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TCPA Class Action Update: Commercial Purpose? Not Enough.

All too often, plaintiffs alleging TCPA violations premised on faxes take the position that although a fax is not an advertisement on its face, it clears the advertisement hurdle because of an underlying profit motive. That’s a no-go, confirmed the Third Circuit. Mauthe v. Optum Inc., No. 18-2894, 2019 U.S. App. LEXIS 15742 (3d Cir. May 28, 2019).

The plaintiff in Optum filed a class action after receiving a fax asking for practice-related information. Optum, 2019 U.S. App. LEXIS 15742 at *3-*4. The fax noted the data would be used by health care organizations for a number of reasons, and the court pointed out the following: “Defendants market, sell, and license the database typically to health care, insurance and pharmaceutical companies, who use it to update their provider directors, identify potential providers to fill gaps in their network of providers, and validate information when processing insurance claims.” Optum, 2019 U.S. App. LEXIS 15742 at *2.

Noting that “a TCPA violation is not necessarily limited to a situation in which a fax is sent to potential direct purchasers of the sender’s product or services,” the Third Circuit provided critical and defendant-friendly guidance. Optum, 2019 U.S. App. LEXIS 15742 at *4. The plaintiff took the position that defendants violated the TCPA because of a “profit motive in sending him the fax.” Id. at *6. The Third Circuit disposed of the theory with the following language:

[T]he TCPA only prohibits unsolicited advertisements, not any and all faxes even if sent for a commercial purpose. It seems beyond doubt that a fax does not become an advertisement merely because the sender intended it to enhance the quality of its products or services and thus its profits.

Id. (emphasis in original). Building on the above, the Third Circuit set out a three-prong test, emphasizing the requisite nexus:

We are satisfied that to establish third-party based liability under the TCPA a plaintiff must show that the fax: (1) sought to promote or enhance the quality or quantity of a product or services being sold commercially; (2) was reasonably calculated to increase the profits of the sender; and (3) directly or indirectly encouraged the recipient to influence the purchasing decisions of a third party.

. . .

It is not enough that the sender sent a fax with a profit motive – in order to show that the sender is trying to make a sale, there must be a nexus between the fax and the purchasing decisions of an ultimate purchaser whether the recipient of the fax or a third party.

Id. at *7.

Turning to the facts of the case, the Third Circuit concluded that the plaintiff’s theory did not survive the standard. “[T]he faxes did not attempt to influence the purchasing decisions of any potential buyer, whether a recipient of a fax or a third party.” Id. at *10. Nor did the fax “encourage [Plaintiff] to influence the purchasing decisions or those of a third party.” Id. The Third Circuit closed with a resounding message: “We will not distort the meaning of ‘advertisement’ to accommodate [Plaintiff’s] case.” Id. at *11.

 

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Author

Esteban Morales

Associate

Esteban Morales is a Mintz litigator who handles class action defense and financial services litigation for companies of all sizes. He defends clients targeted in class action suits, and the results include dismissals at the pleading stage. Esteban practices in Mintz's Sports Law Practice.