Antitrust Law Daily Wrap Up, PRIVACY—D.D.C.: Claim that fax transmission was “unsolicited advertisement” under TCPA proceeds, (May 12, 2015)

By Michael Menzhuber, J.D., LL.M.

A claim that a directory publisher’s unsolicited facsimile, sent to a non-profit organization, violated the Telephone Consumer Protection Act (TCPA) survived a motion to dismiss. The publisher’s contentions that the fax was not an “unsolicited advertisement” and that the fax fell within the “established business relationship” safe harbor were rejected by the federal district court in Washington, D.C. (Drug Reform Coordination Network, Inc. v. Grey House Publishing, Inc., May 11, 2015, Mehta, A.).

Drug Reform Coordination Network, Inc. (DCRN), a non-profit newsletter publisher, received an unsolicited fax from Grey House Publishing, Inc., a New York-based directory publisher, which offered a free listing in a media contact directory published by Grey House. A notice was included at the bottom of the fax which provided information on opting-out of future faxes.

A week after transmitting the fax, Grey House sent a multi-page e-mail to DCRN, advertising its media directory. After receiving two more e-mail advertisements from Grey House about the directory, DCRN filed a complaint that the fax was an “unsolicited advertisement” in violation of the TCPA.

Unsolicited Advertisement. Grey House argued that the fax was not an “unsolicited advertisement” because there were no statements included in the content of the fax that promoted the media directory. Grey further argued that the sole and express purpose in sending the fax was to request updated information from DCRN, who was an existing listee in the media directory.

The court noted that the Federal Communications Commission (FCC) regulations, which implement the TCPA, provide that a fax that promotes a free good or service might be an “unsolicited advertisement.” The court further noted that communications are unlawful if they serve as a “pretext to advertise commercial products and services” and are “part of an overall marketing campaign.”

The court determined that DCRN sufficiently alleged that the fax was an “unsolicited advertisement” because it was a “pretext to advertise commercial products and services” and was “part of an overall marketing campaign” to sell Grey House’s media directory. According to the court, the fax, standing alone, did not promote the sale of the media directory. However, it found that the timing of the solicitation e-mails gave rise to the plausible inference of DCRN’s allegation that it was Grey House’s business practice to market its media directories by transmitting a fax advertisement and, then, follow up with e-mail advertisements.

Established business relationship. Grey House argued that the fax fell within the “established business relationship” exception, which is a statutory safe harbor to the general prohibition on “unsolicited advertisement”, because DCRN was, and had been, listed in the media directory for several years. The court noted, however, that merely demonstrating an “established business relationship” was insufficient to come within the safe harbor and that, to qualify, certain strict notice requirements had to be met.

The court found that Grey House did not qualify for the “established business relationship” safe harbor because the fax sent to DCRN did not include all of the statutorily mandated disclosures. Specifically, the court found that the fax did not include the required language that Grey House must honor an opt-out within 30 days and that the failure to do so would be unlawful. Consequently, the court determined that, even if Grey House could establish an “established business relationship” with DCRN, its non-compliance with the strict notice requirements disqualified it from the safe harbor.

The case is No. 1:14-cv-00701 (APM)

Attorneys: Peter Ashley Bennett (Bennett & Bennett) for Drug Reform Coordination Network, Inc. William Michael Jacobs (Law Office of W. Michael Jacobs) for Grey House Publishing, Inc.

Companies: Drug Reform Coordination Network, Inc.; Grey House Publishing, Inc.

Cases: Privacy StateUnfairTradePractices DistrictofColumbiaNews