Physicians Healthsource, Inc. v. Allscripts-Misy's Healthcare Solutions, Inc. et al
MEMORANDUM Opinion and Order Signed by the Honorable Jeffrey Cole on 6/2/2017:Mailed notice(jms, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
PHYSICIANS HEALTHSOURCE, INC.,
an Ohio corporation, individually and as
the representative of a class of
ALLSCRIPTS HEALTH SOLUTIONS,
INC. and ALLSCRIPTS HEALTHCARE
No. 12 C 3233
Magistrate Judge Jeffrey Cole
MEMORANDUM OPINION AND ORDER
The defendants have filed a motion for summary judgment in what is, as Judge Easterbrook
remarked almost two years ago in another case, is “another of the surprisingly many junk-fax suits
under 47 U.S.C. § 227.” Chapman v. First Index, Inc., 796 F.3d 783, 784 (7th Cir. 2015). The
number of suits was surprising given what the court said were the simple rules applicable to the
practice of sending fax ads – simple rules that senders seemed to simply ignore. Id. This case is
even more surprising than most, given the contentious history between the parties – and counsel.
In any event, the defendants ask that the court, for the purposes of summary judgment, determine that
the plaintiff gave the defendants express permission to send to it all the faxes at issue.
While the plaintiff filed its suit five years ago under the Telephone Consumer Protection Act
(“TCPA”), 47 USC §227, this case traces its beginnings to another junk fax case, Geismann v.
Allscripts-Misy’s Healthcare Solutions, Inc., 09 CV 5114, which settled in February 2012. The
defendants here are two successors of the defendants there, and, as a result of sending fax ads to a
class of recipients, ended up paying plaintiff’s class counsel – mostly the same attorneys representing
the plaintiff here – about $600,000 in attorneys’ fees. [09 CV 5114, Dkt. #142, at 4]. Yet, the
defendants kept sending junk faxes by the thousands, seemingly as it was signing that hefty
settlement check. It sent over a thousand faxes two days after it agreed to settle the case. [09 CV
5114, Dkt. #142, at 4; Dkt. #204-5, Page 224/257]. And so, a new plaintiff – this one a veteran junk
fax litigator1 – is back in court with veteran class counsel – three law firms’ worth – three dozen
offending junk faxes, and thousands of putative class members. So, potentially, it’s very much
worse for the defendants than last time. The defendants estimate it could be tagged with over $200
million in liability. [Dkt. # 215, at 26].
As the D.C. Circuit recently said in a $150 million junk fax case, “[l]et that soak in for a
minute.” Bais Yaakov of Spring Valley v. Fed. Commc'ns Comm'n, 852 F.3d 1078, 1081 (D.C. Cir.
2017). That’s a lot amount of money - a draconian penalty as Judge Posner called it, Creative
Montessori Learning Centers v. Ashford Gear LLC, 662 F.3d 913, 915 (7th Cir. 2011) - for the
electronic equivalent of the fliers or junk mail most throw in the trash without bothering to look at
Teaming up with the law firm representing it here, the plaintiff has, in just the last four years, sued
at least eighteen different companies in federal courts in Illinois, Indiana, Michigan, Missouri, California,
Pennsylvania, New Jersey, Connecticut, Massachusetts, North Carolina, and Florida. And that includes only
those cases limited to the case in which written opinions were published on Westlaw. Counsel tells us
plaintiff has brought more than twenty such cases altogether. [Dkt. #204-1, at 14]. It is thus a knowledgeable
and experienced litigant.
it. Of course, as Judge Easterbrook commented in Chapman and Judge Pillard echoed in his dissent
in Bais Yaakov, it’s ridiculously easy to avoid that exposure. Bais Yaakov, 852 F.3d at 1085. To
which it should be added, this is the way Congress has decided to deal with the matter. And that is
the end of the matter. Creative Montessori Learning Centers v. Ashford Gear LLC, 662 F.3d 913,
915 (7th Cir. 2011). It must be remembered that statutes are to be enforced as Congress intended and
not avoided by judicial action. Patterson v. Shumate, 504 U.S. 753, 759 (1992). See also Fed.
Deposit Ins. Corp. v. Philadelphia Gear Corp., 476 U.S. 426, 441 (1986).
So, can it be that the practice is sufficiently efficacious to make it worth the risk? Intuitively,
the answer would seem to be “no.” Many of the faxes at issue in this case, weighed against that
potential $200 million in damages are, to put in mildly, head-scratchers, why do it: the ads consist
of promotions; a survey sent three weeks in a row; a free beach towel when $250 in supplies was
ordered; a copy paper raffle; tickets to a minor ball game in Columbus, Ohio (the plaintiff is located
125 miles away in Cincinnati); a free pencil cup with a $300 order; the same (or nearly the same)
electronic health records ad sent five times in a month; butter cookies with a $100 order. And these
ads were sent in droves – as many as 8,000 a day. It was cheap when the defendants did it: three
cents a fax. But now, divvying up the potential liability among the faxes, that butter cookie fax
could end up costing $5.5 million. It certainly seems that some people thought the gamble (or
business plan, call it what you will) worthwhile.
