Casso's Wellness Store & Gym, L.L.C. v. Spectrum Pharmacy Products, Inc.

Filing 46

ORDER AND REASONS denying 13 Motion to Dismiss for Lack of Jurisdiction. Signed by Chief Judge Kurt D. Engelhardt on 2/5/2018. (sa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CASSO’S WELLNESS STORE &
GYM, L.L.C.

CIVIL ACTION

VERSUS

NO. 17-2161

SPECTRUM LABORATORY
PRODUCTS, INC.

SECTION “N” (2)

ORDER & REASONS
Before the Court is a Motion to Dismiss for Lack of Subject Matter Jurisdiction pursuant
to Fed. R. Civ. P. 12(b)(1) filed by the defendant, Spectrum Laboratory Products, Inc. (“Spectrum”
or “Defendant”). 1 (Rec. Doc. 13). Plaintiff Casso’s Wellness Store and Gym, LLC (“Casso” or
“Plaintiff”) opposes the Motion. (Rec. Doc. 20). Spectrum filed a reply in support of its Motion
(Rec. Doc. 26), which was followed by Casso’s sur-reply (Rec. Doc. 32). Now, having considered
the extensive submissions of the parties, the record, and the applicable law, the Court DENIES
the Motion to Dismiss for Lack of Subject Matter Jurisdiction for the reasons stated herein.
I.

BACKGROUND

Casso’s Wellness Store and Gym, LLC (“Casso” or “Plaintiff”) filed a putative class action
suit against Spectrum Laboratory Products, Inc. (“Spectrum” or “Defendant”) under the Telephone
Consumer Protection Act of 1991 (“TCPA”), as amended by the Junk Fax Protection Act of 2005
(“JFPA”), seeking to recover damages for and to enjoin Spectrum’s massive junk faxing

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Spectrum concurrently filed an alternative motion to dismiss and/or strike class allegations. (Rec. Doc. 15).

campaign. 2 (Rec. Doc. 1, as amended by Rec. Doc. 9). In its Complaint, Casso defines the
“Plaintiff Class” to include:
[A]ll persons and entities that are subscribers of telephone numbers to which within
four years of the filing of this Complaint, Defendant sent facsimile transmissions
with content that discusses, describes, promotes products and/or services offered
by Defendant, and does not contain the opt-out notice required by 47 U.S.C. §
227(b)(1)(C)(iii), (b)(2)(D), (b)(2)(E), (d)(2) or 47 C.F.R. § 64.1200(a)(4)(iii)-(vii).
(Rec. Doc.1 at p. 6).
Casso alleges that Spectrum violated the TCPA and the regulations promulgated under the
Act by the Federal Communications Commission (“FCC”) by “blasting thousands of [unsolicited]
junk faxes nationwide” to advertise their goods and/or services. (Rec. Doc. 1 at p. 4). “Plaintiff
further alleges that Defendant has blasted junk faxes without complying with the Opt-Out Notice
Requirements, in direct violation of the TCPA, JFPA and the FCC’s regulations.” (Id.). Casso
identifies Spectrum’s alleged violations of the Act as including, but not limited to, the unsolicited
facsimile advertisements sent to Casso’s facsimile telephone number on December 21, 2016;
February 14, 2017; February 17, 2017; and February 24, 2017. 3 (Id. at p. 9).
Casso alleges that it has suffered the following damages as a result of Spectrum’s
unsolicited faxes:
Defendant has imposed disruption, annoyance and cost on Plaintiff. Among other
things, these faxes tie up Plaintiff’s telephone lines and facsimile machines,
misappropriate and convert Plaintiff’s fax paper and toner, require Plaintiff to sort
through faxes to separate legitimate fax communications from junk fax
advertisements and to discard the latter.

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Casso filed a First Amended Class Action Complaint on June 5, 2017. (Rec. Doc. 9).
Plaintiff attached the challenged faxes to the Complaint.

