Avio, Inc., a Michigan corporation, individually and as the representative of a class of similarly situated persons, Plaintiff-Appellant, v. ALFOCCINO, INC.; D. Taliercio Investments, Inc.; Farshid Shushtari, Defendants-Appellees.
No. 14-1704.
United States Court of Appeals, Sixth Circuit.
July 7, 2015.
Before: SILER, MOORE, and STRANCH, Circuit Judges.
OPINION
JANE B. STRANCH, Circuit Judge..
Plaintiff Avio, Inc.1 alleges that Defendant Alfoccino violated the Telephone Consumer Protection Act (TCPA),
I. BACKGROUND
B2B was one of several company names used by Caroline Abraham, who in 2006 conducted fax broadcasting operations for multiple clients. B2B maintained a hard drive that documented thousands of fax transmissions successfully sent on behalf of Alfoccino and other businesses. B2B had obtained the numbers used in the broadcast two years earlier from a company called InfoUSA. Abraham testified that she believed it was legal to send fax advertising to companies that had an established business relationship with the sender and mistakenly thought the companies on the InfoUSA list met that standard. Abraham did not call the businesses on her fax lists to seek consent to send them fax advertisements.
Alfoccino is a restaurant business with two locations. It is operated by brothers Farshid “Tony” Shushtari and Frank Shushtari. Alfoccino, Tony, and an entity that is a part owner of Alfoccino, Taliercio Investments, Inc., are named defendants here. Tony was responsible for Alfoccino‘s marketing and advertising and was the only person from Alfoccino who communicated with B2B. He regularly hired a company named Value Fax to conduct fax advertising for the restaurants, but hired other companies, including B2B, to fax his advertisements “once or twice” as well. In
Tony stated that Value Fax told him it obtained permission from its fax recipients before sending them ads, and that he had assumed that any company sending out faxes on his behalf would have done the same thing because “I assume that ... if you‘re doing business you‘re doing it the right way. I didn‘t know. I was naïve maybe.” He said that he did not knowingly authorize any fax advertisement that violated the law, and that he would not have authorized the ads had he known they violated the law. Tony, however, did not testify that he instructed B2B to send the ads only to people who had given prior permission to receive them, and none of Tony‘s written instructions to B2B in the record mention compliance with the law. None of the documents B2B produced include a representation about the legality of B2B‘s practices or a statement that B2B had obtained prior permission from its targets.
B2B‘s computer files contain copies of the documents faxed back and forth between Alfoccino and B2B and the final version of the Alfoccino ads that were sent. They also contain logs listing the fax numbers targeted, the time, date, and duration of each transmission, and whether each was successfully completed. According to Avio‘s expert, Robert Biggerstaff, B2B‘s fax logs show that Alfoccino‘s advertisements were successfully sent 13,980 times to 7,625 unique fax numbers. The logs show that B2B faxed Alfoccino‘s ad to Avio on November 13, 2006 at 1:42 a.m. and again on December 4, at 8:40 p.m. The first transmission was three pages and the phone lines were connected for two minutes and three seconds. The second transmission was one page and the phone lines were connected for 33 seconds. Both transmissions were successfully completed.
Avio‘s representative, David Barnett, testified at deposition that he had no personal recollection of receiving Alfoccino‘s fax or of its substance, and that he could not remember what year it was sent, but that he would have been the person who got it off the fax machine. Though he testified that it was his practice to keep even junk faxes after having received them, he did not locate a physical copy of the Alfoccino ad.
The original plaintiff filed this action in January 2010. The case was dismissed for lack of subject matter jurisdiction over TCPA claims in July 2010, but on appeal this court reversed and remanded based on intervening circuit precedent holding that federal courts have subject matter jurisdiction over TCPA claims.2 In 2013, Avio moved for class certification, seeking to establish a class of the more than 7,000 unique recipients of B2B‘s fax of the Alfoccino‘s ad. While that motion was pending, Alfoccino filed a motion for summary judgment, which was granted on May 9, 2014. The district court found that Avio lacked Article III standing to pursue its claim and, as a secondary basis for dismissal, that Alfoccino could only be held vicariously liable—not directly liable—under the statute, and Avio failed to offer sufficient evidence for a jury to find Alfoccino vicariously liable for the faxes B2B transmitted.