The statute works like this: it prohibits any person from sending unsolicited fax
advertisements, unless the sender has an established business relationship with the recipient, the
sender obtained the fax number through voluntary communication or a directory, and the fax
includes an opt-out notice meeting certain requirements. 47 U.S.C. §227(b)(1)(C). The statute
defines an “unsolicited advertisement” 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, in writing or otherwise.” 47 U.S.C. § 227(a)(5). Otherwise,
there must be an established business relationship. Federal regulations define “established business
a prior or existing relationship formed by a voluntary two-way communication
between a person or entity and a business or residential subscriber with or without
an exchange of consideration, on the basis of an inquiry, application, purchase or
transaction by the business or residential subscriber regarding products or services
offered by such person or entity, which relationship has not been previously
terminated by either party.
47 C.F.R. § 64.1200(f)(6). Opt-out notices are also required for faxes sent with the recipient’s
permission. Ira Holtzman, C.P.A. v. Turza, 728 F.3d 682, 683 (7th Cir. 2013). The provision
covering opt-out notices requires that the notice be “clear and conspicuous and on the first page” of
the advertisement, and that it state that the recipient can make a request that the sender not send any
further unsolicited advertisements, include a cost-free phone or fax number by which the recipient
can communicate its request. 47 USC §277(b)(2)(D).
For one reason or another, the faxes at issue do not comply with the opt-out notice
requirements. [Dkt. #204-1, at 18-19]. The potential monkey wrench here, however, is that in August
of 2015, the defendants sought and obtained from the FCC a retroactive waiver of the requirement
that faxes sent with permission have an opt-out notice. Bais Yaakov of Spring Valley v. F.C.C., 852
F.3d at 1079. The parties are at odds over whether that waiver applies to civil litigation (or simply
FCC enforcement proceedings). There is also the question of whether it trumps Turza’s 2013 holding
that “[e]ven when the Act permits fax ads – as it does to persons who have consented to receive
them, or to those who have established business relations with the sender—the fax must tell the
recipient how to stop receiving future messages.” 728 F.3d at 683.
Bais Yaakov held that the FCC’s 2006 Solicited Fax Rule was unlawful “to the extent that
it requires opt-out notices on solicited faxes.” Bais Yaakov of Spring Valley v. FCC, 852 F.3d at
1079. The Seventh Circuit’s prior holding in Turza, however, did not even mention the FCC rule,
but relied exclusively on the statute, itself, when it stated that opt-out notices are required on
solicited faxes. The Court said: “Even when the Act permits fax ads—as it does to persons who have
consented to receive them, or to those who have established business relations with the sender – the
facts must tell the recipient how to stop receiving future messages. 47 U.S.C. §227(b)(1)(C)(iii),
(2)(D).” Turza, 728 F.3d at 683.
Given the vertical hierarchy of the federal courts, we are bound to follow Turza and are not
at liberty to opt for Bais Yaakov. See Hays v. United States, 397 F.3d 564, 567 (7th Cir. 2005);
United States v. Castro-Portillo, 211 F. App'x 715, 722 (10th Cir. 2007); Bell v. Hill, 190 F.3d 1089,
1093 (9th Cir. 1999); United States v. Glaser, 14 F.3d 1213, 1216 (7th Cir. 1994); United States v.
Diaz, 122 F. Supp. 3d 165, 179 (S.D.N.Y. 2015).
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as
to any material fact, and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
The court must construe the evidence and all inferences that reasonably can be drawn from it in the
light most favorable to the nonmoving party. Allin v. City of Springfield, 845 F.3d 858, 861 (7th Cir.
2017); Chaib v. Geo Grp., Inc., 819 F.3d 337, 340 (7th Cir. 2016). A factual dispute is “genuine”
only if a reasonable jury could find for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986); Alston v. City of Madison, 853 F.3d 901, 906 (7th Cir. 2017). Here, the defendants are
moving for summary judgment on the issue of plaintiff having granted it express permission to send
the fax ads at issue. That is an affirmative defense on which the defendants bear the burden, Momient
v. Nw. Collectors, Inc., 666 F. App'x 531, 537 (7th Cir. 2016); Van Patten v. Vertical Fitness Grp.,
LLC, 847 F.3d 1037, 1044 (9th Cir. 2017), and so “must lay out the elements of the claim, cite the
facts which they believe satisfy these elements, and demonstrate why the record is so one-sided as
to rule out the prospect of a finding in favor of the non-movant on the claim.” Hotel 71 Mezz Lender
LLC v. Nat'l Ret. Fund, 778 F.3d 593, 601 (7th Cir. 2015). The defendants have fallen short of
making that showing here, and, so, its motion must be denied.
The Defendants’ Motion
Part of the premise of the defendants’ motion for summary judgment is the concession that
the plaintiff’s position that it was not one of the defendants’ customers is to be accepted, despite the
fact that plaintiff eventually admitted at deposition that it was a customer – notwithstanding its
apparent falsification about that point in discovery – which is discussed at length in the ruling on the
plaintiff’s motion for class certification. For the purposes of the motion for summary judgment, the
defendants have eschewed the limited safe harbor of the “established business relationship,” [Dkt.
