Northern District of Illinois Holds That Opt-Out Notices Are Not Required On Solicited Faxes In The Seventh Circuit

Following the D.C. Circuit’s decision in Bais Yaakov of Spring Valley v. FCC, 852 F.3d 1078 (D.C. Cir. Mar. 31, 2017), we explained on this blog and elsewhere that the issue of whether a fax advertisement is solicited or not would come back into play in many cases and make it much harder for the plaintiffs’ bar to certify a class of recipients. And that is precisely what occurred in a recent decision from the Northern District of Illinois in Alpha Tech Pet, Inc. v. LaGasse, LLC, No. 16-cv-513 (N.D. Ill. Nov. 3, 2017): the court granted defendants’ motion to deny class certification. In the process, the court also slammed the door on several arguments proffered by plaintiffs’ counsel in an effort to evade the impact of Bais Yaakov.

In Alpha Tech, plaintiffs Alpha Tech Pet, Inc. and Craftwood II, Inc. (“plaintiffs”) alleged that they received eight unsolicited fax advertisements in violation of the TCPA from defendants LaGasse, LLC, Essendant Management Services, LLC, Essendant Company and United Stationers, Inc. (collectively, “defendants”). Id. at p. 1. Plaintiffs sought to certify classes of all persons and entities that received fax transmissions from defendants between May 1, 2011 and May 1, 2015. Id.

Following the close of discovery on August 23, 2017, defendants filed a motion to deny class certification. Id. at pp. 1-2. Defendants argued that plaintiffs could not meet Rule 23’s predominance and superiority requirements in light of the individualized consent issues created by the Bais Yaakov decision. Id. at p. 2. (Defendants also filed a motion for judgment on the pleadings on portions of plaintiffs’ individual claims, which the court denied. Id.)

On November 3rd, the court granted defendants’ motion to deny class certification and held that the Bais Yaakov decision was binding precedent. Id. at p. 3. The court determined that Bais Yaakov’s conclusion that solicited faxes do not require opt-out notices created individualized consent issues sufficient to destroy the class certification claims, and rejected all of the arguments plaintiffs raised in an attempt to evade the impact of the Bais Yaakov decision. See id. at pp. 5-18.

Plaintiffs asserted three arguments to support their position that Bais Yaakov is not governing law in the Seventh Circuit. Id. at pp. 5-9. First, plaintiffs argued that Bais Yaakov is only binding precedent in the D.C. Circuit. Id. at p. 5. The court disagreed and noted that in Bais Yaakov, “the Judicial Panel on Multidistrict Litigation (‘JPML’) consolidated several petitions for review originally filed in multiple courts of appeals seeking to set aside the FCC’s Solicited Fax Rule,” and that once the JPML assigned petitions challenging the Solicited Fax Rule to the D.C. Circuit, “that court became the sole forum for addressing … the validity of the FCC’s rule.” Id. (quoting Sandusky Wellness Ctr., LLC v. ASD Specialty Healthcare, Inc., 863 F.3d 460, 464-67 (6th Cir. 2017)). Thus, the D.C. Circuit’s decision to strike down the Solicited Fax Rule “became binding outside the [D.C. Circuit].” Id. (quoting Sandusky, 863 F.3d at 467).

Second, the plaintiffs argued that Bais Yaakov did not strike down the FCC’s Solicited Fax Rule and instead was a more limited holding. Id. at pp. 6-7. The court held that “[t]he D.C. Circuit was clear and unequivocal: the ‘Solicited Fax Rule is unlawful to the extent that it requires opt-out notices on solicited faxes.’” Id. at p. 6 (quoting Bais Yaakov, 852 F.3d at 1083). The court also agreed with the defendants that the FCC’s lack of action on remand was unremarkable given that the Supreme Court is considering a petition for certiorari. Id. at p. 7.

