A federal court judge in Michigan ordered Lake City Industrial Products Inc. and its president to pay $5,254,500 for violating the Telephone Consumer Protection Act by sending more than 10,000 fax ads to potential customers.

Fax recipient American Copper & Brass Inc. brought the suit in 2009 and moved for summary judgment earlier this summer. Lake City objected, raising three defenses: first, that it lacked the requisite intent under the Act; second, that the plaintiff could not prove the actual number of fax recipients; and third, that a ruling for the plaintiff would cause it to file for bankruptcy.

U.S. District Court Judge Gordon J. Quist rejected each contention.

Jeffrey Meeder, Lake City’s president, conceded that he worked with Business to Business Solutions. Meeder responded to a B2B ad, completed a questionnaire used to design the Lake City fax advertisement, reviewed a draft and revised it, and ultimately approved the ad before sending it to the 10,000 targeted fax numbers. The defendants then tried to point the finger at B2B as the “sender” of the faxes.

But Judge Quist said that the TCPA is essentially a strict liability statute and the relevant Federal Communications Commission regulations define “sender” as “the person or entity on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement.” Lake City and Meeder clearly fell under this definition, the court said.

Even if the TCPA wasn’t a strict liability statute, “defendants would be vicariously liable for B2B’s broadcast fax,” he added.

The statute also does not require that a plaintiff establish the actual receipt of a faxed advertisement; instead, the court said, the “text merely requires that a defendant ‘send’ the fax and that the fax equipment be capable of transcribing text or images.” An expert report proffered by the defense identifying possible errors sending faxes between qualifying machines was therefore useless.

Judge Quist acknowledged that the issue of which devices fall within the scope of the TCPA “is a potentially complicated issue” because unsolicited faxes sent as email do not fall within the TCPA’s prohibitions. However, in the case at hand, the court said the evidence showed the devices used to send and receive the faxes were within the scope of the Act.

Finally, Lake City requested that the court consider the financial impact of the potential judgment against it, which it said would sound a “death knell” against the company. The relevance of the financial impact is one factor used by federal appellate courts, the judge wrote, but “for purposes of liability at the summary judgment stage, the court will not consider defendants’ ability to pay a judgment.”

Judge Quist then entered judgment against the defendants for $5,254,500.

To read the opinion in American Copper & Brass v. Lake City Industrial Products, click here.

Why it matters: Judge Quist’s decision accords with those of other courts that have considered whether the TCPA is a strict liability statute, but the decision is notable for the fact that a small Midwestern mom-andpop operation will likely go under due to junk faxes. Meeder, Lake City’s president, claimed that he asked B2B whether its practices were legal and when a representative from the company responded in the affirmative, he accepted the answer. As Judge Quist noted in his opinion, “it appears that Meeder and Lake City are bigger victims of fraud or negligence (for not consulting a lawyer) than any individual member of the class.”