#213, at 1. Thus, the defendants assert that “[f]or the purposes of this motion, however, the Court
can accept as true Plaintiff’s sworn statement that it was not [defendants’] customer.” See 47 U.S.C.
§§ 227 (b)(1)(C); (2)(D); Bridgeview Health Care Ctr., Ltd. v. Clark, 816 F.3d 935, 938 (7th Cir.
2016); Physicians Healthsource, Inc. v. Boehringer Ingelheim Pharm., Inc., 847 F.3d 92, 99 n.4 (2nd
That means the defendants must rely on the position that the faxes it sent were not
“unsolicited advertisements.” As already noted, the Act defines an “unsolicited advertisement” 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, in
writing or otherwise.” 47 U.S.C.A. § 227(a)(5); [Dkt. #213, at 1 (“. . . the evidence proves that
[defendants] received express permission from [plaintiff] to fax information advertising its
commercially available goods and services.”)]. The defendants have the burden of proving they had
“express permission” to fax the ads at issue. Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991; Junk Fax Prevention Act of 2005, 71 FR 25967-01, 25972, 2006
There are thirty-six faxes at issue. Either the plaintiff gave the defendants express permission
to send those ads, or it didn’t. Yet, in order to prove what seems like a seemingly simple fact, the
defendants have amassed a record in support of its motion for summary judgment that approaches
1000 pages. While it's not always the case that an unwieldy or large record means that there must
be a genuine issue of fact, see U.S. ex rel. Yannacopoulos v. General Dynamics, 652 F.3d 818 (7th
Cir. 2011)(affirming grant of summary judgment in qui tam action concerning the sale and financing
of 40 F–16 fighter jets to the nation of Greece, a deal that spanned 7 years and cost over $600
billion), that's often the likely result – especially in what ought to be a rather simple case with clearly
defined issues. As the Seventh Circuit said in Adams v. Ameritech Services, Inc., 231 F.3d 414, 417
(7th Cir. 2000), a much more complex discrimination case with 50 plaintiffs, “[w]hile we appreciate
the herculean efforts the district court made to wade through the voluminous materials on summary
judgment that both sides presented, we conclude that the plaintiffs presented enough evidence to
withstand the defendants' motions.” 231 F.3d at 417. Motions for summary judgment in cases like
Yannacopolous and Adams demand massive records. A motion for summary judgment on the
question of whether a plaintiff said it was okay to fax it 36 ads ought not to. Yet, here we are.
Defendants’ motion begins weakly and finishes worse. From the outset, the defendants speak
of both consent and permission, using the terms interchangeably. But “consent” isn’t an issue;
express permission is. The two are very different. Throughout the law, consent may be express or
implied. See, e.g., Reynolds v. Tangherlini, 737 F.3d 1093, 1106 (7th Cir. 2013); Richer v.
Morehead, 798 F.3d 487, 490 (7th Cir. 2015); United States v. Risner, 593 F.3d 692, 694 (7th Cir.
2010); Hunter v. Amin, 583 F.3d 486, 492 (7th Cir. 2009). But in this instance, by definition,
“permission” must be “expressed.” 47 U.S.C. §227(a)(5). There is no avenue for inferring or
implying permission or invitation based on circumstances or conduct.
The Federal Communications Commission’s rules implementing the TCPA and the Junk Fax
Prevention Act make this quite clear:
In the absence of an [established business relationship]2, the sender must obtain the
prior express invitation or permission from the consumer before sending the
Arguably, the established business relationship defense provides and avenue to show implied
permission. But, again, for the purposes of this motion and the defendants’ motion for summary judgment,
which the defendants have insisted on combining [Dkt. #224], the defendants have chosen to paint
themselves into a corner and abandon any defense based on an established business relationship.
facsimile advertisement. Prior express invitation or permission may be given by oral
or written means, including electronic methods. The Commission expects that written
permission will take many forms, including e-mail, facsimile, and internet form.
Whether given orally or in writing, prior express invitation or permission must be
express, must be given prior to the sending of any facsimile advertisements, and must
include the facsimile number to which such advertisements may be sent. It cannot be
in the form of a “negative option.”
Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991; Junk Fax
Prevention Act of 2005, 71 FR 25967-01, 25972, 2006 WL 1151584. The Rules go on to express
concern that, since permission may be obtained orally, senders might falsely submit that they had
received permission to send a fax. As such, the Rules warn senders that if they choose to obtain
permission orally, they must take reasonable steps to ensure that permission can be verified, such
as by promptly documenting oral permission. Id.
It’s clear from much of the material the defendants have submitted on this point that they are
using to term “consent” advisedly and not as a convenient shorthand for express permission or
invitation. To begin with, defendants assert that by providing its fax number or by listing it in a trade
publication, a business has consented to receive all faxes. [Dkt. # 213, at 12-13]. But that’s the case
only where there is an established business relationship. 47 U.S.C. §§ 227 (b)(1)(C). But, as noted
earlier, the defendants have said that their motion is not predicated on the existence of an established
business relationship, and that they won’t be pressing that point.
