3rd Circuit Panel Upholds Dismissal of Pa. Junk Fax Lawsuit

The 3rd Circuit U.S. Court of Appeals upheld a lower court’s dismissal of a junk fax class-action lawsuit, seeking damages under the Telephone Consumer Protection Act. A concurring option examines the FCC's pretext language from 2003.

Millennium Health, which operates a lab that provides drug testing and medication monitoring services for healthcare professionals, sent the fax, a one-page flyer promoting a free educational seminar. A doctor in Center Valley, Pennsylvania, who uses the lab’s services and gave the lab a fax number, brought the suit.

“No reasonable recipient" would view the fax as an unsolicited advertisement, said a three-judge panel's opinion Thursday (docket 20-2265). “Here, under an objective standard, no reasonable recipient of Millennium Health’s unsolicited free-seminar fax could view it as promoting the purchase or sale of goods, services, or property,” said the decision, by Judges Cheryl Ann Krause and Julio Fuentes, with Judge Peter Phipps concurring.

“The fax itself makes no mention whatsoever of goods, services, or property,” the court said: “Instead, the fax mentions a seminar. Nowhere in the fax is a discussion of anything that can be bought or sold -- the fax speaks only about a free event. The fax does not contain testimonials, product images, or coupons -- things commonly associated with an advertisement. It does not provide any email, phone number, or direct internet link to purchase a Millennium Health product or service. The fax is purely educational -- it describes research about opioids, invites attendance at an academic event, and introduces the event speaker.”

The Phipps concurrence delves into whether the FCC’s pretext theory can be used to demonstrate that a fax is an unsolicited advertisement. Phipps notes the Supreme Court and the 3rd Circuit haven't provided guidance on that issue. “In 2003, as part of its final rule implementing the Do-Not-Call registry, the FCC first announced the principle that an otherwise licit unsolicited communication would violate the TCPA if it served as a pretext for a prohibited advertisement,” he said.

One problem with the FCC’s pretext theory "is that it is ambiguous," said Phipps. It may be construed as a rebuttable presumption or as a categorical rule.” In developing the pretext theory, “the FCC relied on its assessment of prevalent marketing practices to enlarge the statutory definition of ‘unsolicited advertisement,’” he said. “But even sound agency fact finding cannot justify a rule that contravenes statutory text,” he said.