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(Rec. Doc. 1 at p. 5). Additionally, Casso claims to have “suffered an injury in that it has also been
deprived of its right, created by Congress, to receive the required opt-out notice disclosures on
facsimile advertisements governed by the TCPA.” (Id. at p. 6). Casso, on behalf of itself and
members of the purported class, seeks the issuance of a permanent injunction, as well as damages
in the amount of $500 for each violation of the TCPA by Defendant, and trebled statutory damages
for violations Defendant committed “willfully or knowingly.” (Id. at pp. 10-11).
On July 31, 2017, Spectrum filed the instant Motion to Dismiss for Lack of Subject Matter
Jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1) and Spokeo, Inc. v. Robins, 136
S. Ct. 1540 (2016), alleging that the Court lacks subject matter jurisdiction because Casso lacks
standing to sue. (Rec. Doc. 13-1 at p. 11). Specifically, Spectrum contends that Casso’s claim
involves “a strictly statutory violation (the alleged failure to include a complaint opt-out notice),
not a concrete injury sufficient to satisfy Article III standing requirements.” (Id. at p. 2). Spectrum
argues that, in addition to failing to allege a sufficient injury in fact, Casso has also failed to show
that the injury is traceable to the alleged TCPA violation. (Id. at p. 15). Spectrum further contends
that the “safe-harbor exception” applies because the parties had an “established business
relationship (“EBR”).” (See id. at p. 17). Moreover, Spectrum moves for dismissal because it
claims it sufficiently complied with the opt-out notice requirements by including the following
language on the referenced faxes: “To unsubscribe please call us at 800.370.6231 or fax this
special back to us with your fax number at 800.901.5518.” (Id. at p. 14).
In its opposition, Casso contends that (1) the EBR defense fails as a matter of law because
Casso has “never done any business with, voluntarily communicated with, or in any way asked to
receive correspondence of any type from Spectrum;” and (2) even if the EBR defense applies,
Spectrum’s unsolicited facsimile advertisements do not comply with the TCPA’s requirements for

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a valid opt-out notice. (See Rec. Doc. 20 at pp. 2-3). Further, Casso asserts that substantial
compliance with the opt-out requirements is inadequate and not a defense to a violation of the
TCPA. (Id. at p. 8). Next, Casso asserts that both of its claims—that Spectrum’s junk fax campaign
violates the TCPA because the faxes are unsolicited and fails to contain the statutorily-mandated
opt-out language—confer Article III standing. (Id. at p. 4). Casso states that Paragraph 16 of its
Complaint identifies the actual, concrete harm Casso suffered by being a target of Spectrum’s junk
fax campaign. (Id. at p. 11). Moreover, Casso argues that “courts have found, in the wake of
Spokeo, that receipt of unsolicited fax advertisements satisfies Article III standing under the
TCPA.” (Id. at p. 13).
In reply, Spectrum reiterates the applicability of the EBR safe-harbor defense and that
substantial compliance with the opt-out requirements is sufficient. (Rec. Doc. 26 at p. 2). Spectrum
claims the parties had an established business relationship based on prior business dealings
between Spectrum and OncologyRX, LLC, a company formerly owned by Mike Casso (also the
owner of Casso’s Wellness Store & Gym, LLC). (Id. at p. 3). Spectrum argues that this relationship
applies to Casso’s Wellness Store & Gym, LLC because both companies were owned by Mike
Casso and Mike Casso chose to utilize the same fax number for his subsequent company. (Id.)
Moreover, Spectrum argues that the language included on its faxes “conveys the essence of the
required information” and that at least one court has deemed substantial compliance satisfactory
as a defense. (Id. at pp. 4-5). Spectrum asserts that the applicability of the EBR defense strips
Casso of a concrete injury sufficient under Article III: because the faxes fall under the EBR
exception, “the only possible violation Casso’s can allege is not that it received faxes without
basis…but that the opt-out notices were not fully compliant.” (Id. at pp. 5-8).

