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The Sixth Circuit Limits Third-Party Liability for Junk Faxes

Jun 28, 2018 | Topic: Class Actions

In Health One Med. Ctr., Eastpointe P.L.L.C. v. Mohawk, Inc., 889 F.3d 800 (6th Cir. 2018), the Sixth Circuit held drug manufacturers could not be held liable for sending junk faxes that they knew nothing about. 

A drug wholesaler sent junk faxes to various medical providers—including Bristol Myers and Pfizer—advertising its prices on various drugs.  The plaintiff, an alleged fax recipient, sued not only the drug wholesaler but also the manufacturers based on the theory that the manufacturers had “sent” the junk faxes because their drugs were mentioned on the faxes.

The question before the court was “whether—for purposes of the Telephone Consumer Protection Act, which makes it unlawful ‘to send . . . an unsolicited advertisement’ to a fax machine—the manufacturers of those drugs ‘sent’ those faxes even though they knew nothing about them.” 

The Sixth Circuit answered no.  The court observed that the term “send” is not defined in the TCPA, and therefore gave “send” its ordinary meaning—“to cause to be conveyed by an intermediary to a destination” or “to dispatch, as by a communication medium.”  The Sixth Circuit found Bristol and Pfizer did not “send” the faxes because they neither caused the subject faxes to be conveyed, nor dispatched them in any way.  Instead, only the drug wholesaler did those things.  The court therefore found that Bristol and Pfizer could not be held liable for the junk faxes. 

The Sixth Circuit also rejected the plaintiff’s argument that Bristol and Pfizer were each a “sender” under the FCC regulation—which defines “sender” for purposes of the TCPA 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”—simply because their drugs “advertised or promoted” in the faxes.   

“Here, the statutory text makes clear that, to send a junk fax in violation of 47 U.S.C. § 227(b)(1)(C), one must ‘use’ a fax machine or other device to convey or dispatch an unsolicited advertisement to another fax machine.  Those requirements—the use of a fax machine or other device, and the sender’s own responsibility for the conveyance or dispatch—are ones that the agency must enforce, not elide.”

The court further explained that when read in the context of the TCPA itself, the regulation does strip “send” out of “sender” such that liability could be imposed under the regulation on parties that did not “send” the fax at all.  Instead, the Sixth Circuit found the regulation purports to allocate liability in cases where the party that physically sends (i.e., dispatches) the fax and the party that causes it to be sent are not one and the same—for example, where a person or company hires a fax broadcaster.  

The Sixth Circuit also easily distinguished its previous decisions on sender liability for junk faxes—explaining that in both Siding & Insulation Co. v. Alco Vending, Inc., 822 F.3d 886 (6th Cir. 2016), and Imhoff Inv., LLC v. Alfoccino, Inc., 792 F.3d 627 (6th Cir. 2015), the defendant hired and used a fax broadcaster to send out the junk faxes.  The court concluded that “thus in neither case did we hold, or have occasion to hold, that an innocent party—like Bristol or Pfizer here—could by some legal alchemy be held liable for having ‘sent’ the faxes.”

While Health One involved faxes, it is nevertheless instructive for companies faced with TCPA litigation involving the actions of third parties as well as for companies structuring business arrangements with third parties.