Antitrust Law Daily Wrap Up, PRIVACY—W.D. Mich.: Fact issues preclude summary judgment in medical practice’s TCPA claim against orthopedic products maker, (Jan 13, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in Grand Rapids, Michigan has denied cross-motions for summary judgment on a medical practice group’s Telephone Consumer Protection Act (TCPA) claim against an orthopedic products manufacturer for sending faxes promoting seminars on orthopedic products. However, the faxes were found to be “unsolicited” as a matter of law (Physicians Healthsource, Inc. v. Stryker Sales Corporation, January 12, 2015, Jonker, R.).

Stryker Corporation and subsidiary Howmedica Osteonics Corp. design, manufacture, and sell orthopedic products used in joint replacement. The companies conducted primary care physician (PCP) seminars relating to the field in which they operate and promoted the seminars by fax, focusing on the recipient’s medical specialty or geographic location. In October 2009, Dr. Jose Martinez, a physician with Physician’s Healthsource, Inc. (PHI), received a faxed invitation to attend an upcoming seminar. In 2012, PHI filed a class action complaint against Stryker and Howmedica, alleging that the companies’ practice violated the TCPA. The parties filed cross motions for summary judgment.

The TCPA provides that the term “unsolicited advertisement” means any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without prior express consent. The defendants argued that the faxes did not promote the commercial availability or quality of Stryker products or mention any specific product. The Stryker logo that appeared on the fax merely served to identify the sender of the fax as required by the TCPA. PHI contended that the faxes did promote the commercial availability of goods and services by inviting individuals to a free seminar, along with a free dinner, and contained a picture of one of Stryker’s products. The text on the fax, “advancements in orthopedics,” related to specific Stryker products.

In determining whether the fax itself was an advertisement within the meaning of the TCPA, the court found that neither party was entitled to summary judgment on the issue. Drawing all inferences in favor of the plaintiff, a reasonable fact finder could conclude that the fax in part promotes the quality and availability of Stryker products. On the other hand, a reasonable finder of fact, drawing all inferences in favor of the defendant, could conclude that no particular Stryker product was featured in the fax and the fax was simply promoting an opportunity for continuing medical education.

The fax itself, along with the seminar promoted in the fax, could be considered in determining whether the fax constituted an advertisement, according to the court. The text of the TCPA did not limit the evidence a court could consider in deciding whether a particular fax amounts to an advertisement. In the absence of statutory restriction, the rules of evidence applied and the actual content of the seminar could logically shed light on whether the fax was providing educational opportunities or advertising the availability or quality of particular products.

The fact that the defendants were for profit entities and the seminars were free was insufficient for purposes of deciding a motion for summary judgment. The issue of whether the seminar was principally educational or promotional in nature could not be decided as a matter of law. Thus, the plaintiff’s motion for summary judgment was denied.

However, the court found that the fax was “unsolicited” as a matter of law. An “unsolicited advertisement” sent by fax violates the TCPA unless the sender can establish: (1) the sender has a business relationship with the recipient; (2) the sender obtained the recipient’s fax number either through a voluntary communication or public source; and (3) the fax has an opt-out notice. In this case, the fax did not include any opt-out language and was not sent by “express invitation or permission” of the plaintiff. Therefore, the plaintiff’s motion for summary judgment was granted on this issue.

The case is No. 1:12-cv-00729.

Attorneys: David Max Oppenheim (Anderson & Wanca) for Physicians Healthsource, Inc. Anthony J. Anscombe (Sedgwick LLP) for Stryker Sales Corp., Stryker Biotech LLC, and Stryker Corp. David S. Almeida (Sheppard Mullin Richter & Hampton LLP) for Howmedica Osteonics Corp.

Companies: Physicians Healthsource, Inc.; Stryker Sales Corp.; Stryker Biotech LLC; Stryker Corp.; Howmedica Osteonics Corp.

Cases: Privacy MichiganNews