Antitrust Law Daily Wrap Up, PRIVACY—11th Cir.: Dental practice could take fall for marketer’s unauthorized fax, (Oct 31, 2014)

By Greg Hammond, J.D.

A dental practice could be directly liable under the Telephone Consumer Protection Act (TCPA) for an unsolicited facsimile sent on behalf of the practice by a third party, the U.S. Court of Appeals in Atlanta has declared. The lower court’s order, awarding summary judgment to the dental practice, was therefore reversed and remanded (Palm Beach Golf Center-Boca, Inc. v. John G. Sarris, D.D.S., P.A., October 30, 2014, Eaton, R.).

Background. Dr. John G. Sarris owns the dental practice John G. Sarris, D.D.S., P.A., and hired a marketing manager to market his business. The marketing manager was later solicited by Business to Business Solutions (B2B), which provides mass fax advertisement services. After receiving $420.00 from Sarris, B2B sent out 7,085 successful fax transmissions of an advertisement promoting Sarris’ dental practice. Plaintiff Palm Beach Golf Center-Boca, Inc. received one such facsimile in December 2005.

Palm Beach Golf subsequently filed suit, alleging violations of the TCPA. However, the district court granted Sarris summary judgment, finding that: (1) Palm Beach Golf lacked Article III standing; (2) Palm Beach golf could only prevail under the TCPA on a theory of vicarious liability, pursuant to the FCC declaratory ruling in In re DISH Network, LLC, 28 FCC Rcd. 6574 (2012); and (3) none of the three theories of vicarious liability—actual approval, apparent approval, and ratification—were supported by facts on the record.

Article III standing. As a threshold matter, the court first determined whether Palm Beach Golf had Article III standing. It agreed with the golf club that the specific injury targeted by the TCPA is the sending of the fax and resulting occupation of the recipient’s telephone line and fax machine and not that the fax was actually printed or read. Specifically, the court determined that Palm Beach Golf had two bases for Article III standing, sufficient to satisfy the injury requirement: (1) the company suffered a concrete and personalized injury in the form of the deprivation of the use of its fax machine for the period of time required for the electronic transmission of the data, and (2) the company had standing because the TCPA functions as a congressionally created "bounty," permitting private individuals to sue based on a statutory violation.

Direct liability. Next, the appellate court determined that the district court’s construction of the DISH Network decision—that a person who did not physically transmit a fax, but rather directed a third party to do so, could be held liable under the TCPA only vicariously under federal common law principals—was error. Instead, the appellate court held that "a person whose services are advertised in an unsolicited fax transmission, and on whose behalf the fax is transmitted, may be held liable directly under the TCPA’s ban on the sending of junk faxes."

Specifically, the court noted that the FCC submitted a letter, observing that the DISH Network ruling applied only to telemarketing phone calls, not fax advertisements. Additionally, the TCPA states that it is unlawful to "use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement." According to a 1995 FCC issued memorandum Opinion and Order, the FCC clarified that "the entity or entities on whose behalf facsimiles are transmitted are ultimately liable for compliance with the rule banning unsolicited facsimile advertisements, and that fax broadcasters are not liable for compliance with this rule." Consequently, the court determined that there was sufficient evidence for a jury to find that an unsolicited fax was sent on behalf of Sarris’ practice to Palm Beach Golf, in violation of the TCPA. The court therefore reversed and remanded the lower court’s grant of summary judgment.

The case number is 13-14013.

Attorneys: Attorneys: Phillip Andrew Bock (Bock & Hatch, LLC) for Palm Beach Golf Center-Boca, Inc. Kevin David Franz (Lane Reese Summers Ennis & Perdomo, PA) for John G. Sarris, DDS, PA.

Companies: Palm Beach Golf Center-Boca, Inc.

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