Plaintiff’s Fax Policy
Defendants next argue that plaintiff’s written fax policy for its employees demonstrates that
there is no issue that plaintiff consented to receive the faxed ads in this case. The policy reads as
WE CONSTANTLY RECEIVE JUNK EMAIL ON A DAILY BASIS. IN AN
EFFORT TO CURTAIL NEW JUNK AND DECREASE THE ADDITIONAL
USAGE OF OUR COPIER/FAX MACHINE, I WANT TO REMIND EVERYONE
NOT TO GIVE OUT OUR PHS FAX NUMBER TO ANYONE WHO MAY ASK
YOU FOR IT OVER THE TELEPHONE WITHOUT IDENTIFYING WHAT
COMPANY THE INDIVIDUAL IS CALLING FROM. COMPANYS [SIC] THAT
HAVE NOTHING TO DO WI1H OUR DAY TO DAY BUSINESS WILL OFTEN
ARBITRALY [SIC] CALL AND ASK FOR THE FAX NUMBER. IF YOU GIVE
IT OUT, YOU HAVE AUTHORIZED THEM TO UTILIZE OUR NUMBER AND
WE SUBSEQUENTLY GET MORE JUNK FAX.
SO, IF YOU RECEIVE A CALL ASKING FOR OUR FAX NUMBER, ASK WHO
IS CALLING AND WHY DO THEY NEED IT. IF THEY IDENTIFY
THEMSELVES AS A REPRESENTATIVE FROM AN ATTORNEY'S OFFICE,
MCO, INSURANCE CARRIER, PHARMACY, PHYSICIANS OFFICE, OR
HOSPITAL, YOU MAY GIVE OUT THE NUMBER. IF YOU ARE UNSURE
WHETHER TO GIVE OUT OUR NUMBER, ASK DR ELWERT OR DR. RUCH.
[Dkt. #214-30 (Defendants’ Ex. 29)(Capitals and underlining in original).
Defendants argue that because individuals from plaintiff’s office gave out the plaintiff’s fax
number on certain occasions, that meant, pursuant to this policy, that plaintiff was “consenting” to
receive all the faxes defendants cared to send. [Dkt. #213, at 5]. Again, the provision of a fax
number has import if there is an established business relationship. But, for the purposes of this
motion, the defendants say it should be assumed there wasn’t one. Moreover, the defendants quote
excerpts from the plaintiff’s policy, [Dkt. #213, at 5, 14-15], omitting the following:
“So, if you receive a call asking for our fax number, ask who is calling and
why they need it. If they identify themselves as a representative from an attorney’s
office, MCO, insurance carrier, pharmacy, physician’s office of hospital, you may
give out the number.”
The defendants did not fit into any of the above categories, and the omitted portion of the
Policy meant that the fax number was not to be given to anyone who did not fit into one of the above
slots. So if the policy were followed, the plaintiff would not have routinely given out its fax number
to the defendants.
While the quotation of the policy in the defendants’ brief contains ellipses, deleting portion
of quotes that are significant – and the omitted portion fits that definition – is frowned upon by all
courts. See, e.g., Walters v. National Association of Radiation Survivors, 473 U.S. 305, 322 (1985);
Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC, 626 F.3d 958, 966 (7th Cir. 2010);
Swanson v. Bank of America, N.A., 563 F.3d 634, 636 (7th Cir. 2009);Posner, Overcoming Law 277
It’s difficult to see how the evidence shows, as summary judgment requires, that the
plaintiff’s claimed policy means that the policy was invariably followed, and the plaintiff, by giving
permission for specific faxes from specific parties, but not others, consented to all the faxes at issue
here. At most, the argument and evidence raises a question of fact as to whether the plaintiff,
through an employee who might have given permission to defendants to send a specific fax or faxes,
thereby gave blanket permission for the sending of all faxes of any character. The fact that the policy
includes language warning employees “if you give it out, you have authorized them to utilize our
number and we subsequently get more junk fax”, doesn’t mean that’s the law.
In fact, it is no more on its face than someone’s conclusion about the consequences of certain
actions. And that implied opinion is meaningless in deciding what the statute means. It’s a warning
to employees of what the author of the policy thinks possible consequences might be in this context:
if they give out the fax number, plaintiff will get more unwanted faxes. The clear policy is not to
give out the fax number unless the call is from a limited class of entities that did not include the
Without more, the policy shows nothing. It certainly does not warrant summary judgment in
the defendants’ favor. For defendants, though, it proves that plaintiff knew if it gave out its fax
number to the defendants, even for one limited circumstance, that meant it consented to receive “any
and all faxes” from defendants. But even if that’s what the plaintiff thought – and again, the policy
is clearly a worst-consequences warning to employees – that doesn’t mean that’s what the law is.
