CRAFTWOOD II, INC., doing business as BAY HARDWARE, et al., v. GENERAC POWER SYSTEMS, INC.,
Nos. 21-2858 & 21-3393
United States Court of Appeals For the Seventh Circuit
DECIDED MARCH 30, 2023
ARGUED SEPTEMBER 9, 2022
Before ROVNER, HAMILTON, and SCUDDER, Circuit Judges.
us for a second time, two hardware companies sued a hardware store supplier for sending three facsimile advertisements that the hardware stores alleged the supplier sent in violation of the TCPA,
With today‘s pestilence of robocalls, scam calls, and texts pinging our attention away, it may be difficult to remember that there was a time when unsolicited faxes were the nuisance of the day. This is particularly true because at the time Congress passed the TCPA, unsolicited faxes had a monetary cost to the recipient in the form of lost ink and expensive fax paper. But today, with nary a facsimile machine in sight, many (or perhaps most) faxes go directly to an email address like other unwanted junk emails. The TCPA, however, still protects unwilling recipients from unsolicited faxes in the same way it always has, by granting statutory damages of $500 for each violation of the Act (and three times that for willful and knowing violations). See
become the means of targeting small businesses.“).2 But as we noted when this case
I.
This case involves a total of three facsimile advertisements sent to two hardware stores in Southern California owned and operated as a family business by David and Cynthia Brunjes. They established оne store, Craftwood II (also called
Bay Hardware) in 2009, and in 2013, they established Craftwood III (also called Lunada Bay Hardware, but we will call them Craftwood II and III respectively for simplicity, and together, the “Craftwood Stores“). Craftwood II is operated by the Brunjes’ daughter, Diana Newton, and another manager. Newton also oversees Craftwood III along with a different manager. Although the Craftwood Stores are independent hardware stores, they are part of the Do It Best (DIB) hardware industry cooрerative and wholesaler. By joining the cooperative, hardware stores receive access to better prices from vendors, as well as advertising and buying assistance.
The defendant, Generac Power Systems, is one of many companies that supplies goods to DIB for purchase by hardware retailers who belong to the DIB cooperative. Those retailers in turn sell Generac‘s wares to the public. Generac had an agreement with Comprehensive Marketing, Inc. (CMI), an independent sales and marketing representative that assisted Generac, along with many other DIB vendors, to get their products from the vendor to the market, including by assisting with promotional materials and other marketing ventures. As part of its role, CMI sent out faxes to DIB-member hardware stores advertising deals on Generac products, including the three at issue in this case—one sent in July 2016 to Craftwood II, and one in February 2013, sent to both Craftwood Stores. All three faxes were addressed to the “Store Manager/Owner.” R. 1-1, 1-2, 1-3.
The Craftwood Stores sued Generac and CMI, claiming that those three faxes were sent in violation of the TCPA, which forbids any person or entity from using “any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.”
The district court initially dismissed the case finding that the Craftwood Stores lacked standing to bring their claim (Craftwood II, Inc. v. Generac Power Sys., Inc., No. 17 C 4105, 2018 WL 11468610, at *2 (N.D. Ill. Aug. 1, 2018)), but we reversed and remanded, allowing the case to proceed. Craftwood II, 920 F.3d at 483.
On remand, Generac‘s defense relied on the TCPA‘s exemption for faxes sent where the recipient gave “prior express invitation or permission, in writing or otherwise.”
The Corporation agrees to sell its goods and provide its advertising programs, training services and other programs to Member (so long as Member makes timely payment therefore) at the Corporation‘s established
prices, terms, and conditions and in accordance with the Corporation‘s established business policies and practices which are in effect from time to time, for sale and use by Member ... .
R. 253-12 at 1 (R. 259 at 1). In return, the member agrees to purchase most of its products from DIB. In a later part of the agreement, there is a place for the applicant to provide contact information, including a fax number, which the Craftwood Stores provided.
One of the optional services that DIB provides to cooperative members is an opportunity to receive advertising materials that a member store can purchase to send to its own customers. And so, for example, rather than creating its own marketing material, catalogues, coupons, or flyers, a DIB member hardware store can sign up to receive these types of promotional materials to send to its customers. Craftwood II and III both opted into one such program called the Ad-Pak program. According to DIB‘s online information for cooperative members, the Ad-Pak program “includes more than 50 promotions designed to help drive traffic, develop customer loyalty, and build your local brand. ... We‘ll help you identify the best weeks of the year to promote your products, secure outstanding deals, and customize all marketing components so you‘re telling a relevant, local story to your customers.” R. 272-2 Ex. B, p.2.
The district court ultimately granted summary judgment for Generac, finding that the contract between the Craftwood Stores and DIB evinced an agreement by the former to receive faxes, including from vendors. As support for its conclusion, the district court focused on the explicit language of the
agreement quoted above, along with the fact that the plaintiffs provided their fax number as contact information in a later part of the document, and, to a lesser extent, that the plaintiffs had opted into the Ad-Pak program. The court found further support from the testimony of a CMI employee who testified that she received direct permission to send fax advertisements in a telephone call to Craftwood II. We review the district court‘s grant of summary judgment de novo, interpreting the facts and
II.
