Antitrust Law Daily Wrap Up, PRIVACY—E.D. Mich.: Damages awarded under TCPA for tax service’s fax ads, (Nov 11, 2013)

By Tobias J. Gillett, J.D., LL.M.

The federal district court in Detroit has granted summary judgment to a catering company on its claims that a tax service and its principal violated the Telephone Consumer Protection Act (TCPA) by hiring a facsimile advertising company to send thousands of facsimile advertisements (Jackson Five Star Catering, Inc. v. Beason, November 8, 2013, Cook, A.). The court, however, refused to award treble damages.

In January 2005, John R. Beason, sole owner of Tax Connection Worldwide LLC, hired a facsimile advertising company to transmit an advertisement to 5,000 fax numbers. One of the recipients, Jackson Five Star Catering, Inc., filed suit against Beason and Tax Connection, alleging that the faxes violated the TCPA. The court determined that 3,267 faxes were successfully sent to 3,159 numbers, but seven recipients declined to participate in the litigation, leaving a total of 3,260 faxes at issue. Both parties moved for summary judgment.

Defendants’ motion for summary judgment. The court declined to grant summary judgment to the defendants on Beason’s personal liability for the TCPA violations. The court explained that “many courts have held that corporate actors can be individually liable for violating the TCPA where they had direct, personal participation in or personally authorized the conduct found to have violated the statute.” Here, Beason was the only person with authority to issue the check for the company that was used to pay for the advertisements, and the check was drawn on his account and signed by him. Therefore, he was personally liable for violating the TCPA.

The court also declined to grant summary judgment to the defendants on their argument that the TCPA only permitted a plaintiff to file a federal claim under the TCPA “if otherwise permitted by the laws or rules of court of a state,” and Michigan’s version of the TCPA did not permit a plaintiff to bring a claim without first notifying the fax sender in writing that he or she does not consent to receiving faxes. The court observed that the Michigan law did not mention the TCPA or attempt to preclude a TCPA action in any way. It also found that “the federal and state statutes stand as separate avenues of recovery.” Moreover, the Second Circuit had recently held, based on the Supreme Court’s decision in Mims v. Arrow Financial Servs., LLC, 132 S. Ct. 740 (2012), that “federal district courts are permitted to hear TCPA claims regardless of state law or court rules” (Givovanello v. ALM Media, LLC, 726 F.3d 106 (2d Cir. 2013).

Plaintiff’s motion for summary judgment. The court granted summary judgment to Jackson on its TCPA claim. The fact that Tax Connection did not transmit the advertisement itself, but rather had the fax advertising company transmit the advertisement on its behalf, did not shield it from liability. The TCPA did not “require a particular mental state on the part of the sender,” and the FCC regulations defined a “sender” as “the person or entity on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement.” Moreover, the TCPA did not require Jackson to establish that the advertisements were actually received because courts had “consistently determined that a fax advertisement only needs to be sent, not received, to be actionable under the TCPA.” Finally, the court found that the plaintiffs’ failure to establish that anyone at Tax Connection had authorized the fax advertising company to send faxes to recipients who had not given permission did not create a question of material fact.

Treble damages. The court declined to grant treble damages to Jackson pursuant to the TCPA’s provision permitting such damages in the event of knowing or willful violations. Here, the fax advertising company had sought out the defendants and offered to conduct a fax advertising campaign on their behalf, despite the TCPA’s prohibition on that conduct. The advertising company had recently been involved in dozens of cases in which it had illegally broadcast faxes for clients it solicited. Under those circumstances, the court found an award of treble damages was “not appropriate.”

The case is No. 10-10010.

Attorneys: Brian J. Wanca (Anderson & Wanca) for Jackson’s Five Star Catering, Inc. Peter D. Bosch (Strain, Murphy &Venereal, P.C.) for John R. Beason and Tax Connection Worldwide, LLC.

Companies: Jackson Five Star Catering, Inc.; Tax Connection Worldwide LLC

Cases: Privacy MichiganNews