CPA & Associates, Ltd.

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