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Casso filed a sur-reply, arguing that Landsman & Funk, P.C. v. Lorman Business Center,
Inc., 2009 WL 602019 (W.D. Wis. Mar. 9, 2009), cited by Spectrum in support of its substantial
compliance argument, is distinguishable because (1) the opt-out language at issue in Landsman
contained all of the required information and (2) the plaintiff provided express permission for the
defendant to send fax advertisements. (Rec. Doc. 32 at pp. 1-2). Instead, Casso asserts that
Spectrum’s opt-out language is “almost identical” to the opt-out language contained in Bais
Yaakov of Spring Valley v. Alloy, Inc., 936 F.Supp 2d 272 (S.D. NY. 2013), and is “woefully
deficient” as it does not convey the essence of the required information, specifically, it fails to
satisfy “64.1200(a)(4)(iii)(B), (C).” (Id. at pp. 3-4).
II.

LAW AND ANALYSIS
a. Federal Rule of Civil Procedure 12(b)(1)

Rule 12(b)(1) provides for the dismissal of an action upon a finding by the court that it
does not have subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). “A case is properly dismissed
for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to
adjudicate the case.” Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010
(5th Cir.1998) (quoting Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d
Cir.1996)). As the party invoking the jurisdiction of the federal court, the plaintiff bears the burden
of demonstrating that jurisdiction exists. Dow v. Agrosciences, LLC v. Bates, 332 F.3d 323, 326
(5th Cir. 2003). “Courts may dismiss for lack of subject matter jurisdiction on any one of three
bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record;
or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.”
Clark v. Tarrant County, 798 F.2d 736, 741 (5th Cir.1986) (citing Williamson v. Tucker, 645 F.2d
404, 413 (5th Cir.1981)).
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b. Standing
It is well settled that unless a plaintiff has standing, a federal district court lacks subject
matter jurisdiction to address the merits of the case. In the absence of standing, there is no “case
or controversy” between the plaintiff and defendant which serves as the basis for the exercise of
judicial power under Article III of the constitution. Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.
Ct. 2197, 2206, 45 L.Ed.2d 343 (1975). The key question is whether the plaintiff has “alleged such
a personal stake in the outcome of the controversy” as to warrant federal court jurisdiction. Baker
v. Carr, 369 U.S. 186, 204, 82 S. Ct. 691, 703, 7 L.Ed.2d 663 (1962). In ruling on a motion to
dismiss for lack of standing, courts must accept as true all material allegations of the Complaint,
and must construe the Complaint in favor of the complaining party. Warth v. Seldin, 422 U.S. 490,
501, 95 S. Ct. 2197, 2206, 45 L.Ed.2d 343 (1975).
A plaintiff invoking federal jurisdiction bears the burden of establishing the “irreducible
constitutional minimum of standing,” which consists of three elements: “the plaintiff must have
(1) suffered an injury in fact, (2) that is fairly traceable to the challenged action of the defendant,
and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136
S. Ct. 1540, 1547 (2016) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)).
Plaintiff’s failure to establish any one element deprives the federal courts of jurisdiction to hear
the suit. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103, 118 S. Ct. 1003, 140 L. Ed. 2d
210 (1998).
Here, the parties dispute whether Casso has sufficiently pled a concrete injury in fact. “To
establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally
protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or
hypothetical.’” Spokeo, 136 S. Ct. at 1548 (2016) (quoting Lujan, 504 U.S. at 560). “A ‘concrete’
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injury must be ‘de facto’; that is, it must actually exist.” Spokeo, 136 S. Ct. at 1548. Congress may
“elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously
inadequate in law.” Lujan, 504 U.S. at 578. However, even in the context of a statutory violation,
“Article III standing requires a concrete injury.” Spokeo, 136 S. Ct. at 1549. In some
circumstances, “the violation of a procedural right granted by statute can be sufficient…to
constitute injury in fact,” such that “a plaintiff in such a case need not allege any additional harm
beyond the one Congress has identified.” Id.
c. Telephone Consumer Protection Act
The Telephone Consumer Protection Act (“TCPA”), enacted by Congress in 1991 and
amended by the Junk Fax Prevention Act of 2005, prohibits the transmission of unsolicited
advertisements 4 via telephone facsimile machine, computer, or other device. 47 U.S.C. §
227(b)(1)(C) (emphasis added). In enacting the TCPA, “Congress sought to protect consumers
from the unwanted intrusion and nuisance of unsolicited telemarking phone calls and fax
advertisements.” Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1043 (9th Cir. 2017)
(citing Telephone Consumer Protection Act of 1991, Pub. L. 102-243, § 2, ¶ 12). The TCPA
provides a private right of action, which permits any “person or entity” to bring an action seeking
(i) to enjoin a violation of the TCPA; (ii) to recover actual monetary loss from such violation or to
receive statutory damages of $500 per violation, whichever is greater; or (iii) to pursue both
injunctive or monetary relief. 47 U.S.C. § 227(b)(3).

