Tcl - Regulating Faxing Activity Under State and Federal Law - December 2005 - the Civil Litigator
| Jurisdiction | United States,Federal,Colorado |
| Citation | Vol. 34 No. 12 Pg. 63 |
| Pages | 63 |
| Publication year | 2005 |
2005, December, Pg. 63. TCL - Regulating Faxing Activity Under State and Federal Law - December 2005 - The Civil Litigator
December 2005
Vol. 34, No. 12 [Page 63]
The Civil Litigator
Regulating Faxing Activity Under State and Federal Law
The Civil Litigator column addresses issues of importance and interest to litigators and trial lawyers practicing in Colorado courts. The Civil Litigator is published six times a year.
Column Editors:
Don Kelso, Denver, of Holme Roberts & Owen LLP - (303) 861-7000, kelsod@hro.com; Eric Bentley, Colorado Springs, of Holme Roberts & Owen LLP - (719) 381-8400, bentlee@hro.com
About The Author:
This month's article was written by Brandee L. Caswell, Denver,
The recent proliferation of "junk fax" claims in state and federal courts has prompted many practitioners to examine this unfamiliar area of law, only to find it is largely unsettled. This article provides an overview of federal and Colorado laws restricting unsolicited fax advertisements, as well as defenses being litigated across the country.
Junk fax litigation has increased dramatically in recent years. By some estimates, thousands of cases are currently pending in Colorado's state and federal courts.1 Junk fax litigation is being driven primarily by for-profit entities that acquire claims, based on the receipt of unsolicited fax advertisements, from businesses and individuals on an assignment basis.
This article provides an overview of the ban on unsolicited fax advertising contained in the Telephone Consumer Protection Act of 1991 ("TCPA"),2 the regulations implementing the TCPA, and related Colorado law. It also discusses statutes of limitations and junk fax claims and defenses being litigated in Colorado and across the country.
Junk Fax Advertising
The term "junk faxes" refers to print advertisements sent by facsimile ("fax"), such as flyers advertising cruise specials or low mortgage rates. Fax advertising can be annoying to recipients because it may set off a home fax machine at night or, while receiving a fax advertisement, older machines may be unavailable for their owners' use. Fax advertising also can shift costs to recipients by using their fax paper, ink, and machines to print the advertisements.
Congress passed the TCPA in response to consumer complaints about intrusive telemarketing activities, including junk faxes. The TCPA bans unsolicited residential telephone and fax solicitations.3 Although it was enacted almost fifteen years ago, the TCPA's substantive and procedural contours are just now being vigorously challenged in and defined by the courts. Consequently, this area of law is evolving at a rapid pace. Additionally, Congress amended the TCPA's junk fax provisions for the first time in 2005.4
Many states are enacting similar laws or modifying existing consumer protection laws to mirror the TCPA. Colorado is among them. The Colorado legislature first addressed fax advertising in 1997 and went on to expand prohibitions of junk faxes in 2004. The Colorado legislature enacted additional provisions in 2005.5
The Telephone Consumer Protection Act
Congress enacted the TCPA to protect the privacy interests of residential telephone subscribers by placing restrictions on unsolicited, automated telephone calls to the home, and to facilitate interstate commerce by restricting certain uses of fax machines and automatic dialers.6 The TCPA makes it unlawful to send an "unsolicited advertisement" to any person "without that person's prior express invitation or permission."7 The TCPA defines an "unsolicited advertisement" as "any material advertising the commercial availability or quality of any property, goods or services."8
What exactly constitutes "prior express invitation or permission" is not entirely clear. It has been argued that the prior invitation or permission must be in writing.9 However, the TCPA makes no mention of written documentation, and the first reported decision in Colorado clearly states that the permission or invitation can be oral.10
Enforcement of the TCPA
There are a number of enforcement mechanisms under the TCPA. State attorneys general may bring suit in federal court to enforce the TCPA.11 Similarly, the Federal Communications Commission ("FCC") may bring enforcement actions.12 Congress also authorized private actions.13
The TCPA provides that "any person or entity" may bring an action based on a TCPA violation in an appropriate court of a state "if otherwise permitted by the laws or rules of court of [that] State."14 This unusual provision of the TCPA, specifically naming state courts as the forum for private actions, has been the subject of much dispute. Commentators and courts alike have observed that, as a result of the TCPA's express reference only to state courts, there is no federal subject matter jurisdiction of private TCPA claims.15
