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2nd Cir. Upholds Dismissal of TCPA ‘Unsolicited Advertisement’ Putative Class Action

tcpaThe U.S. Court of Appeals for the Second Circuit recently affirmed the dismissal of a putative class action alleging that an unsolicited faxed invitation to participate in a market research survey in exchange for money was an “unsolicited advertisement” under the federal Telephone Consumer Protection Act.

A copy of the opinion in Bruce Katz, M.D., P.C., v. Focus Forward, LLC is available at:  Link to Opinion.

The named plaintiff, a medical services company, alleged that the defendant, a market research company, sent the plaintiff two unsolicited faxes seeking participants in market research surveys, in violation of the TCPA, as amended by the Junk Fax Prevention Act (JFPA).

Both faxes explained that the defendant was “currently conducting a market research study” and “offer[ed] an honorarium of $150 for [the recipient’s] participation in a . . . telephone interview.”

In response, the defendant filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that an unsolicited faxed invitation to participate in a market research survey in exchange for money does not constitute an “unsolicited advertisement” under 47 U.S.C. § 227(b)(1)(C). The trial court agreed and granted the motion to dismiss. This appeal followed.

As you may recall, the TCPA as amended by the JFPA prohibits the use of “any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.” 47 U.S.C. § 227(b)(1)(C).

An “unsolicited advertisement” is defined by the statute as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s prior express invitation or permission.” Id. § 227(a)(5). The regulations of the Federal Communications Commission implementing the TCPA contain an identical definition of “unsolicited advertisement.”47 C.F.R. § 64.1200(f)(16).

The Second Circuit here agreed with the defendant and the trial court and held that faxes that seek a recipient’s participation in a survey do not advertise the availability of any one of “property, goods, or services,” and therefore cannot be “advertisements” under the plain meaning of the TCPA.

Furthermore, the Second Circuit noted that “[t]he text’s plain meaning can best be understood by looking to the statutory scheme as a whole and placing the particular provision within the context of that statute.” Saks v. Franklin Covey Co., 316 F.3d 337, 345 (2d Cir. 2003); see K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988).

The Second Circuit held that the word “property” does not appear to include money as the word is used in the TCPA. 47 U.S.C. § 227(a)(4). The word “property” occurs twice: once in the definition of “unsolicited advertisement” and once in the definition of “telephonic solicitation.” A “telephone solicitation” is defined in the TCPA as “a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services.” 47 U.S.C. § 227(a)(4) (emphasis added).

The Second Circuit reasoned that it would be strange for the statute to speak of the “purchase or rental of, or investment in” money. The Court also noted that, although it is true that the “unsolicited advertisement” definition might allow a broader reading of the word “property” than the “telephone solicitation” definition, the Court observed that “identical words used in different parts of the same statute are generally presumed to have the same meaning.” IBP, Inc. v. Alvarez, 546 U.S. 21, 34 (2005).

The Second Circuit also concluded that the faxes could not be construed as advertising the availability of a service because the faxes only sought participation in a survey from the fax recipient. The Court noted that the statute does not prohibit communications advertising the availability of such an opportunity, even if the opportunity is commercial in character.

On this point, the Second Circuit disagreed with the Third Circuit’s holding in Fischbein v. Olson Research Group, 959 F.3d 559 (3d Cir. 2020), which relied on an encyclopedia definition of what constitutes a “commercial transaction” to conclude that “an offer of payment . . . transforms the . . . market surveys into advertisements,” rather than focusing on the definition of “advertisement” that the TCPA and FCC regulations provide. Id. at 562. In doing so, the Second Circuit held that the Third Circuit’s opinion effectively rewrote the TCPA.

Furthermore, the Second Circuit found that the legislative history of the TCPA and the FCC’s implementation of that law support the position that the faxes in this case were not advertisements.

Specifically, before the JFPA extended the TCPA to include faxes, the House Committee on Energy and Commerce, in its recommendation that the TCPA be enacted, noted that “the Committee does not intend the term ‘telephone solicitation’ to include public opinion polling, consumer or market surveys, or other survey research conducted by telephone,” and explained that “such research has generated relatively few complaints” from consumers. Moreover, in regulations implementing the TCPA the year after its enactment, the FCC excluded “research, market surveys, political polling or similar activities” from liability under the statute.

Accordingly, the Second Circuit held that the statutory text, legislative history, and FCC implementation of the TCPA all support the conclusion that faxed invitations to participate in a survey, without more, are not advertisements under the statute. Thus, the Court affirmed the trial court’s judgment.

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Daniel Miller is an associate in the Chicago office of Maurice Wutscher LLP, practicing in the firm’s Consumer Credit Litigation and Commercial Litigation groups. Daniel has substantial experience as a litigation attorney representing clients in both individual and class action cases involving the FDCPA, TCPA, FCRA, TILA, RESPA, Illinois Consumer Fraud Act, and various other federal and state statutes. He also has experience in representing corporate clients in commercial transactions and executive compensation agreements. Daniel earned his Juris Doctor from the University of Illinois College of Law, and his Bachelor of Arts in History from Durham University in the United Kingdom. He is admitted to practice law in Illinois and the U.S. District Courts for the Northern District of Illinois and the Southern District of Illinois.

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