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The TCPA defines an “unsolicited advertisement” as “any material advertising the commercial availability or quality
of any property, good, 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).

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Additionally, the TCPA, requires senders to include specific opt-out notices on all
unsolicited fax advertisements. See 47 U.S.C. § 227(b)(1)(C)(iii), (b)(2)(D), (b)(2)(E), (d)(2); 47
CFR § 64.1200(a)(4)(iii)-(vii). An unsolicited fax advertisement violates the TCPA unless the
sender can establish three things: (i) the sender has an “established business relationship” 5 with
the recipient; (ii) the sender obtained the recipient’s fax number either through “voluntary
communication with the recipient in the context of the established business relationship” or the
recipient voluntarily made his number available in “a directory, advertisement, or site on the
Internet;” and (iii) the unsolicited advertisement contains a compliant opt-out notice (hereinafter
“EBR defense”). 47 U.S.C. § 227(b)(1)(C). In order for an opt-out notice to be compliant it must:
(1) Be clear and conspicuous and on the first page of the unsolicited advertisement;
(2) State the recipient may opt out of future unsolicited advertisements;
(3) Note that a failure by the sender to comply with a proper opt-out request within
30 days is unlawful;
(4) Include a domestic contact number and fax number for the recipient to send an
opt-out request;
(5) Include a cost-free mechanism to send an opt-out request; and
(6) Instruct the recipient that an opt-out request is valid only if the recipient (i)
sends the request to the number the sender identified in the notice; (ii) identifies
the fax number to which the opt-out request relates; and (iii) does not expressly
invite fax advertisements thereafter.
See 47 U.S.C. § 227(b)(2)(D), (E); 47 C.F.R. § 64.1200(a)(4)(iii), (v). Failure to comply with the
opt-out requirements is an independent violation of the TCPA and precludes a defendant from
asserting an EBR defense. See 47 U.S.C. § 227(b)(3), (b)(1)(C)(i-iii).

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The FCC has defined “established business relationship” as:
[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)(5); 47 U.S.C. § 227(a)(2).

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d. Analysis
Applying these standards, the Court concludes that Casso has sufficiently alleged an injury
in fact to establish standing. Contrary to Defendant’s assertions, Spokeo does not preclude a
finding of standing in the instant case. As Casso points out, the overwhelming number of courts
that have addressed standing in TCPA cases post-Spokeo have found standing. (See Rec. Doc. 20
at p. 14) (citing various district court decisions). Specifically, courts subsequent to Spokeo, have
repeatedly held that allegations of wasted time in reviewing unsolicited fax advertisements and the
use of paper and ink toner in printing those advertisements constitute concrete injuries as required
to have Article III standing under the TCPA and the JFPA. See, e.g., Kostmayer Construction, LLC
v. Port Pipe & Tube, Inc., No. 16-1012, 2017 WL 5079181 (W.D. La. Nov. 1, 2017) (collecting
cases); Palm Beach Golf Ctr.-Boca, Inc. v. John G. Sarris D.D.S., P.A., 781 F.3d 1245 (11th Cir.
2015); Sandusky Wellness Ctr., LLC v. MedTox Scientific, Inc., 250 F. Supp. 3d 354, (D. Minn.
2017); Fauley v. Drug Depot, Inc., 204 F. Supp. 3d 1008 (N.D. Ill. 2016). Moreover, courts have
concluded that the receipt of an impermissible fax advertisement is a sufficient concrete and
particularized injury to establish standing to bring a TCPA claim. See, e.g., Van Patten v. Vertical
Fitness Group, LLC, 847 F.3d 1037, 1043 (9th Cir. 2017); Rogers v. Capital One Bank (USA),
N.A., 190 F. Supp. 3d 1144, 1147 (N.D. Ga. 2016); Progressive Health & Rehab Corp. v. Strategy
Anesthesia, LLC, --- F. Supp. 3d ---, No. 16-1151, 2017 WL 4277200 (S.D. Ohio Sept. 25, 2017).

