GORSS MOTELS, INC., individuаlly and on behalf of all others similarly situated v. LANDS’ END, INC.
20-589-cv
United States Court of Appeals, Second Circuit
May 13, 2021
Gorss Motels, Inc. v. Lands’ End, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2020
Argued: December 9, 2020 Decided: May 13, 2021
Docket No. 20-589-cv
GORSS MOTELS, INC., individually and on behalf of all others similarly situated,
Plaintiff-Appellant,
— v. —
LANDS’ END, INC.,
Defendant-Appellee.*
B e f o r e:
CABRANES, LYNCH, AND CARNEY, Circuit Judges.
* The Clerk of the Court is respectfully directed to amend the caption as set forth above.
First, although the parties do not raise the issue on appeal, we conclude that Gorss has standing to proceed under the TCPA. Second, we conclude that Gorss gave prior express permission to receive the faxes at issue through its franchise agreements with Wyndham. Finally, we reject Gorss’s contention that any permission to send fax advertisements was given to Wyndham and not tо Lands’ End. We conclude that Gorss agreed to the process that occurred here, in which Wyndham sent Gorss fax advertisements on behalf of a Wyndham-approved supplier, Lands’ End, advertising products that could be used in franchised motels. Accordingly, the judgment of the district court is AFFIRMED.
GLENN L. HARA, Anderson + Wanca, Rolling Meadows, IL, for Plaintiff-Appellant.
DANIEL P. TIGHE (Joshua N. Ruby, on the brief), Donnelly, Conroy & Gelhaar, LLP, Boston, MA, for Defendant-Appellee.
The Telephone Consumer Protection Act (“TCPA”) prohibits the sending of unsolicited fax advertisements. This appeal requires us to determine the contours of the TCPA’s affirmative defense for fax advertisements that are sent with the recipient’s “prior express invitation or permission.”
Gorss filed a putative class action complaint against Lands’ End under the TCPA, on behalf of itself and other Wyndham-branded motels that received the faxes. The district court (Victor A. Bolden, J.) granted Lands’ End’s motion for summary judgment, concluding that the faxes Gorss received were not unsolicited advertisements that could give rise to TCPA liаbility because Gorss had given “prior express invitation or permission” to receive them.
On appeal, Gorss argues that the district court erred in granting summary judgment to Lands’ End and denying class certification, because it improperly
We begin by addressing whether Gorss has standing, and conclude that it does. Proceeding to the merits, we further conclude that Gorss gave “prior express invitаtion or permission” to receive faxes from Wyndham and its affiliates offering products from Wyndham-approved suppliers such as Lands’ End for use in franchised motels. Finally, we reject Gorss’s contention that its permission did not extend to the faxes at issue here. We conclude that Gorss agreed to receive precisely the type of fax – ones offering products for use in its motel sold by Wyndham-approved suppliers – that it complains of here. Accordingly, we affirm the judgment of the district court.
BACKGROUND
I. Statutory Framework
As relevant here, the TCPA makes it illegal “to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement,” except in certain limited situations.
The TCPA establishes a private right of action through which consumers can “recover for actual monetary loss from such a violation, or . . . receive $500 in damages for each” unsolicited fax.
II. Factual Background
In 1988, Gorss Motels, a Connеcticut corporation owned by Steven Gorss, entered into a franchise agreement with Super 8 Motels, a brand owned by Wyndham Hotel Group, to operate a Super 8-branded motel in Cromwell, Connecticut. As part of the original franchise agreement, Gorss “agree[d] to purchase from [Wyndham], or from such other vendor as [Wyndham] may approve from time to time” certain supplies and materials for the motel. J.A. 307. In 2009, Gorss and Super 8 amended the 1988 franchise agreement to extend its term to 2014.
On September 10, 2014, Gorss entered into a new franchise agreement (the “2014 Franchise Agreement”) to operate the franchise for an additional twenty years. The 2014 Franchise Agreement, as in the earlier agreement, contained provisions regarding approved vendors and suppliers for the motel. Specifically, it provided:
You will purchase or obtain certain items we designate as proprietary or that bear or depict the Marks, such as signage, only from suppliers we approve. You may
purchase other items for the Facility from any competent source you select, so long as the items meet or exceed System Standards. . . .We may offer optional assistance to you with purchasing items used at or in the Facility. Our affiliates may offer this service on our behalf. We may restrict the vendors authorized to sell proprietary or Mark-bearing items in order to control quality, provide for consistent service or obtain volume discounts. We will maintain and provide to you lists of suppliers approved to furnish Mark-bearing items, or whose products conform to System Standards.