Again, the giving out of the fax number is part of the established business relationship defense and
defendants insist we assume there wasn’t one.
The defendants rely on two cases, CE Design v. King Architectural Metals, Inc., 637 F.3d
721 (7th Cir. 2011) and Practice Mgmt. Support Servs., Inc. v. Appeal Sols, Inc., 2010 WL 748170
(N.D.Ill. Mar. 1, 2010). But the fact patterns in those two cases have little or nothing to do with the
circumstances here, and neither stands for the proposition that granting permission to send one fax
means a blanket consent to any and all faxes from then on. In CE Design v. King Architectural
Metals, Inc., the plaintiff not only posted its fax number on its website and invited all to “contact us”,
but – and the Seventh Circuit found this more important – it knowingly made itself part of an online
directory that published its fax number, and specifically consented to receive faxes when it filled out
the form for the directory from anyone who used the directory. 637 F.3d at 725. Similarly, in
Practice Mgmt. Support Servs., Inc. v. Appeal Sols, Inc., 2010 WL 748170 the plaintiff visited the
defendants’ website and filled in a form to receive information from defendants’ business. In so
doing, the plaintiff provided its fax number even though the website did not require it. Id. at *1, 3.
There is no evidence in the record that the plaintiffs gave the defendants any such blanket
permission to send “any and all faxes.” Defendants rely, in the main, on testimony from Geri
Monhollen, one of plaintiff’s employees. But that testimony is speculative, and “[s]peculation is no
substitute for evidence at the summary judgment stage” and speculation does not succeed in a
summary judgment proceeding. Bass v. Joliet Pub. Sch. Dist. No. 86, 746 F.3d 835, 841 (7th Cir.
All the defendants can show is that, hypothetically, there might be instances where Ms.
Monhollen would give permission for information about using defendants’ medical billing software
to be faxed. In other words, “support” for the product the plaintiff had purchased. [Dkt. #214-5,
Monhollen Dep., at 67-68]. For example, Ms. Monhollen testified that:
A: . . . if -- they would call me and say, you know, "Can I fax this over to you?" I
would say, "Yes." And I would let staff know I was expecting a fax. And it would
come. And I would complete whatever it was that they gave me. And I would fax
Q: . . . I just want to go back and clarify what you said earlier. That you would ask
them for information. And you would ask them to send you information. And they
would send it to you by fax?
A. Well, they would say, "Can we send this over to you by fax?" And I would say,
[Dkt. #214-5, Page 30-31/61 (Monhollen Dep., at 68-69)].
Beyond being merely hypothetical, the questions focused on what would be “transactional
faxes,” not junk fax ads. So even if defendants could show that Ms. Monhollen actually gave
express permission for a fax, that’s not permission to send fax ads as the spirit moved the sender.
See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991; Junk Fax
Prevention Act of 2005, 71 FR 25967-01, at 25973 (explaining that while a fax that advertises the
commercial availability of goods, but purports to be a price sheet would be an unsolicited
advertisement, “if not sent for the purpose of facilitating, completing, or confirming an ongoing
transaction.”). See also Physicians Healthsource, Inc. v. Boehringer Ingelheim Pharm., Inc., 847
F.3d 92, 101 n.6 (2nd Cir. 2017)(noting distinction between transactional faxes and faxed
advertisements); Absolute Health Ctr., Inc. v. Multiplan, Inc., 2016 WL 7868822, at *3 (D. Colo.
2016); Vinny's Landscaping, Inc. v. United Auto Credit Corp., 207 F. Supp. 3d 746, 750 (E.D. Mich.
Staying in the realm of the hypothetical, the defendants point out that Ms. Monhollen also
testified that if someone called and asked if they could fax information about a specific product, she
would generally defer to one of the doctors (Ruch), but if she was “intrigued” by it and thought the
business would benefit, she would say yes. [Dkt. #214-5, Page 50/61 (Monhollen Dep., at 100)].
None of this suggests what the defendants are arguing: that plaintiff gave general permission for
defendants to send it any and all fax advertisements defendants wanted to, whenever they wanted
to. That means faxes about free cookies, beach blankets, or anything else of concern to the
defendants. There’s nothing to show Ms. Monhollen was “intrigued” by any of that. At best, Ms.
Monhollen’s testimony shows that, hypothetically, she might have given permission to defendants
to send a specific fax when she asked them for information about using a product. Free cookies are
not information about product. The fax would simply be an indirect – and, perhaps, an ineffective
one – to get more sales.
This case is about three dozen or so specific faxes. In their motion for summary judgment,
defendants point to no evidence that Ms. Monhollen actually gave express permission to defendants
to send any of the faxed advertisements at issue here, or any advertisement at all. At her deposition,
she testified she had no recollection of doing so. [Dkt. #214-5, Page 53-54/61 (Monhollen Dep.,
at 132-33)]. That doesn’t eliminate a genuine issue of fact for trial; it highlights the fact that there
is one. It will be for the jury to resolve credibility.