A.
Prior express consent is an affirmative defense on which Generac bears the burden of proof. Id. Generac claims that it can demonstrate prior express permission, and thus avoid liability under the TCPA, in two ways. First, it claims that the written agreement between the Craftwood Stores and the DIB cooperative gave Generac permission to send the faxes. Second, it claims that an employee of CMI received express permission during a phone call with Craftwood II. We will consider each of these in turn.
Generac argues that the Craftwood Stores gаve express permission to receive faxed advertising by entering into a membership agreement which mentioned “advertising programs” and then providing their fax numbers. The district court agreed, holding that the combination of the term
“advertising program” and plaintiffs’ provision of their fax number constituted express permission to receive fax advertisements. D. Ct. Op. (R. 16) at 9. That conclusion, however, does not accurately reflect the actual language of the agreement.
Our circuit interprets the TCPA in favor of consumer protection. A-S Medication Solutions, 950 F.3d at 967. In defining what constitutes express permission, we have made clear that “‘[e]xpress permission to receive a faxed ad requires that the consumer understand that by providing a fax number, he or she is agreeing to receive fax advertisements.‘” Id. at 965 (quoting 18 FCC Rcd. at 14129). The permission may be written or oral, but it must be affirmative; the sender may not presume permission unless otherwise advised. Id. at 966. Evidence of permission to send faxes generally does not establish prior express permission to fax advertisements. Id. And so, for example, permission to receive product information by fax does not grant permission to receive faxed advertisements. Id. at 967. Moreover, permission to receive a single faxed advertisement does not grant permission to send more faxes on an ongoing basis, unless the permission affirmatively and explicitly gives the advertiser permission to send the faxes on an ongoing basis. Id. at 966. It would be fair to summarize from all of this that our case law requires some fairly speсific and reliable indicia of permission.
With those standards in mind, we turn to the cooperative agreement that Generac asserts gave it permission to send faxes to the Craftwood Stores. If we reduce the agreement language to its relevant parts—those that reference advertising—“The Corporation agrees ... to provide its advertising programs to Member (so long as Member makes timely payment
therefore) ... , for sale and use by Member.” R. 253-12 at 1 (R. 259 at 1). On its face, this is language that DIB has agreеd to do something—provide advertising programs—in exchange for payment from the Craftwood Stores. Stating that “DIB agrees to provide advertising programs as long as Craftwood timely pays” would be an odd way to say “Craftwood agrees to receive fax advertising from DIB.” Moreover the agreement speaks of “advertising programs ... for sale and use by [the Craftwood Stores].” The implication of this language is that DIB will provide marketing materials for the member hardware store to distribute to their customers, in exchange
Although it does not appear to be the primary basis for the decision, the district court also mentioned the Ad-Pak program as further evidence of an agreement to receive advertising programs. D. Ct. Op. (R. 16) at 7. (“... and plaintiffs opted into the Ad-Pak program.“). But as the district court conceded, two of the three faxes—the ones date-stamped 2-13-2017 and sent to both Craftwood Stores—were fax аds targeted exclusively to the hardware stores themselves as opposed to their customers, and thus were not the types of advertisements contemplated by the Ad-Pak program at all. See D. Ct. Op. (R. 16) at 7, n.3. The other fax (date-stamped 7-28-2016 and sent only to Craftwood II), included a cover letter addressed to the hardware store on the first page and an extended warranty form for customers to fill out on the second page. R. 1-2, 1-3. Whether this latter fax was part of the Ad-Pak program to which the Craftwood Stores subscribed is a question of fact that can be resolved, if necessary, on remand. The two ads sent to each of the Craftwood Stores on 2-13-2017 could not have been part of the Ad-Pak program that provided advertising to pass along to customers. They were unequivocally advertisements targeted at the hardware stores themselves.
In sum, we can rule out the contract language as sufficient evidence that the Craftwood Stores gave Generac “affirmative[] and explicit[]” prior еxpress permission to fax advertisements to the stores. See A-S Medication, 950 F.3d at 966. Our conclusion does not conflict with the Eleventh Circuit‘s decision in Gorss Motels, Inc. v. Safemark Sys., LP, 931 F.3d 1094 (11th Cir. 2019). In that case, the Eleventh Circuit found that hotel franchisees who entered into agreements with Wyndham Hotel Group had given prior express permission to Wyndham‘s affiliates to send fax advertisements when it
signed a franchise contract “agreeing that Wyndham affiliates could offer assistance with purchasing items for the hotels and by providing their fax numbers” Id. at 1100. The agreement in the case before us contains no equivalent express language allowing DIB‘s affiliates to offer optional assistance in purchasing items or any other similar agreement to receive assistance from affiliates. It makes no mention of affiliates at all. Whatever our circuit might make of the language in the agreement in Gorss Motels, particularly in light of our clarifying decision in A-S Medication Solutions, we cannot say, but we can note that the agreement here between DIB and the Craftwood Stores contains no language whatsoever allowing affiliates to offer purchasing assistance. When and if we encounter
Our conclusion about the contract language, however, does not end the matter. Generac alleges that it received permission in a second and more direct fashion. According to Generac, CMI received direct permission to send faxes to Craftwood II on behalf of Generac when, in 2012, an employee of CMI, Sherri Davis, called Craftwood II and asked for the store‘s fax number for the purpose of sending promotional materials “generally and on an ongoing basis.” Generac Brief at 10. We note from the start that this argument only applies to Craftwood II, as Generac does not claim that Davis ever
called Craftwood III, and indeed she could not have, as Craftwood III was not incorporated until 2013.