J.A. 309-10, quoting the 2014 Franchise Agreement at §§ 3.10, 4.4.
In connection with the 2014 Franchise Agreement, Gorss also received a Franchise Disclosure Document. The disclosure explained that a Wyndham affiliate, Worldwide Sourcing Solutions, Inc. (“WSSI”), would be offering “goods and services” sold by approved suppliers to franchisees and that “Wyndham would be paid a commission based on” purchases that the franchisees made from approved suppliers. J.A. 310-11. The disclosure further explained the approved supplier program as follows:
To support the purchasing efforts of our franchisees we and/or WSSI negotiate purchasing terms, including price, volume discounts and commissions on a range of products and services. . . . In connection with this program, we and/or WSSI identify certain suppliers of products and services who are then designated as “Approved Suppliers.” Under the Approved Supplier
program, franchisees may purchase products and services directly from these Approved Suppliers through our electronic e-procurement system or through more traditional means.
J.A. 312.
Finally, as part of the renewal application process and in the 2014 Franchise Agreement, Gorss provided its fax number to Wyndham. That was not the first time that Gorss gave Wyndham its fax number; Gorss “periodically provided [its] fax number to Wyndham as part of the franchisor/franchisee relationship,” including in 2010, as part of the renewal process in 2014, and again in 2015. J.A. 319-21. Throughout Gorss’s relationship with Wyndham, Gorss received thousands of pages of faxes advertising the products of Wyndham-approved suppliers sent to the number it had provided to Wyndham. Gorss did not indicate to Wyndham at any point that it wished to stop receiving these faxes.
On October 28, 2014, Defendant-Appellee Lands’ End entered into an agreement with WSSI. Lands’ End was designated an approved supplier and authorized to sell its products to Wyndham franchisees in exchange for a commission to Wyndham. After the agreement was executed, Wyndham recommended that Lands’ End use its fax broadcasting service to advertise to
On August 4, 2016, Gorss sold the Cromwell motel building to new owners, terminating the franchise agreement. Since the sale, Gorss has filed class action complaints against more than twenty Wyndham-approved supрliers, based on fax advertisements it received while it was operating a Wyndham-franchised motel.
On January 4, 2017, Gorss filed a class action complaint against Lands’ End in the District of Connecticut, based on the faxes advertising Lands’ End products that it received in 2015.1 The complaint pleaded claims under the TCPA and Connecticut’s junk fax statute, Conn. Gen. Stat. § 52-570c. On April 5, 2019, after discovery, Gorss moved to certify a class. On June 26, 2019, Lands’ End moved for summary judgment.
On January 16, 2020, the district court granted Lands’ End’s motion for summary judgment and denied as moot Gorss’s motion for class certification. Gorss Motels, Inc. v. Lands’ End, Inc., No. 17-cv-10, 2020 WL 264784 (D. Conn. Jan. 16, 2020). The court began by addressing whether Gorss had alleged an injury sufficient to confer standing. Lands’ End contended that Gorss was “collect[ing] the faxes with an eye towards litigation” and therefore would not have opted out of the faxes even if they did contain a TCPA-compliant opt-out notice. Id. at *8.2
On the merits, the district court concluded that the faxes Gorss received were not “unsolicited advertisemеnts” within the meaning of the TCPA.3 The court reasoned that Gorss’s “list[ing] its fax number and agree[ing] to receive information from its franchisor’s affiliates and approved vendors” in its 2014
DISCUSSION
“We review a district court’s decision to grant summary judgment de novo, construing the evidence in the light most favorable to the party against which summary judgment was granted and drawing all reasonable inferences in its favor.” Halo v. Yale Health Plan, 819 F.3d 42, 47 (2d Cir. 2016) (internal quotation marks omitted). We review for abuse of discretion a district court’s decision not to exercise supplemental jurisdiction over state law claims. Motorola Credit Corp. v. Uzan, 388 F.3d 39, 56 (2d Cir. 2004).
Although the parties do not contest the issue, we consider first whether Gorss has standing, and conclude that it does. Turning next to the merits, Gorss
We are unpersuaded. We conclude that Gorss gave “prior express invitation or permission” to receive fax advertisements from Wyndham and its affiliates through its agreements with Wyndham. We further conclude that the permission Gorss gave extends to the faxes in this case.
