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Sandusky Wellness Center, LLC v. ASD Specialty Healthcare, Inc.

United States Court of Appeals, Sixth Circuit

July 11, 2017

Sandusky Wellness Center, LLC, an Ohio limited liability company, individually and as the representative of a class of similarly situated persons, Plaintiff-Appellant,
v.
ASD Specialty Healthcare, Inc., d/b/a Besse Medical AmerisourceBergen Specialty Group, Inc.; John Does 1-10, Defendants-Appellees.

          Argued: February 2, 2017

         Appeal from the United States District Court for the Northern District of Ohio at Toledo. No. 3:13-cv-02085-Jack Zouhary, District Judge.

         ARGUED:

          Glenn L. Hara, ANDERSON WANCA, Rolling Meadows, Illinois, for Appellant.

          Martin W. Jaszczuk, JASZCZUK P.C., Chicago, Illinois, for Appellees.

         ON BRIEF:

          Glenn L. Hara, ANDERSON WANCA, Rolling Meadows, Illinois, Matthew E. Stubbs, MONTGOMERY RENNIE & JONSON, Cincinnati, Ohio, for Appellant.

          Martin W. Jaszczuk, W. Scott Hastings, Keith L. Gibson, LOCKE LORD LLP, Chicago, Illinois, Jennifer J. Dawson, MARSHALL & MELHORN, LLC, Toledo, Ohio, for Appellees.

          Before: SUHRHEINRICH, SUTTON, and McKEAGUE, Circuit Judges.

          OPINION

          McKEAGUE, Circuit Judge.

         In 2010, Defendant ASD Specialty Healthcare, d/b/a/ Besse Medical AmerisourceBergen Specialty Group ("Besse"), a pharmaceutical distributor, sent a one-page fax advertising the drug Prolia to 53, 502 physicians. Only 40, 343, or 75%, of these faxes were successfully transmitted. Plaintiff Sandusky Wellness Center, a chiropractic clinic that employed one of these physicians, claims to have received this so-called "junk fax, " and- three years later-filed a lawsuit against Besse for the annoyance. Sandusky alleged that Besse violated the Telephone Consumer Protection Act, 47 U.S.C. § 227, by sending an unsolicited fax advertisement lacking a proper opt-out notice, and it sought to certify a putative class of all 40, 343 Prolia fax recipients. The district court denied Sandusky's motion for class certification, and because that decision was not an abuse of discretion, we affirm.

         I

         We first provide a brief overview of the Telephone Consumer Protection Act before turning to the facts of this case.

         A

         In 1991, Congress passed the Telephone Consumer Protection Act (TCPA), see Pub. L. No. 102-243, 105 Stat. 2394, which was later amended by the Junk Fax Prevention Act of 2005, see Pub. L. No. 109-21, 119 Stat. 359 (codified at 47 U.S.C. § 227). These legislative efforts were geared towards curbing the inundation of "junk faxes" that businesses were receiving. H.R. Rep. 102-317 at 10 (1991). These faxes were seen as problematic because they forced unwitting recipients to bear the costs of the paper and ink and also monopolized the fax line, preventing businesses from receiving legitimate messages. Id.

         In response, the TCPA generally banned the sending of any "unsolicited advertisement" via fax. 47 U.S.C. §227(b)(1)(C) (emphasis added). A fax is "unsolicited" if it is sent to persons who have not given their "prior express invitation or permission" to receive it. Id. § 227(a)(5).

         The statute carves out a narrow exception to this general ban by permitting the sending of unsolicited faxes if a sender can show three things: (1) the sender and recipient have "an established business relationship"; (2) the recipient voluntarily made his fax number available either to the sender directly or via "a directory, advertisement, or site on the Internet"; and (3) the fax contained an opt-out notice meeting detailed statutory requirements. Id. § 227(b)(1)(C)(i)-(iii). The upshot of this exception is that if an unsolicited fax does not contain a properly worded opt-out notice, the sender will be liable under the statute, regardless of whether the other two criteria are met.

         Congress also authorized the Federal Communications Commission (FCC) to "prescribe regulations to implement the requirements of [the TCPA]." Id. § 227(b)(2). In 2006, the FCC promulgated a rule requiring opt-out notices on solicited faxes, i.e., those faxes sent to recipients who had given their "prior express invitation or permission" to receive it. See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991; Junk Fax Prevention Act of 2005, 71 Fed. Reg. 25, 967, 25, 971-72 (May 3, 2006) (now codified at 47 C.F.R. § 64.1200(a)(4)(iv)) (the "Solicited Fax Rule"). After the passage of the Solicited Fax Rule, both unsolicited and solicited faxes were required to include opt-out notices that, among other things, were "clear and conspicuous, " informed recipients that a sender was required to comply with an opt-out request "within the shortest reasonable time, " and included a telephone number recipients could call to exercise their opt-out rights. See 47 U.S.C. § 227(b)(2)(D)(i)-(vi).

         To ensure fax senders complied with the TCPA, Congress provided for a private right of action that allowed individuals and entities to sue for injunctive and monetary relief based on any violation "of [the statute] or the regulations prescribed [there]under." Id. § 227(b)(3).

         Specifically, fax senders faced a $500 fine for each fax sent that violated the TCPA or any FCC rule-a fine that could be increased to $1, 500 per fax for willful violations. Id.

         The import of the TCPA's damage scheme combined with the FCC's Solicited Fax Rule meant vast exposure to liability for businesses that used fax machines to advertise. For example, even individuals who agreed to receive faxes could nevertheless turn around and sue senders for $500 per fax if, ...


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