A. Article III Standing
Courts must resolve questions of subject matter jurisdiction before ruling on the merits of the claim. Gross v. Hougland, 712 F.2d 1034, 1036 (6th Cir. 1983). Where the plaintiff has no Article III standing to bring a case, jurisdiction is lacking and the court must dismiss it. TCG Detroit v. City of Dearborn, 206 F.3d 618, 622 (6th Cir. 2000). To have Article III standing, a plaintiff must “allege personal injury fairly traceable to the defendant‘s allegedly unlawful conduct and likely to be redressed by the requested relief.” Murray v. U.S. Dep‘t of Treasury, 681 F.3d 744, 748 (6th Cir. 2012). The alleged injury must be both “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)).
The TCPA prohibits the use of “any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.”
Though the TCPA does not expressly state who has a cause of action to sue under its provisions, its descriptions of the conduct it prohibits repeatedly refer to the “recipient” of the unsolicited fax,
In the instant case, the district court ruled that Avio lacked Article III standing, noting that it “refuses to find that a plaintiff satisfies Article III‘s injury in fact requirement when all it knows about its alleged injury is based upon what someone else told it.” Avio, Inc. v. Alfoccino, Inc., 18 F.Supp.3d 882, 891 (E.D.Mich.2014). Sixth Circuit authority filed several months after the district court‘s opinion, however, points to the opposite conclusion: that plaintiff Avio, as the recipient of Alfoccino‘s unsolicited advertising faxes, does allege an injury sufficient to meet the requirement for Article III standing.
In American Copper & Brass, Inc. v. Lake City Indus. Products, Inc., this court affirmed a district court decision granting class certification and ultimately summary judgment to a class of plaintiffs who had received junk fax advertisements that B2B transmitted on behalf of the defendant, Lake City. 757 F.3d 540, 542 (6th Cir. 2014). The pertinent facts in American Copper are virtually identical to those of the instant case: Lake City‘s president paid B2B to transmit an advertisement on its behalf to thousands of recipients who had not been vetted by B2B and with whom it had no prior business relationship. Id. at 542-43. American Copper sued under the TCPA and moved for class certification, proposing a class consisting of all persons who were successfully sent a fax from Lake City Industrial Products, Inc. on one of three dates in February 2006. Id. To support the motion, American Copper attached a report from its expert witness Robert Biggerstaff—Avio‘s expert in the instant case as well—concluding, based on his review of B2B‘s fax records, that a total of 10,627 successful
On appeal, Lake City attacked the class definition on the basis that it included plaintiffs who lacked standing to assert TCPA claims, specifically “persons that may not have ever received, noticed or printed the fax but who are somehow associated with a number on the hard drive‘s fax logs” and “persons that may not be (or who were) the owners of the machines or fax number [who] may or may not have actually received [the] fax.” Id. at 544.
Lake City based its argument on a district court‘s decision in Machesney v. Lar-Bev of Howell, Inc., 292 F.R.D. 412 (E.D.Mich.2013)—another case based on faxes sent by B2B—which had held that only the “person or entity that owned the fax machine that received the unsolicited fax” had standing to sue under the TCPA. American Copper, 757 F.3d at 544. American Copper flatly rejected this argument and Machesney‘s reasoning, finding instead that the TCPA‘s private right of action provision was not premised on ownership of the machine, id., and explaining:
The Machesney court‘s conclusion that the TCPA was “intended to address ... the cost of the paper and ink incurred by the owner of the fax machine,” 292 F.R.D. at 427, is too narrow. True, Congress was generally concerned with the costs associated with unsolicited fax advertisements. See id. at 426-27 (discussing the legislative history of the TCPA). But unsolicited fax advertisements impose costs on all recipients, irrespective of ownership and the cost of paper and ink, because such advertisements waste the recipients’ time and impede the free flow of commerce. Ira Holtzman, C.P.A. v. Turza, 728 F.3d 682, 684 (7th Cir.2013) (“Even a recipient who gets the fax on a computer and deletes it without printing suffers some loss: the value of the time necessary to realize that the inbox has been cluttered by junk.“) (emphasis in original); Owners Ins. Co. v. European Auto Works, Inc., 695 F.3d 814, 820 (8th Cir.2012) (explaining that the TCPA was intended in part to “keep[] telephone lines from being tied up” by unsolicited fax advertisements); Missouri ex rel. Nixon v. Am. Blast Fax, Inc., 323 F.3d 649, 655 (8th Cir.2003) (noting that “unsolicited fax advertising interferes with company switchboard operations and burdens the computer networks of those recipients who route incoming faxes into their electronic mail systems“). Accordingly, to the extent that Lake City relies on Machesney for the proposition that owners (and only owners) of fax machines have standing to sue under the TCPA, we reject Lake City‘s argument.
American Copper, 757 F.3d at 544–45.
