TCPA Bars Junk Fax as Unsolicited Ad Even if It Offers Free Goods, Says 4th Circuit

The 4th U.S. Circuit Court of Appeals vacated a district court’s ruling dismissing a chiropractic office’s Telephone Consumer Protection Act complaint and remanded the case for further proceedings, in a Wednesday decision (docket 22-1279).

Carlton & Harris Chiropractic brought suit against PDR Network, a medical information company, after it received an unsolicited fax in 2013 offering a free ebook version of the Physicians’ Desk Reference, a compilation of medical prescribing information for certain prescription drugs. The district court dismissed its complaint, saying the plaintiff didn’t allege the junk fax, which tendered a product for free rather than for sale, was sufficiently commercial to bring it within the TCPA’s statutory prohibition against unsolicited ads.

“We disagree,” said the 4th Circuit. “At this early stage of the litigation, we conclude, the plaintiff has adequately alleged that the fax offer had the necessary commercial character” to make it an unsolicited ad under the TCPA, it said.

The “central issue” in the case is whether a fax that touts the quality of a good that’s offered for free, rather than at a price, can fall within the TCPA’s definition of an unsolicited ad, said the decision. The fax addressed to Carlton & Harris provided a link for the recipient to reserve a free ebook, plus a customer-service phone number and email address, it said. Below a photo of the ebook were bullet points calling attention to features that PDR thought would appeal to the recipient, it said.

After Carlton & Harris filed a putative class action against PDR in November 2015, “the result was years of extensive and complex proceedings through multiple courts,” said the 4th Circuit’s decision. Those proceedings focused mostly on administrative law questions about the FCC’s 2006 rule implementing the TCPA and treating faxes that promote goods or services even at no cost as prohibited unsolicited ads under the statute, it said. “For those who are interested, the details may be found in our two previous opinions in this case and the Supreme Court decision that issued between them” in June 2019, it said.

By the time the 4th Circuit issued its second opinion in 2020, “much of that brush had been cleared away,” said the decision. “Most important, there was no longer a question of Chevron deference,” it said. Because the 2006 FCC rule is interpretive and not legislative, Chevron deference was “inappropriate,” it said. Instead, whether PDR’s fax qualified as an unsolicited ad under the TCPA turned first on the statutory language itself, and then, if the statute was ambiguous, on whether the 2006 FCC rule “was sufficiently persuasive to merit so-called Skidmore deference,” it said. The 4th Circuit remanded to the district court “to consider that question in the first instance,” it said.

On remand, Carlton & Harris amended its complaint and PDR again moved to dismiss, said the decision. The district court granted the motion, saying PDR’s fax didn’t constitute an ad under the TCPA because it offered the ebook for free and not for sale, it said.

For the district court, “it was clear from the TCPA’s definition” of an unsolicited ad that a fax could qualify only if it had a commercial component or discernible commercial purpose, said the decision. The district court also concluded that PDR’s fax lacked the requisite commercial aspect because it promoted a product that wasn’t for sale, it said.

On appeal, PDR defends both steps in the district court’s reasoning, arguing a fax must be commercial to qualify as an ad under the TCPA and that Carlton & Harris didn’t allege “the requisite commercial character,” said the decision. Carlton & Harris disputes both portions of the court’s reasoning, contending a prohibited ad may be entirely non-commercial and it adequately alleged the fax it received was commercial in nature, it said.

The 4th Circuit does agree with the district court and PDR “in a critical respect,” said the decision. The TCPA’s general prohibition on unsolicited ads “is best read to cover only faxes of a commercial nature,” it said. “But we also agree with Carlton & Harris that the allegations in its amended complaint suffice to meet that standard at this early stage of the litigation,” it said. “We therefore vacate the district court’s order and remand for further proceedings.”