According to Generac, in 2012, Davis worked on a project for which she was to record on a spreadsheet a list of DIB cooperative members who would be interested in receiving promotional material from DIB vendors, such as Generac. Davis testified at her deposition that she called each entity on the list and said, “I was wondering if I could get your fax number in order to send you some promotions.” R. 253-3 at 28 (Davis Dep. at 104).5 Specifically, as it pertains to Craftwood II, Davis stated in her August 14, 2019 declaration that on May 12, 2012, she placed a phone call to “the Craftwood stores to obtain their fax number in order to send them promotionаl sales materials. During these telephone calls, Craftwood provided to me in 2012 their fax numbers for the express purpose of CMI to provide [sic] Craftwood with sale promotions by fax.” R. 253-16 at 2. In her later deposition, on July 22, 2020, Davis admitted that she did not recall the specifics of the conversation with Craftwood II, including to whom she spoke or what was discussed, but according to her system, if a store agreed
to receive fax promotions, she recorded its fax number in the final column on her spreadsheet, and, although she did not recall the specific conversation, by looking at her spreadsheet, she was able to see that Craftwood II‘s fax number was recorded in the final column of the spreadsheet, thus indicating that it had given permission to receive fax advertisements.
Generac describes Davis’ testimony that she received permission as “uncontested,” and the district court agreed, but we find that conclusion to be at odds with the party‘s factual assertions in this case. Craftwood II‘s representаtives presented ample evidence from the record supporting its stance that the call did not and could not have happened, as the store has a longstanding policy against giving permission to receive faxes. See R. 272-2 at 2
This is a classic factual dispute: Generac‘s witness, Davis, testified that she made a phone call to and received permission from Craftwood II to send it fax advertisements. Craftwood II, on the other hand, asserts that it never received any such call and that it has and had a longstanding policy of not giving approval for fax advertisements. On summary judgment a court cannot “weigh conflicting evidence, resolve swearing contests, determine credibility, or ponder whiсh party‘s version of the facts is most likely to be true.” Runkel v. City of Springfield, 51 F.4th 736, 742 (7th Cir. 2022) (quoting
Stewart v. Wexford Health Sources, Inc., 14 F.4th 757, 760 (7th Cir. 2021)).
The depositions certainly leave room for a fact finder to assess the credibility of witnesses and the likelihood both that the phone call occurred and that Craftwood II‘s “no fax” policy was as clear, known, and disseminated to its employees as Craftwood II asserts that it was. The testimony by both parties shifted and curved throughout this litigation, and sometimes within the course of a single deposition.6 But all of these present credibility issues for a jury. None оf these assertions are so implausible on their face that a reasonable jury could not find in Craftwood II‘s favor on this factual dispute. See Kodish v. Oakbrook Terrace Fire Prot. Dist., 604 F.3d 490, 507 (7th Cir. 2010) (citing Payne v. Pauley, 337 F.3d 767, 773 (7th Cir. 2003)).
Because the contract language could not have been interpreted to mean that the Craftwood Stores granted anyone permission to send them fax advertisements, and there is a material factual dispute as to whether Craftwood II gave
Davis prior express permission to send faxes, we remand for further proceedings.
B.
One final matter remаins on the table: the Craftwood Stores argue that the district court made a mistake of law when calculating costs by awarding the defendant PACER and computerized research charges in the amount of $3,555.30. Although our reversal may alter the assessment of costs at the end of the day, we note once again that PACER and computerized research costs are not separately recoverable as costs.
We made clear in Haroco, Inc. v. Am. Nat‘l Bank & Trust Co., 38 F.3d 1429, 1440 (7th Cir. 1994) that computerized research costs are not recoverable under
the district courts have interpreted our decision in Haroco, and they are correct. See, e.g., Pezl v. Amore Mio, Inc., No. 08 C 3993, 2015 WL 2375381, at *6 (N.D. Ill. May 13, 2015) (denying costs for PACER research); Freedom Mortg. Corp. v. Burnham Mortg., Inc., No. 03 C 6508, 2008 WL 4534162, at *2 (N.D. Ill. Oct. 3, 2008) (denying costs for PACER research); Angevine v. WaterSaver Faucet Co., No. 02 C 8114, 2003 WL 23019165, at *9 (N.D. Ill. Dec. 23, 2003) (“charges for Pacer research fall into the same category as Wеstlaw and Lexis computerized research charges” and “are not recoverable as costs under
Generac cites dicta in one of our decisions suggesting that computerized research charges are recoverable under
We REVERSE the grant of summary judgment for Generac and REMAND for proceedings consistent with this opinion.