New Jersey Federal Court Rejects FCC’s Dish Network Ruling in Blast Fax Case, Relies on FCC’s Letter Brief in Sarris

As we previously reported, on July 17, 2014, the FCC filed a letter brief in Palm Beach Golf Center-Boca, Inc. v. Sarris, No. 13-14013 (11th Cir.) (“Sarris”), in which it took the position that entities can be held directly liable under the TCPA whenever their products or services are advertised in an unsolicited fax—even if they did not actually send the fax, and even if they did not know the fax was going to be sent. The FCC’s letter brief stood in marked contrast to its decision last year in In re Joint Petition Filed by Dish Network, LLC, 28 F.C.C. Rcd. 6574 (2013) (“Dish Network”), where the FCC had limited direct liability to only “telemarketers” that “initiate” calls, and otherwise applied agency principles to determine whether “sellers” might be vicariously liable for calls made on their behalf. As readers may recall, the FCC’s letter brief does not articulate a policy reason why a “seller” in the voice call context should receive more protection than an entity whose goods and services are promoted through a fax advertisement. But whatever the merits of the letter brief, it has yet to be cited by the Eleventh Circuit (which has heard argument but not yet issued an opinion) or, at least for the past few months, any other court.

That is, until now. On September 24, 2014, the District of New Jersey denied the defendants’ motion for summary judgment in a blast fax class action, relying principally on the FCC’s analysis in its letter brief to conclude that the defendants could be directly liable under the TCPA for fax advertisements that they did not send. See City Select Auto Sales, Inc. v. David Randall Associates, Inc., No. 11-2658 JBS, 2014 WL 4755487 (D.N.J. Sept. 24, 2014) (“City Select”).

In City Select, the defendants—a commercial roofing company and its owner—had contracted with a third-party marketing firm to conduct a blast fax campaign advertising the company’s roof repair services. Id. at *1. The resulting fax advertisements were sent to more than 29,000 fax numbers. Id. at *2. The plaintiff alleged to have received two such faxes without providing its “prior express invitation or permission,” and it asserted a violation of 47 U.S.C. Section 227(b)(1)(C), among other claims. Id. at *1. The plaintiff successfully moved to certify a class of all persons who received the fax advertisements in question. Id. at *3.

The defendants moved for summary judgment, arguing, inter alia, that because they had not actually sent the faxes, they could not be held liable under the TCPA. Id. at *3. Indeed, it was beyond dispute that the third-party marketing company—not defendants—had physically transmitted the fax advertisements. The parties vigorously disputed the import of the FCC’s Dish Network ruling under these circumstances, particularly the FCC’s statement that “a seller cannot be held directly liable for a TCPA violation unless the seller itself perform[ed] the acts[.]” Id. at *3 (quotations and citations omitted). For its part, the plaintiff contended that the FCC’s regulatory definition of “sender” (47 C.F.R. § 64.1200(f)(10)) controlled the analysis, and that it broadly encompassed any entity on whose behalf a fax advertisement is sent and/or any entity whose goods or services are advertised or promoted in a fax advertisement. Id. at *4.

In denying the defendants’ motion for summary judgment, the court first acknowledged that numerous cases have extended the FCC’s Dish Network ruling to the blast fax context. Id. at *7 (noting that “the majority of courts [have] expressly imputed the FCC’s [Dish Network] interpretation into courts’ interpretations of the TCPA’s junk-fax provisions”) (emphasis in original, citations omitted). Nevertheless, the court fully adopted the analysis in the FCC’s recent letter brief and concluded that Dish Network applied only to “the telemarketing provisions of the TCPA.” Id. at *6 (emphasis in original, citations omitted). In doing so, the court relied primarily on the FCC’s statement in its letter brief that Dish Network “had no occasion to opine on direct or vicarious liability” in the context of fax advertisements. Id. at *7. The court concluded: “Consequently, even if [Dish Network] could have been construed to preclude any assertion of direct liability under the TCPA for the acts of a third-party, as argued by Defendants …, the FCC’s subsequent [letter brief] unambiguously rejects such interpretation, and the Court need not apply the FCC’s [Dish Network] ruling in this instance.” Id. at *7.

City Select is the first court decision thus far to flatly reject Dish Network in favor of the FCC’s letter brief. While it is too early to predict whether City Select will ultimately become an outlier case, or whether it serves as a prelude to the Eleventh Circuit’s forthcoming opinion in Sarris, one thing is clear: the FCC’s attempt to distinguish faxes and calls finds no support in the TCPA’s language or legislative history and remains difficult to reconcile with Dish Network or justify as a matter of policy. At this juncture, all eyes will be on the Eleventh Circuit to see how the Sarris opinion shapes the landscape of direct and vicarious liability in the blast fax context.