The American Copper panel also rejected Lake City‘s attack on the meaning of “successfully sent” in the class certification adopted by the district court. It found that a fax might be “successfully sent” without being received by its intended recipient: Biggerstaff‘s report showed that exactly 10,627 faxes were received by 10,627 different fax numbers. Id. at 545. Biggerstaff counted only “error-free transmissions” and the defendant failed to “offer[] any reason to think that [the defendant‘s] fax machines recorded the codes inaccurately or that its software maintained the log incorrectly.” Id. (quoting Ira Holtzman, 728 F.3d at 685).
Alfoccino argues that American Copper is not dispositive on the standing issue here because it was presented in a differ
Congress may not confer jurisdiction on Article III courts to issue advisory opinions, Sierra Club v. Morton, 405 U.S. 727, 732 n. 3, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972), and Congress cannot convert a generalized grievance “into an ‘individual right’ vindicable in the courts,” Lujan v. Defenders of Wildlife, 504 U.S. 555, 576-77, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Congress may, however, “enact statutes creating legal rights, the invasion of which creates standing, even though no injury would exist without the statute.” Linda R.S. v. Richard D., 410 U.S. 614, 617 n. 3, 93 S.Ct. 1146, 35 L.Ed.2d 536 (1973). Thus, once “a statute confers new legal rights on a person, that person will have Article III standing to sue where the facts establish a concrete, particularized, and personal injury to that person as a result of the violation of the newly created legal rights.” Palm Beach Golf Ctr.-Boca, Inc. v. Sarris, 781 F.3d 1245, 1251 (11th Cir.2015).
The TCPA is just such a statute: it gives recipients of unsolicited fax advertising the legal right to recover damages and obtain injunctive relief from the senders of those faxes.
The Sixth Circuit‘s holding in American Copper is not an outlier. Our sister circuits also hold that there is no need for a plaintiff to have printed the fax ad to have Article III standing. Reversing a district court decision to the contrary, in Palm Beach Golf Center-Boca, Inc. v. Sarris, the Eleventh Circuit concluded that “the specific injury targeted by the TCPA is the sending of the fax and resulting occupation of the recipient‘s telephone line and fax machine, not that the fax was actually printed or read,” and that the plaintiff “has Article III standing sufficient to satisfy the injury requirement because it has suffered a concrete and personalized injury in the form of the occupation of its fax machine for the period of time required for the electronic transmission of the data (which, in this case was one minute).” 781 F.3d at 1250-51. Similarly the Seventh Circuit held that there is no need for a plaintiff to prove he printed the offending fax to recover under the TCPA, and that electronic confirmation of transmission suffices as proof absent evidence to the contrary. Holtzman, 728 F.3d at 684. And the Eighth Circuit, though not ruling on the precise issue, noted that the TCPA promotes an “interest in seclusion, as it also keeps telephone lines from being tied up...” Owners Ins. Co., 695 F.3d at 820.
Here, the district court adopted the reasoning of the district court decision in Palm Beach Golf Ctr.-Boca, Inc. v. Sarris, 981 F.Supp.2d 1239 (S.D.Fla.2013), emphasizing that Plaintiff‘s injury is outside of
The opinion below correctly notes that the TCPA bans unsolicited faxed advertisements, not all unsolicited faxes. But its conclusion that a “plaintiff must see the fax to discern whether it is an advertisement or not,” id. at 890, is incorrect. Biggerstaff‘s report indicates that B2B faxed two particular advertisements to Avio and 7,624 other recipients. And Alfoccino concedes that it hired B2B to fax advertisements on its behalf and that it ultimately paid B2B for doing so. On these facts, a reasonable trier of fact could find by a preponderance of the evidence that the content of the two faxes at issue was advertising material prohibited by the TCPA.
Circuit precedent in American Copper and the text and legislative history of the TCPA itself point to the conclusion that Avio has Article III standing to bring its claim against the defendants.
B. Direct Liability
We now address the district court‘s second, independent basis for granting Alfoccino‘s motion for summary judgment: that the TCPA provides only for indirect—not direct—liability, and that Avio had failed to meet its burden of production with regard to Alfoccino‘s indirect liability. The pertinent FCC regulations, however, indicate that Alfoccino may be held directly liable for the faxes sent to Avio at issue here, and Avio has presented sufficient evidence to create a triable issue of fact on that point.
The TCPA makes it unlawful “to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement”3 unless the “sender” has an “established business relationship with the recipient” and meets several other requirements.
The FCC‘s codification of this definition of “sender” is in accord with its earlier uncodified interpretation: “the entity or entities on whose behalf facsimiles are transmitted are ultimately liable for compliance with the rule banning unsolicited facsimile advertisements, and that fax broadcasters are not liable for compliance with this rule.” In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 10 F.C.C. Rcd. 12391, 12407–08 (¶ 35) (1995).