The Seventh Circuit recently disagreed in Brill v. Countrywide Home Loans, Inc.16 Brill holds that the state forum mentioned in § 227(b)(3) of the TCPA is optional rather than mandatory; therefore, federal subject matter exists under both 28 U.S.C. § 1331 (federal question) and § 1332 (diversity). In reaching its conclusion, the Seventh Circuit relied on two recent U.S. Supreme Court decisions clarifying issues of federal jurisdiction17 and § 227(f)(2) of the TCPA, expressly stating that federal court is the "exclusive" forum for states to bring TCPA enforcement actions. The court stated, "The contrast between § 227(f)(2) and § 227(b)(3) is baffling unless one provides exclusivity and the other doesn't."18 Even before Brill, however, federal courts agreed to hear TCPA cases where diversity jurisdiction could be established.19
Another complex issue arising in connection with the TCPA's reference to state courts is the question of whether state courts must pass enabling legislation or "opt-in" before state court actions may be brought. This issue, which will be discussed in more detail below, is currently the subject of great debate in Colorado and other jurisdictions.
Remedies Under the TCPA
Congress explicitly provided consumers with a private right of action under certain provisions of the TCPA.20 Damages under the TCPA are $500 per violation or "actual monetary loss," whichever is greater.21 A junk fax recipient's actual damages are typically limited to the nominal cost of a sheet of paper and some ink. Consequently, plaintiffs tend to seek the $500 in statutory damages when they bring suit. Because the TCPA expressly provides for $500 in statutory damages for "each such violation" of the TCPA, plaintiffs also usually plead multiple violations of the TCPA for each fax.
The TCPA further provides for treble damages if the sender either willfully or knowingly violated the TCPA. Courts examining the treble damages provision of the TCPA have held that no showing of bad faith is required, stating: "[T]he TCPA is willfully or knowingly violated when the defendant knows of the TCPA's prohibitions, knows he does not have permission to send a fax ad to the plaintiff, and sends it anyway."22
Some trial courts have gone so far as to hold that a plaintiff need not show intentional conduct to establish that a TCPA violation was willful or knowing.23 If accurate, this interpretation of the "willfully or knowingly" requirement significantly increases the likelihood that treble damages may be awarded. Counsel should keep in mind that Congress gave the FCC a significant role in interpreting and enforcing the TCPA. Thus, there may be other definitions of the terms "willfully" and "knowingly" in FCC rules and orders.24
The TCPA also provides for injunctive relief. The express statutory language permits "any person or entity" to bring an appropriate action "to enjoin violations of the TCPA, for damages, or both."25
Finally, in contrast with most types of claims, courts have held that TCPA plaintiffs are not required to mitigate their damages by contacting the sending party to request that fax advertisements cease.26 Thus, ostensibly, a junk fax recipient could ignore any information provided to contact the sender and request the cessation of faxing, let the faxes pile up, and then bring suit against the sender.
Burden of Proof Under the TCPA
Who bears the burden of proof under the TCPA is another disputed question. A trial court in Ohio held that the defendant - rather than the plaintiff - has the burden of proving a fax was sent with "prior express invitation or permission."27 The Ohio court premised its decision on the TCPA's legislative history, which indicated that senders should retain evidence of prior express invitation or permission.28
Other courts, specifically those presiding over class action cases, have held to the contrary. One such court stated: "[T]he essential question of fact that each potential plaintiff must prove is whether a specific transmission to its machine was without prior express invitation or permission."29 Also, the Georgia Supreme Court recently held that a plaintiff bears the burden of proving that a fax was unsolicited because "non-solicitation is an element of a TCPA violation - permission is not an affirmative defense."30
Class Actions
Class action litigation under the TCPA is prevalent in some areas of the country. Illinois, for example, is the venue of a number of class action suits, and some classes there have been certified.31 Many courts, however, have declined to allow class action suits under the TCPA. Some courts, relying on F.R.C.P. 23(b) or its state analogue, deny...
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