The Telephone Consumer Protection Act (TCPA) prohibits
"unsolicited advertisements" sent to fax machines.
47 U.S.C. § 227(b)(1)(C). But when is a fax considered
an "advertisement" for purposes of the TCPA?
Several district courts have attempted to answer this question, and
we finally have some appellate court guidance. On June 3,
2015 the Sixth Circuit in Sandusky v. Medco, No.
3:14-cv-00583, found that unsolicited faxes that "lacked the
necessary commercial aspects of ads," were not
"advertisements" for purposes of the TCPA, and thus not
actionable under the Act. In light of this decision,
companies that send out unsolicited faxes can do so without fear of
violating the TCPA so long as their faxes are only informational
and not perceived as promotional or marketing ploys to profit
from.
In Sandusky, Medco sent two faxes to a chiropractor
(Sandusky), listing lower-priced prescription medications available
in the health plans of Sandusky's patients. As a pharmacy
benefit manager, Medco services (including keeping and updating a
list of medicines, known as the "formulary") plan
sponsors that enable the plans to offer more informed and less
expensive prescription drug benefits to their members. Medco
also sends the formulary to healthcare providers that prescribe
medications to its clients' members, allowing the providers to
know which medications are covered by their patients'
healthcare plans. After Medco sent two formularies in June
and September 2010, Sandusky sued (individually and on behalf of a
proposed class) Medco claiming each fax was an "unsolicited
advertisement" prohibited by the TCPA.
The district court granted summary judgment to Medco, and against
the court's warning, Sandusky appealed. The Sixth Circuit
examined the TCPA's definition of "advertisement",
refining it to mean "any material that promotes the sale
(typically to the public) of any property, goods, or services
available to be bought or sold so some entity can
profit." The court reasoned that because an
advertisement must promote something to the public for sale, an ad
(under the TCPA) is fundamentally commercial and seeks a
profit. The court found that Medco's faxes contained
"only information—parts of the formulary—and do
not seek to promote products or services to make a
profit." Thus, the court held that Medco's faxes, as
a matter of law, were not "advertisements," did not
violate the TCPA, and affirmed summary judgment for Medco.
Sandusky argued that the Act's definition should be
interpreted more broadly; that the court should follow the Seventh
Circuit on the issue; and that all publicity is apparently
financially good publicity. However, the court found all
three of these arguments unpersuasive. Sandusky's proposed
definition of "advertisement" was "any that
'makes known' the quality or availability of a good or
service", which the court said was too broad and would include
non-commercial messages. Next, the court differentiated this
case from the Seventh Circuit, because in that case, the fax sent
was for promotional and marketing reasons. The faxes
solicited business from the public, whereas Medco's faxes did
not seek a profit nor did they seek any actual, potential or future
commercial transaction. Lastly, the court held that Sandusky
could not rely on potential or future benefits to Medco's
business from the two faxes to show that they were somehow
commercial in nature.
The Sandusky decision provides helpful guidance on a
thorny issue, and certainly narrowed the scope of what it means to
be an "advertisement" for purposes of the TCPA.
Stay tuned for further appellate decisions on this issue.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