The plain language of the TCPA and the FCC‘s accompanying definition of “sender” together establish that under the TCPA direct liability attaches to the entity whose goods are advertised as opposed to the fax broadcaster.4 Alfoccino is not enti-
Rather than applying the FCC‘s codified definition of “sender” to the TCPA, the district court applied the FCC‘s decision in DISH Network, 28 F.C.C. Rcd. 6574 (2013). The DISH Network decision, however, applies in a different context: the determination of direct and vicarious liability for telemarketing voice calls. The TCPA makes it unlawful in certain circumstances to “initiate” a telephone call to a residential telephone line using an artificial or prerecorded voice.
The FCC regulations governing these voice calls create distinctions that do not apply to fax transmissions. They identify who “initiates” these voice calls by distinguishing between the “telemarketer” and the “seller.” The “telemarketer” is defined as “the person or entity that initiates a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person.”
The DISH Network analysis is inapplicable to the fax transmissions at issue here. The words “seller” and “telemarketer” are not used in the sections of the TCPA and accompanying regulations that apply to unsolicited fax advertisements, and DISH Network did not address the FCC‘s definition of “sender” codified at
In a letter brief, the FCC responded in the affirmative and explained that “[t]he DISH Network ruling did not address or alter the treatment of facsimile transmissions under the TCPA or the Commission‘s implementing regulations.” Id. The FCC‘s letter brief first discussed the voice-call-related TCPA provisions and accompanying regulations at issue in the DISH Network decision as described above, id. at *2-3, then contrasted them with the statutory and regulatory provisions pertaining to fax advertisements. It explained that:
The TCPA uses different language governing facsimile transmissions. Specifically, the TCPA prohibits the “use [of] any telephone facsimile machine ... to send, to a telephone facsimile machine, an unsolicited advertisement.”
47 U.S.C. § 227(b)(1)(C) (emphasis added). In contrast with the Commission‘s construction of “initiate” in the robo-call and do-not-call contexts—where FCC rules describe the directly-liable call “initiat[or]” as the “telemarketer” that physically makes the call—the FCC defines the directly-liable “sender,” for purposes of the TCPA‘s unsolicited facsimile advertisement prohibition, as “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.”47 C.F.R. § 64.1200(f)(10) . In other words, under the plain text of that definition—and unlike the robo-call and do-not-call contexts—direct liability for sending an unsolicited facsimile advertisement attaches to the entity (defined as the “sender“) whose goods or services are being promoted, and not generally to the entity that physically transmits the facsimile.
FCC Letter Br., Palm Beach Golf Center-Boca, 2014 WL 3962595, at *3 (underlined emphasis added). After further elaborating on the history of the FCC‘s regulations pertaining to fax transmissions and on the differences between those regulations and the definition of “seller” and “telemarketer” at issue in DISH Network, the FCC‘s letter brief concluded that:
the [Palm Beach] district court misapplied the TCPA, the DISH Network ruling, and FCC regulations regarding unsolicited facsimile advertisements to the extent that it ruled, as a matter of law, that the defendant ... may not be directly liable under the TCPA for any unsolicited facsimile advertisement sent to the plaintiff ... unless the defendant actually transmitted the fax.
Id. at *7. The instant case turns on a fact pattern effectively identical to Palm Beach, so the FCC decision in DISH Network is likewise inapplicable here.
Given that DISH Network does not have any bearing on the FCC‘s regulations pertaining to fax transmissions, liability turns on the plain language of the FCC‘s definition of “sender” in
Neither the FCC‘s Palm Beach letter nor its regulations explain why the FCC has attached direct liability to the “telemarketer” that actually places a voice call while requiring proof of vicarious liability for the “seller” on whose behalf the call was made, yet has attached direct liability to the “sender” on whose behalf a fax advertisement was sent by a third party. Nonetheless, though Alfoccino questioned the reasoning of the FCC‘s letter brief and its application to this case, it has not directly challenged the legitimacy of the FCC‘s definition of sender in
The pertinent FCC regulations are explicit that the party whose goods or services are advertised—and not the fax broadcaster—is the sender. We therefore find that Alfoccino is a party subject to direct liability for the unsolicited Alfoccino advertisements B2B transmitted to Avio in violation of the TCPA.
III. CONCLUSION
For the foregoing reasons, we REVERSE the district court‘s grant of summary judgment to Alfoccino and REMAND the case to the district court for further proceedings in accordance with this opinion.