Courts in this district have similarly found that the occupation of plaintiff’s fax machines,
and wasted time, toner, and paper to be sufficient TCPA-related injuries to meet the Article III
standing requirements. See Fairway Med. Ctr. LLC v. McGowan Enters., Inc., No. 16-3782, 2017
WL 1423883 (E.D. La. Jan. 25, 2017) (J. Fallon); Sartin v. EKF Diagnostics, Inc., No. 16-1816,
2016 WL 7450471 (E.D. La. Dec. 28, 2016) (J. Vance). In Sartin v. EKF Diagnostics, Inc., Judge
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Vance denied defendants’ motion to dismiss for lack of Article III standing, finding that plaintiff
had sufficiently alleged “judicially cognizable injuries” that are traceable to defendant’s violation
of the TCPA: “Dr. Sartin’s alleged injuries [wasted time and the tying up of his fax line] are of the
type that the TCPA sought to redress, and Congressional judgment supports finding that these
alleged injuries satisfy Article III requirements.” Sartin, 2016 WL 7450471, at *4.

This Court joins the various circuit and district courts in finding that Casso has alleged a
concrete and particularized injury sufficient to meet the Article III standing requirements. Casso
alleged that Spectrum violated the TCPA by sending fax advertisements that were unsolicited and
failed to contain the statutorily-mandated opt-out language. In addition to alleging TCPA
procedural violations, Casso specifically alleged additional, real harm, it suffered as a result of
receiving Spectrum’s unsolicited faxes, including disruption, annoyance, cost, the loss of use of
their telephone lines and fax machine during receipt of the unsolicited faxes, misappropriation of
fax paper and toner, and loss of time to sort faxes. (Rec. Doc. 1 at p. 5). Consequently, Casso has
sufficiently alleged a concrete injury in fact, which satisfies Article III standing.

Additionally, the Court rejects Spectrum’s argument that the established business
relationship defense warrants dismissal in this case. Even construing Spectrum’s argument as a
12(b)(6) motion, the Court finds that dismissal at this stage in the proceedings would be improper
as Spectrum did not meet its burden of proving the applicability of the EBR defense. Casso
adamantly contests Spectrum’s assertion that it had an established business relationship with Casso
through Oncology RX, LLC: “Casso has never done any business with, voluntarily communicated
with, or in any way asked to receive correspondence of any type from Spectrum.” (Rec. Doc. 20
at p. 2). Whether Spectrum can show that it had an established business relationship with Casso,

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that its faxes contained valid opt-out notices, or that it otherwise satisfies the requirements of
Section 227(b)(1)(C) are issues of merit, not of standing. Resolution of these issues involve a factintensive inquiry that is not suitable for this motion. Accordingly, at this time, absent further
discovery and briefing, the Court does not find that Defendant falls under the exception provided
by 47 U.S.C. § 227(b)(1)(C).

III.

CONCLUSION

For the foregoing reasons, IT IS ORDERED that Spectrum’s Rule 12(b)(1) Motion to
Dismiss for lack of Subject Matter Jurisdiction (Rec. Doc. 13) is DENIED.
New Orleans, Louisiana, this 5th day of February 2018.

________________________________
KURT D. ENGELHARDT
United States District Judge

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