I. Gorss Has Standing to Sue.
When a district court “dismisses a case without deciding whether standing exists . . . th[is] Court has an obligation sua sponte to assure itself that the plaintiff[] ha[s] Article III standing before delving into the merits.” Connecticut v. Am. Elec. Power Co., 582 F.3d 309, 332-33 (2d Cir. 2009), rev’d on other grounds, 564 U.S. 410 (2011). Accordingly, we begin with the question of whether Gorss has standing to proceed.
We have previously held that the “nuisance and privacy invasion” of receiving unsolicited text messages is a sufficient injury to allege standing under the TCPA. Melito v. Experian Mktg. Sols., Inc., 923 F.3d 85, 93 (2d Cir. 2019), cert. denied, 140 S. Ct. 677 (2019). So too, we think, is the “nuisance and privacy invasion” of receiving unsolicited fax advertisements. Moreover, the “occupation of [a] [p]laintiff’s fax machine,” as well as use of its paper and ink, which occurred here, are “among the injuries intended to be prevented by” the TCPA. Palm Beach Golf Ctr.-Boca, Inc. v. John G. Sarris, D.D.S., P.A., 781 F.3d 1245, 1252 (11th Cir. 2015).
Lands’ End argued below that Gorss lacks standing because the injuries it
II. Lands’ End Did Not Violate the TCPA.
We turn next to the question of whether the district court erred in concluding that the faxes Gorss received were not unsolicited advertisements that would give rise to TCPA liability. The TCPA defines an “unsolicited
Lands’ End argues that the faxes at issue here were not “unsolicited advertisements” because Gorss gave “prior express invitation or permission” to receive them through its agreements with Wyndham. We agree.
“We begin with the text.” Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 1169 (2021). The TCPA requires “express permission,” which is defined as “[p]ermission that is clearly and unmistakably granted by actions or words, oral or written.” Permission, Black’s Law Dictionary (11th ed. 2019). Moreover, “prior” permission requires that permission be given before the fax is sent. Taken together, the entire defense requires permission, given before the fax
Here, it is clear that Gorss “underst[ood] that by providing a fax number,” it was “agreeing to receive faxed advertisements” and “clearly and unmistakably grant[ing]” pеrmission to receive those fax advertisements. In the 2014 Franchise Agreement, Gorss agreed that Wyndham was permitted to “offer optional assistance . . . with purchasing items used at or in” the motel. J.A. 309-10. Gorss similarly agreed that Wyndham’s “affiliates” were permitted to “offer this service on [Wyndham’s] behalf.” Id. The Franchise Disclosure Document Gorss received
Together, these facts lead inexorably to the conclusion that Gorss gave permission to receive faxes from Wyndham and its affiliates advertising the products of approved suppliers. Gorss agreed that Wyndham and its affiliates could “offer optional assistance . . . with purchasing items used at or in” the motel, and in the same agreement provided its fax number. J.A. 309-11. And Gorss knew, from having been a Wyndham franchisee before, that the “offer[s] of
Gorss argues that “merely . . . providing a fax number in the course of a business relationship” is not enough to establish permission. Appellant’s Br. 22, 24. True enough. But here, Gorss did not “merely” provide a fax number in the course of its relationship with Wyndham. Instead, it agreed that Wyndham and its affiliates, and specifically WSSI, could “offer optional assistance . . . with purchasing items used at or in” the motel, including, for example, branded apparel sold by approved supplier Lands’ End. Moreover, Gorss’s prior experience as a Wyndham franchisee made clear that the “optional assistance . . . with purchasing” Gorss was agreeing to receive would take the form of fax advertisements. To be sure, mere provision of a fax number in the course of a business relationship is not sufficient to establish permission to receive faxed advertisements – but that is not all that occurred here.