Defendants’ Fax Policy
Clearly, defendants’ main problem is that they didn’t care about the statutory command or
heed the FCC’s warning about documenting whether a business gave it express permission to send
it faxed advertisements. And that makes it a very difficult affirmative defense to prove on a motion
for summary judgment. So, without pointing to any supporting evidence, defendants claim they had
a policy of obtaining express permission prior to sending any fax and relies on testimony from its
“corporate representative.” [Dkt. #213, at 18]. Defendants don’t reveal that person’s position with
the company, but, assuming he was in charge of all the faxing, his testimony only raises the question
of what he thinks – and what defendants think – getting express permission means.
Mr. Moffett testified that he “would always tell [his] staff make sure you get permission . .
. .” [Dkt. #214-4, Moffett Dep., at 40]. “First, you had to have permission,” he said, “and then once
you had permission, we would send them the fax.” [Dkt. #214-4, Moffett Dep., at 64]. He explained
that the fax number had to be verified “because you couldn’t just send something knowing they
might not get it, so . . . you always verified the fax number and ask permission.”
Moffett Dep., at 40-41]. He was unable to say, however, if that was a written policy. [Dkt. #214-4,
Moffett Dep., at 41]. On its face, and without more from defendants, given the evidence regarding
defendants’ faxing habits, that testimony strains credulity but that’s not for us to decide on this
That’s because defendants’ faxes came in blizzards. For example, on May 4, 2008,
defendants sent faxes to 5,113 recipients. [Dkt. #204-5, Page 2/257]. They sent faxes to a combined
9,065 recipients on May 26 and 30, 2008. [Dkt. #204-5, Page 3-4/257]. In other words, nearly 10,000
faxes to nearly 10,000 businesses in less than a week. On September 21, 2008, defendants blasted
faxes to 8,285 recipients. [Dkt. #204-5, Page 12/257]. Defendants sent faxes to 10,400 businesses
on November 24 and 25, 2008. [Dkt. #204-5, Page 24/257]. There was another storm December
15-17, 2008: more than 15,203 faxes. [Dkt. #204-5, Page 39-40/257]. Over two days in February
2009, defendants’ faxes snowed down on just over 21,000 recipients. [Dkt. #204-5, Page 3940/257]. Even as April turned to May in 2009, winter faxing wasn’t over. From April 28 to May 1,
there was a blizzard of over 38,000 faxes. [Dkt. #204-5, Page 61-70/257]. There were another
21,000 or so from May 4 to May 7. [Dkt. #204-5, Page 71-72/257]. May 20 and May 22 brought
over 18,699. [Dkt. #204-5, Page 78-79/257]. The examples, of course, go on and on.
Paraphrasing the D.C. Circuit’s take on potential damages in junk fax cases, let that soak in
a minute. Mr. Moffett testified that his staff “always” got permission before sending “the fax” and
“always verified the fax number and ask[ed] permission.” Assume two-minutes to reference a phone
number, call, verify the fax number and get express permission, and note permission – and that’s a
very conservative estimate. Assume there are no unsuccessful calls – and that’s a fantastic
assumption. That means for the fax blast at the end of February 2009, Mr. Moffett’s staff spent 700
man-hours – or 17 man-weeks – getting express permission for those beach towel or butter cookie
ads. For April 28 to May 1, 2009, it would have taken 1266 man-hours to get express permission.
That would take one person 8 months; a staff of 32 might accomplish it, doing absolutely nothing
else, working solidly for an entire week! A judge doesn’t give up his/her common sense when they
become a judge.
So, clearly something else was going on. But, we don’t know the procedure defendants used
to obtain express permission to send a fax ad. Mr. Moffett refused to answer what defendants’
understanding of the law regarding sending fax ads was. [Dkt. # 214-4, Moffett Dep., at 42]. Did
they operate on a permission for one, permission for all basis? In other words, was Mr. Moffett’s
policy that if a business asked for a transactional fax – say, instructions on a product they had
purchased – that meant they had given express permission for defendants to fax ads for anything?
All we can glean along these lines from Mr. Moffett’s testimony is that he seemed to think that, if
a business had purchased a product from defendants in the past, that meant “[defendants] would have
had permission to fax them” ads. [Dkt. #214-4, Moffett Dep., at 65]. While that might be true if the
defendants are asserting that they had an established business relationship and the elements of that
defense are proven, defendants have eschewed that defense for the purposes of this motion. As a
result, in the context of the defendants’ motion and the ground rules the defendants have insisted on,
Mr. Moffett’s testimony is all but meaningless.
That leaves, as defendants’ evidence of express permission, its Salesforce records. [Dkt.
#213, at 18-19]. Unfortunately for defendants, they failed to disclose the witness who was to provide
the necessary foundation and explain those records, and that witness’s affidavit has been stricken.
[Dkt. #283, at 15-21]. Accordingly, these records are no longer properly before the court in this
summary judgment proceeding. But, even if they were properly part of the record, it would have to
be said that defendants’ assertion that the Salesforce records prove that the plaintiff gave it express
permission to fax it advertisements doesn’t hold water.