Third, citing the Seventh Circuit’s decision in Ira Holtzman v. Turza, plaintiffs argued that the TCPA itself extends the opt-out notice requirement to solicited faxes, regardless of the FCC’s Solicited Fax Rule and the Bais Yaakov decision. Id. (citing Ira Holtzman v. Turza, 728 F.3d 682, 683 (7th Cir. 2013)). The court discarded this argument and concluded that “this broad reading of Turza is not the law,” but rather based on dicta, for several reasons. Id. (quoting Brodsky v. Humana Dental Insurance Co., No. 10-cv-3233, 2017 WL 3704824, at *8 (N.D. Ill. Aug. 28, 2017)). The court noted that:

  • “It is true that Turza cites the TCPA, rather than the Solicited Fax Rule, in support of the proposition that opt-out notices are required on solicited faxes,” but “[t]he absence of a specific cite to the Solicited Fax Rule itself cannot be read out of context.” Id. (quoting Brodsky, 2017 WL 3704824, at *8).
  • “The portions of the TCPA cited at this point in Turza never mention solicited messages at all; instead, they refer to the FCC’s ability to promulgate additional rules regarding opt-out notices (such as the Solicited Fax Rule).” Id. (quoting Brodsky, 2017 WL 3704824, at *8).
  • Turza did not even involve solicited faxes; ‘[t]he only question on the merits in Turza was whether’ unsolicited faxes contained ads.” Id. at p. 8 (quoting Brodsky, 2017 WL 3704824, at *8 and citing Turza, 728 F.3d at 685).
  • Plaintiffs’ interpretation of Turza (that Turza stands for the proposition that the TCPA requires opt-out notices on solicited faxes) is contrary to the plain language of the statute and the guidance from the FCC regarding the Solicited Fax Rule, which “implicitly presume[d] that the opt out notice requirement [was] imposed on solicited faxes solely by virtue of the Solicited Fax Rule—not the TCPA itself.” Id. (quoting Brodsky, 2017 WL 3704824, at *8).

Furthermore, the court asserted that it “respectfully disagree[d]” with other decisions from the Northern District of Illinois that have cited Turza to reach a different conclusion on this issue. Id. at pp. 8-9 (citing Orrington v. Scion Dental, Inc., No. 17-cv-884, 2017 WL 2880900, at *2 (N.D. Ill. July 6, 2017); Physicians Healthsource, Inc. v. Allscripts Health Sols., Inc., No. 12-cv-3233, 2017 WL 2406143, at *24 (N.D. Ill. June 2, 2017)). “Thus, [i]n the Seventh Circuit, as in the rest of the country, the TCPA itself does not require that opt-out notices be included on solicited faxes – notwithstanding a missing citation in Turza.” Id. at p. 8 (quoting Brodsky, 2017 WL 3704824, at *8).

Based on its findings with regard to the applicability of Bais Yaakov, the court determined that individualized issues of consent precluded certification under Rule 23(b)(3) on predominance and superiority grounds. Id. at pp. 9-18. Specifically, based on the evidence proffered by the defendants, the court concluded that it would be required to determine whether each individual class member “solicited” or “consented” to receive faxes to assess whether that putative member had a TCPA claim. Id. at p. 9.

Justin O. Kay

About the Author: Justin O. Kay

Justin Kay advises and defends business clients regarding their interactions and communications with consumers. He appears regularly on behalf of clients before federal and state courts, federal agencies and independent self-regulatory bodies, such as the National Advertising Division of the Better Business Bureau. Justin’s practice focuses on defending clients in the growing number of complex class actions arising under federal and state consumer protection and privacy laws such as the federal Telephone Consumer Protection Act, the Illinois Biometric Information Privacy Act and the California Consumer Privacy Act. He is a deputy leader of the litigation practice group.

Matthew M. Morrissey

About the Author: Matthew M. Morrissey

Matthew Morrissey focuses his practice on high-stakes litigation. He frequently defends clients facing class actions arising under federal and state consumer protection and privacy laws. Matt also represents clients in complex commercial disputes, securities litigation and other financial services matters pending in courts across the country. Matt develops business-focused resolution strategies for clients in all phases of the litigation process. He has achieved significant victories in contentious disputes at both the trial court level and on appeal. He has also obtained highly favorable results in private arbitration and mediation proceedings.

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