A central issue in many Telephone Consumer Protection Act ("TCPA") cases is whether the communication that the plaintiff challenges amounts to an "unsolicited advertisement" or whether it is merely an informational communication that is not prohibited by the statute. The answer to that question can be the difference between a complete defense and potentially huge liability, given that the statute provides for $500 in statutory damages ($1,500 in the case of willful violations).
According to the Sixth Circuit Court of Appeals, a company sending a fax that includes product information may not violate the TCPA if the fax is not commercial in nature. See Sandusky Wellness Center, LLC v. Medco Health Solutions, Inc., No. 14-4201, 2015 WL 3485900 (6th Cir. Jun. 3, 2015). The TCPA generally prohibits "unsolicited advertisements" sent via fax.Sandusky turned on the court's determination of what constitutes an "advertisement."
In Sandusky, defendant pharmacy benefits manager Medco Health Solutions ("Medco") sent two unsolicited faxes to plaintiff chiropractor Sandusky Wellness Center ("Sandusky"). One fax included a portion of Medco's formulary (a list of drugs covered by health plans associated with Medco) and suggested that Sandusky practitioners prescribe covered drugs, as the health plans of many Sandusky patients likely adopted the formulary. In doing so, the fax said, Sandusky would lower medication costs for Sandusky patients. The second fax stated that one respiratory drug was preferred over another and again suggested that prescribing the preferred drug would save patients money.
Sandusky sued in the Northern District of Ohio on behalf of itself and a proposed class, claiming the faxes were unsolicited advertisements that violated the TCPA. The District Court granted Medco's motion for summary judgment, finding that the faxes were informational, not promotional, and therefore were not advertisements. Sandusky appealed this decision.
The Sixth Circuit focused on the TCPA's definition of an "advertisement," which is "any material advertising the commercial availability or quality of any property, goods, or services." TCPA § 227(a)(5). The court found that a TCPA advertisement "unambiguously contains commercial components" and that "the sender must have profit as an aim." Sandusky, 2015 WL 3485900 at *3.
The court concluded that the evidence failed to establish that Medco's faxes were sent with profit in mind. Medco did not offer the drugs or its services for sale but merely "listed the drugs in a purely informational … sense." Id. at *4. The court rejected Sandusky's argument that the faxes were advertisements because Medco could, as the court put it, benefit from the faxes "several locks down the stream of commerce." Id. at *6. In other words, the court found, to be an advertisement, a "fax itself must at least be an indirect commercial solicitation, or pretext for a commercial solicitation. If it's not, it's not an ad." Id.
The Sixth Circuit's decision provides some comfort to companies that utilize faxes to provide information about products and services by making it clear that certain faxes are not per se advertisements under the TCPA. However, the decision highlights that some courts will rigorously analyze faxes to determine whether they are "informational" messages or "advertisements."
Therefore, companies should be mindful of the purpose of communications with consumers. Are they disseminated with the intention of making a profit? Or are they purely for information? Or somewhere in between? Of course, their determinations may be subject to second guessing by the plaintiffs' bar and by the courts. Companies that use faxes as a means to communicate with the public would be well advised to review Sandusky and analyze the nature of any faxed communications.