Defendants claim that the Salesforce record shows two occasions where plaintiff’s personnel
gave defendants permission to fax ads. [Dkt. #213, at 18]. The first supposedly came in late 2008,
and concerned the electronic health records stimulus package. The Salesforce entry, dated November
4, 2008, states that “Dr. Ruch . . . want[ed defendant’s employee] to mail him some lit[erature].”
[Dkt. #214-20, Page 2/14 (emphasis supplied)]. Mailing, of course, is not faxing, and asking
someone to mail you literature is not granting them express permission to fax ads. The story
unravels further when defendants explain that they sent plaintiff the “first fax” about electronic
health records “on April 28, 2009, after [plaintiff] gave permission.” [Dkt. #214, at 6-7]. But the
Salesforce entry states that the packet of literature was sent – presumably mailed, because that’s what
the doctor requested and permitted – on November 4, 2008. [Dkt. #214-20, Page 2/14]. There’s
nothing to indicate that plaintiff gave permission to send ads about the electronic health records
stimulus package by fax months later.
Worse, the April 28, 2008 fax the defendants refer to provides no information whatsoever.
It’s a “survey” asking the recipient whether it had an electronic health records system in place, or
whether it just didn’t want one, or whether it wanted more information on the package. Fill out the
“survey” and you could win a prize. [Dkt. #214-18, at Page 2/18]. Defendants sent plaintiff the
same “survey” three times in a week. [Dkt. #214-18, at Pages 2-4/18]. So, to sum up, if a business
asks the defendants to mail them a specific packet of literature about a specific topic, for the
defendants that equates to providing express permission to fax any and all ads arguably touching on
the topic starting five months later. That is not the kind of persuasive and decisive evidence Rule 56
contemplates and requires.
The only other instance from the Salesforce records that defendants can point to in support
of its express permission to send faxed ads argument is dated January 11, 2008. One of plaintiff’s
employees wanted to order a new computer backup battery and asked defendants’ employee to fax
price quote. [Dkt. #214-29, Page 12/12]. If such a fax was sent, again, that’s a transactional fax,
facilitating an ongoing purchase, not a fax ad. See Rules and Regulations Implementing the
Telephone Consumer Protection Act of 1991; Junk Fax Prevention Act of 2005, 71 FR 25967-01,
at 25973 (explaining that while a fax that advertises the commercial availability of goods, but
purports to be a price sheet would be an unsolicited advertisements, “if not sent for the purpose of
facilitating, completing, or confirming an ongoing transaction.”); see also Boehringer Ingelheim,
847 F.3d at 101 n.6 (noting distinction between transactional faxes and faxed advertisements);
Absolute Health, 2016 WL 7868822, at *3; Vinny's Landscaping, 207 F. Supp. 3d at 750.
Because the defendants have failed to demonstrate they are entitled to summary judgment;
because they have failed to show that “the record is so one-sided as to rule out the prospect of a
finding in favor of the non-movant on” the issue of express permission. Hotel 71, 778 F.3d at 601,
we need not wade into the quagmire that is the opt-out rule in express consent situations, the
F.C.C.’s granting of a waiver of that rule, and the conflict between the D.C. Circuit’s holding in Bais
Yaakov and the Seventh Circuit’s holding in Turza. But it is very clear that the defendants are
picking and choosing from among their favorite parts of rules and cases, and that only tends to show
their position is weak.
For example, defendants’ theory is clearly that permission to send any type of fax at all, even
a fax that is part of an ongoing business transaction, means blanket permission to send any fax
whatsoever, including faxes about raffles, free beach towels, or free butter cookies. Or, at the very
least, that permission to send one ad mean permission to send all ads – although the defendants
haven’t established there was any such permission for the purposes of its summary judgment motion.
Defendants do not provide any support for this position until their reply brief, where they purport to
quote from the FCC’s Rules and Regulations Implementing the Telephone Consumer Protection Act
of 1991; Junk Fax Prevention Act of 2005 (May 3, 2006)(“2006 FCC Rule”):
“‘Express permission need only be secured once from the consumer in order to send
[Dkt. #274, at 13 (quoting 2006 FCC Rule)]. Setting aside for the moment that providing a basis for
an entire theory of a case in a reply brief is too little too late, see Cornucopia Inst. v. U.S. Dep't of
Agric., 560 F.3d 673, 678 (7th Cir. 2009); Harper v. Vigilant Ins. Co., 433 F.3d 521, 528 (7th
Cir.2005),3 that quote y supports defendants’ theory. The problem is, it is a misquote, as we show
Courts disapprove of replacing significant portions of quotes with ellipses. See e.g., May
Dept. Stores Co. v. Federal Ins. Co., 305 F.3d 597, 599 (7th Cir.2002); United States v. Johnson,
187 F.3d 1129, 1132 (9th Cir.1999); Posner, Overcoming Law 277 (1995). That is a bad enough
practice, but the defendants don’t indicate the deletion of an entire clause. The passage actually
reads: “[e]xpress permission need only be secured once from the consumer in order to send facsimile
advertisements to that recipient until the consumer revokes such permission by sending an opt-out
request to the sender.” 2006 F.C.C. Rule, 71 FR 25967-01, 25972. (Emphasis supplied). This, of
course, goes hand in hand with the FCC’s conclusion just two sentences later that “entities that send
facsimile advertisements to consumers from whom they obtained permission must include on the
advertisements their opt-out notice and contact information to allow consumers to stop unwanted
faxes in the future.” Id. The defendants didn’t comply with the opt-out notice rule. But they want
to have theirs cake – blanket permission after one permitted ad – and eat it, too – ignore the opt-out
Of course, this goes for arguments defendants raises for the first time in its reply brief about a
“January 6/7 2010 Fax.”
