Too Soon to Dismiss TCPA Action, Court Decides

TCPA Connect

A Connecticut judge denied a motion to dismiss a putative TCPA class action, ruling that whether the faxes at issue were unsolicited remains in dispute.

According to the complaint, A.V.M. Enterprises sent five allegedly unsolicited advertisements by facsimile to Gorss Motels over an 11-month period. The faxes described “the commercial availability or quality of the Defendants’ products, goods and services,” Gorss alleged.

Not only did the faxes lack a required opt-out notice, but A.V.M.—which sent similar faxes to “at least” 40 other recipients within the TCPA’s four-year statute of limitations period—did not obtain the express invitation or permission of any of the recipients, nor did it have an established business relationship as defined by the statute and its regulations, Gorss said.

The defendant moved to dismiss the suit. The faxes were sent to the recipients in the context of their established business relationship with Wyndham Worldwide, not as unsolicited advertisements, A.V.M. argued. In addition, the TCPA requires an opt-out notice only for unsolicited faxes, and the faxes at issue were not unsolicited, the defendant said, adding that the plaintiff lacked standing because the alleged technical violation of the opt-out requirement did not amount to an injury in fact under Spokeo, Inc. v. Robins.

U.S. District Court Judge Victor A. Bolden declined to put an end to the suit, however, deciding that it was too soon to make a ruling on whether the faxes were unsolicited.

The Federal Communications Commission (FCC) has defined an “existing business relationship” as “a prior or existing relationship formed by a voluntary two-way communication between a person or entity and a business or residential subscriber with or without an exchange of consideration, on the basis of an inquiry, application, purchase or transaction by the business or residential subscriber regarding products or services offered by such person or entity, which relationship has not been previously terminated by either party.”

A.V.M. took the position that the plaintiff gave its fax number to Wyndham as part of a franchise agreement. The faxes themselves made plain that they came from (or were sent in concert with) Wyndham, the defendant argued, and in the context of Gorss’s relationship as a Wyndham entity. The plaintiff failed to allege that it did not give consent to Wyndham, the defendant pointed out.

But the court was not persuaded.

“The issue of whether the faxes were solicited, including whether there was an ‘established business relationship’ between [the parties], is better determined at a later stage of this case,” the court said. “For now, it is sufficient that A.V.M. is provided ‘fair notice of what the … claim is and the grounds upon which it rests[.]’ While A.V.M. wishes for Gorss Motels to plead more, A.V.M. cannot argue that it does not understand this lawsuit. The Complaint therefore alleges sufficient facts to give A.V.M. ‘fair notice’ of Gorss Motels’s claims.”

As for the opt-out notice, Judge Bolden declined to find that the U.S. Court of Appeals for the D.C. Circuit’s opinion in Bais Yaakov of Spring Valley v. FCC applied. In that case, the federal appellate panel rendered invalid the FCC’s requirement that even solicited faxes need an opt-out notice.

“Here, unlike the recipients in Bais, the plaintiffs have not ‘admitted that they had expressly given permission’ to A.V.M. to send faxes to them,” the court wrote. “In any event, regardless of the applicability of the 2006 Solicited Fax Rule, the underlying issues are factual and better addressed at a later stage of the case.”

The court did find the plaintiff had standing to sue, however. Relying on the Second Circuit’s interpretation of Spokeo in Strubel v. Comenity Bank, the court noted that the mere allegation of a statutory right can in some circumstances provide a concrete injury to establish standing.

“Thus, ‘where Congress confers a procedural right in order to protect a concrete interest, a violation of the procedure may demonstrate a sufficient ‘risk of real harm’ to the underlying interest to establish concrete injury without ‘need [to] allege any additional harm beyond the one Congress has identified,’” the court said.

“Here, Gorss Motels alleges that the five unsolicited advertisements that A.V.M. allegedly sent without opt-out notices harmed them by wasting their ink, paper, and time,” Judge Bolden wrote. “These alleged harms are precisely the harms that the Junk Fax Prevention Act aims to address.”

To read the order in Gorss Motels, Inc. v. A.V.M. Enterprises, Inc., click here.

Why it matters: This decision illustrates the difficulty of having a TCPA action dismissed at the pleading stage, even if the defense has evidence of potential consent or an established business relationship. Here, the court concluded that too many factual disputes remained to grant the defendant’s motion to dismiss, saying, “Whether the faxes were solicited and whether the faxes contained a proper opt-out notice is a factual dispute that may be addressed at the summary judgment stage.” And the court’s finding that Gorss Motels had made “sufficiently concrete and particularized claims to support standing” shows that courts are disinclined to accept a Spokeo argument in a TCPA case.



pursuant to New York DR 2-101(f)

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