The situation here is similar to that in Latner. The plaintiffs in both cases provided their contact information and indicated their agreement to receive certain information, before receiving the complained-of fax or text message. Gorss complains that the agreement he signed did not spell out that he was agreeing to receive information via fax (even though he provided his fax number in the
Our conclusion that Gorss gave “prior express invitation or permission” is further supported by decisions in the Third and Eleventh Circuits which have given “prior express invitation or permission” a similar construction in analogous cases. In Physicians Healthsource, Inc. v. Cephalon, Inc., the Third Circuit concluded that a physician had given permission to receive fax advertisements
Similarly, in Gorss Motels, Inc. v. Safemark Sys., LP, Gorss, along with another franchised motel, alleged that another Wyndham-approved suppliеr violated the TCPA when it sent, and allowed WSSI to send on its behalf, faxes advertising its products. Id. at 1097. The court rejected that argument, concluding that through their franchise agreements, Gorss and its co-plaintiff “expressly agreed to receive information about purchasing items
Gorss argues that these two out-of-circuit decisions, which it concedes support the district court’s conclusion here, are incorrect, and that we should instead follow the Seventh Circuit’s reasoning in Physicians Healthsource, Inc. v. A-S Medication Sols., LLC, another recent decision addressing the meaning of “express invitation or permission” in the cоntext of the TCPA. 950 F.3d 959 (2020). There, a pharmaceutical company sent a fax advertisement to more than 11,000 fax numbers it obtained by purchasing the customer database of another business. Id. at 962-63. The court concluded that in order to render a fax solicited, “the consumer must affirmatively and explicitly give the advertiser permission to send it fax advertisements on an ongoing basis.” Id. at 966. It further concluded that the pharmaceutical company was liable, both because permission was not transferable from the original owner of the customer database to the defendant
In urging us to follow A-S Medication, Gorss ignores that the Seventh Circuit was addressing a substantially different scenario. There, it was undisputed that the defendant “never sought or obtained permission from any of the recipients prior to sending the fax,” id. at 963, and the issue was whether the prior owner of the customer database obtained permission, and whether that permission could be transferred to the defendant. But here, Lands’ End argues that Gorss did give permission, through its agreements with Wyndham, to receive fax advertisements from Wyndham and its affiliates advertising the products of approved suppliers such as Lands’ End. Moreover, even if we were to apply the test from A-S Medication here, as Gorss urges us to, and ask whether Gorss “affirmatively and explicitly g[a]ve [Wyndham and its affiliates] permission to send it fax advertisements on an ongoing basis,” we are persuaded that the answer is yes. As described above, the agreements between Wyndham and Gorss clearly establish that Gorss agreed to receive fax advertisements from Wyndham and its affiliates. Accordingly, the facts of A-S Medication are quite distinct from
Finally, in the alternative, Gorss argues that any permission it gave to receive faxes from Wyndham and its affiliates would not extend to the faxes here, which Gorss contends were sent by Lands’ End and not by Wyndham. Citing FCC regulations, Gorss argues that the sender of a fax advertisement is “the person or entity on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement,” and that the sender here is Lands’ End, not Wyndham or its affiliates, the entities to which it ostensibly gave permission. Appellant’s Br. 31, citing
Here, Lands’ End entered into an agreement with WSSI, a Wyndham affiliate. Wyndham then proposеd, pursuant to that agreement, that Lands’ End advertise its products via fax to Wyndham franchisees. The fax advertisement was drafted by Lands’ End, edited by Wyndham, sent by Wyndham to a third-
More importantly, Gorss’s argument about who ultimately sent the advertisements evades the real question here: Whether Gorss gave permission to receive the advertisements at issue. Gorss agreed that Wyndham was permitted to “offer optional assistance . . . with purchasing items used at or in” the motel, and that Wyndham’s affiliates were permitted to “offer this service on
Gorss attempts to rely on A-S Medication for the proposition that prior express permission “is not transfer[]able under the TCPA.” Appellant’s Br. 32, citing A-S Medication, 950 F.3d at 967. But in that case, the defendant sent faxes to numbers it obtained by purchasing the customer database of аnother business. The court there was merely pointing out that even if the defendant could show that the business selling the database had obtained prior express permission, that permission would not be transferable to the defendant. Assuming arguendo that we would adopt a similar rule, that scenario is a far cry from what occurred here, where Gorss agreed to receive faxed messages advertising the goods and services of approved suppliers such as Lands’ End. Gorss cannot now complain about receiving advertisements of the very type it expressly agreed to receive.
For the reasons stated above, we conclude that the district court did not err in granting summary judgment to Lands’ End and dismissing Gorss’s motion for class certification as moot. Moreover, because Gorss’s federal claims were properly dismissed on summary judgment, the district court did not abuse its discretion in declining to exercise supplemental jurisdiction over Gorss’s state law claims. See Motorola Credit Corp., 388 F.3d at 56 (“[A]s a general proposition . . . if all federal claims are dismissed before trial, the state claims should be dismissed as well.”) (internal quotation marks and alterations omitted).
Accordingly, the judgment of the district court is AFFIRMED.