Now granted, that was before the waiver monkey wrench – not to mention the D.C. Circuit’s
ruling in Bais Yaakov – was thrown into the mix but, again, having found against defendants’
express permission argument, that’s a matter, perhaps, for another day and perhaps, another court.
Truth be told, if defendants had negotiated the hurdle of expression permission in its summary
judgment motion, their arguments on the waiver of the opt-out requirement would likely have been
unconvincing and inadequate.
The waiver of the opt-out requirement for ads faxed with express permission came about
when the FCC, fielding petitions from scores of companies, determined “that a footnote contained
in the [2006 FCC Rule] caused confusion regarding the applicability of this requirement to faxes sent
to those recipients who provided prior express permission or created a false sense of confidence that
the requirement did not apply.” Matter of Rules & Regulations Implementing the Tel. Consumer
Prot. Act of 1991, 29 FCC Rcd. 13998, 14005 (2014). “As a result,” the FCC found “good cause
exist[ed] to grant individual retroactive waivers of” the rule requiring ads faxed with express
permission to include an opt-out notice. Id. That would have been footnote 154, buried among
another 107 footnotes in a 42-page document that made explicitly clear in its text – twice – that an
opt-out notice was required. In any event, that footnote apparently confused businesses like the
defendants, and they followed that footnote rather than the text or the codified rule.4
The defendants leave a few unanswered questions in their motion for summary judgment.
So, the defendants supposedly fixated on this obscure footnote, while clearly ignoring the wording
in the text to either get written permission or promptly document oral permission. Still, at least a few of the
faxes include opt-out notices, albeit ones that aren’t compliant with the requirements of the statute, so it’s
hard to say just what the defendants might have been thinking.
Such as how the waiver of the opt-out requirement jibes with the Seventh Circuit’s holding that the
TCPA requires opt-out notices on faxes sent with the express permission of the recipient. See
Turza, 728 F.3d at 683. As discussed, the waiver was based on supposed confusion stemming from
a footnote in an FCC rule; the Seventh Circuit didn’t consider that rule and based its statement of
what the law required on the statute. According to the FCC, in granting the waiver, it was
“interpreting a statute, the TCPA, over which Congress provided the Commission authority as the
expert agency.” That seems debatable, as it reiterated, in the waiver order, that its interpretation of
the statute was that an opt-out notice was required in a fax sent with express permission.
But, assuming the waiver was an interpretation of the statute, does the FCC waiver trump the
clear Seventh Circuit pronouncement in Turza? See Nat'l Cable & Telecommunications Ass'n v.
Brand X Internet Servs., 545 U.S. 967, 982–83 (2005)(“The better rule is to hold judicial
interpretations contained in precedents to the same demanding Chevron step one standard that
applies if the court is reviewing the agency's construction on a blank slate: Only a judicial precedent
holding that the statute unambiguously forecloses the agency's interpretation, and therefore contains
no gap for the agency to fill, displaces a conflicting agency construction.”). It’s a question the
defendants leave unresolved.
Moreover, it would seem that the D.C. Circuit’s vacating of the FCC’s ruling that faxes sent
with express permission scotches the defendants’ theory is drawn from a misquote of a portion of
that ruling, that permission for one fax ad is permission for all. It’s pretty clear that the FCC never
would have said that express permission need only be secured once if there was also not a
requirement of an opt-out notice. See Bais Yaakov, 852 F.3d at 1080 (noting the FCC’s position
“that it has reasonably defined the phrase ‘prior express invitation or permission’ to mean that prior
express permission lasts only until it is revoked, and that all fax advertisements—even solicited fax
advertisements—therefore must include a means to revoke that permission.”).
Suffice it to say, the defendants left a lot on the table. Without development of these issues
from the parties, it would be inappropriate to tread any further. Arnold v. Villarreal, 853 F.3d 384,
388 (7th Cir. 2017); Kay v. Board of Educ. of City of Chicago, 547 F.3d 736, 738 (7th Cir. 2008);
Hartmann v. Prudential Ins. Co. of America, 9 F.3d 1207, 1214 (7th Cir. 1993). In sum, the
defendants have not shown they are entitled to summary judgment on the theory that they received
express permission to fax ads to the plaintiff.
For the foregoing reasons, the defendants’ motion for summary judgment [Dkt. # 209] is
UNITED STATES MAGISTRATE JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?