Antitrust Law Daily Wrap Up, PRIVACY—E.D. Mich.: Fact issues preclude summary judgment in dispute over fax advertisements by clothing business, (Jan 16, 2014)

By Linda O’Brien, J.D., LL.M.

The federal district court in Detroit refused to grant summary judgment to a certified public accounting firm on its claims against a clothing and tuxedo rental business for sending an unsolicited fax advertisement in violation of the Telephone Consumer Protection Act (TCPA) (Imhoff Investment, LLC v. SamMichaels, Inc., January 15, 2014, Battani, M.).

SamMichaels, Inc. hired fax broadcaster, Business to Business Solutions (B2B), to advertise and promote its clothing store and tuxedo rental business. The owner of SamMichaels worked with B2B to create a fax advertisement and provided the information about SamMichaels business and services. B2B created an advertisement for the business from the information provided and was paid to send out over 10,000 fax advertisement on SamMichael’s behalf. SamMichaels instructed B2B to send the ads to the zip codes and area code surrounding its business. Imhoff Investment, LLC, a certified public accounting firm, received one of the faxed advertisements and filed a class action suit against SamMichaels for an alleged violation of the TCPA. Subsequently, Imhoff Investment moved for summary judgment, treble damages, and prejudgment interest.

The TCPA prohibits the use of any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine. The statute also creates a private right of action where a person or entity may bring an action to recover actual monetary loss from such violation or $500 in damages for each violation, whichever is greater.

The court found that the term “sender” as defined by the Federal Communications Commission (FCC), included the person on whose behalf a fax broadcaster sends a fax. Under this definition, a formal relationship was not necessary to necessary to establish liability and a plaintiff could use ratification or apparent authority to establish vicarious liability under common law agency principles.

In this case, there were factual disputes whether B2B was an independent contractor or agent regarding the fax content and distribution, and whether SamMichaels authorized the faxed advertisements. Although it was undisputed that SamMichaels paid money to B2B, the issue of control over the content of the advertisement remained. SamMichaels presented evidence that it did not approve the faxed advertisement as it included marketing for B2B’s services and was not limited to the requested targeted zip codes and area code. Thus, the issue of agency could not be determined as a matter of law.

Additionally, Imhoff Investment failed to show as a matter of law that B2B successfully sent over 7,000 fax advertisements. The credibility of each of the parties’ experts and the weight of their opinions regarding the accuracy of B2B’s fax transmission logs was an issue appropriately addressed at trial. Imhoff Investment’s claim for treble damages was also denied. Knowing and willful violations of the TCPA are discretionary by the court. Since the facts of the case were disputed, an award of treble damages was premature. Finally, the granting of prejudgment interest was not warranted because the TCPA provision for statutory damages that exceed actual damages would adequately compensate Imhoff Investment for any injury if it were to prevail in the action.

The case is No. 10-10996.

Attorneys: Brian J. Wanca (Anderson & Wanca) for Imhoff Investment, LLC. Eric L. Samore (SmithAmundsen LLC) for SamMichaels, Inc.

Companies: Imhoff Investment, LLC; SamMichaels, Inc.

Cases: Privacy MichiganNews