PHYSICIANS HEALTHSOURCE, INC. v. ADVANCED DATA SYSTEMS INTERNATIONAL, LLC et al
Filing
105
OPINION. Signed by Judge John Michael Vazquez on 5/27/2020. (bt, )
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Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
PHYSICIANS HEALTHSOURCE, INC.,
Individually and on behalf of a Class of
Similarly Situated Individuals,
Civil Action No. 16-3620 (JMV) (JBC)
Plaintiff,
OPINION
v.
ADVANCED DATA SYSTEMS
INTERNATIONAL, LLC and ADVANCED
DATA SYSTEMS CORP OF DELAWARE,
Defendants.
John Michael Vazquez, U.S.D.J.
In this this putative class action, named Plaintiff alleges that Defendants sent it multiple
unsolicited fax advertisements in violation of statutes prohibiting junk faxes. Presently before the
Court is a motion to dismiss Plaintiff’s Second Amended Complaint pursuant to Federal Rule of
Civil Procedure 12(b)(6) by Defendants Advanced Data Systems International, LLC and
Advanced Data Systems Corp. of Delaware (D.E. 82). Plaintiff filed a brief in opposition (D.E.
87), to which Defendants replied (D.E. 89). 1 The Court reviewed the parties’ submissions and
decided the motions without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R. 78.1(b).
1
Plaintiff’s Second Amended Complaint (D.E. 65) will be referred to as “SAC”; Defendants’
brief in support of their motion to dismiss (D.E. 82-1) will be referred to as “Def. Brf.”; Plaintiff’s
opposition (D.E. 87) will be referred to as “Plf. Opp.”; and Defendant’s reply of its motion (D.E.
89) will be referred to as “Def. Reply.”
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For the reasons set forth below, Defendants’ motion to dismiss is GRANTED in part and
DENIED in part.
I.
FACTUAL BACKGROUND 2 & PROCEDURAL HISTORY
Plaintiff Physicians Healthsource, Inc. is an Ohio corporation.
SAC ¶ 9, D.E. 65.
Defendant Advanced Data Systems International, LLC is a Delaware limited liability company
with a principal place of business in Paramus, New Jersey. Id. ¶ 10. Defendant Advanced Data
Systems Corp. of Delaware is a Delaware corporation. Id. ¶ 11.
Over the course of several days in March and April of 2013, Defendants sent eight
unsolicited faxes to Plaintiff’s telephone facsimile (“fax”) machine. Id. ¶ 12. Plaintiff had not
given the Defendants permission to send the faxes, nor is there a method for Plaintiff to avoid
receiving them. Id. ¶¶ 14, 16. Plaintiff seeks to represent a class of persons who also received
these unsolicited faxes. Id. ¶ 19.
On June 21, 2016, Plaintiff filed its Complaint. D.E. 1. Plaintiff then filed a First Amended
Complaint on October 7, 2016, followed by a Second Amended Complaint (“SAC”) on June 19,
2019. D.E. 16, 65. The SAC asserts the following counts: Count 1 – violation of the Junk Fax
Prevention Act of 2005, 47 U.S.C. § 227; Count 2 – violation of the New Jersey Junk Fax Statute,
N.J.S. 56:8-157 et seq.; and Count 3 – violation of the New Jersey Consumer Fraud Act, N.J.S.
56:8-1 et seq. D.E. 65.
Defendants’ present motion to dismiss was filed on October 9, 2019. D.E. 82. Defendants
seek a dismissal pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter
jurisdiction and Rule 12(b)(6) for failure to state a claim upon which relief can be granted.
2
The factual background is taken from the Second Amended Complaint. D.E. 65. When
reviewing a motion to dismiss, a court accepts as true all well-pleaded facts in a complaint. Fowler
2
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II.
STANDARD OF REVIEW
In deciding a Rule 12(b)(1) motion for lack of subject-matter jurisdiction, a court must first
determine whether the party presents a facial or factual attack because the distinction determines
how the pleading is reviewed. 3 A facial attack “contests the sufficiency of the complaint because
of a defect on its face,” whereas a factual attack “asserts that the factual underpinnings of the basis
for jurisdiction fails to comport with the jurisdictional prerequisites.” Gould Elecs. Inc. v. United
States, 220 F.3d 169, 177 (3d Cir. 2000), holding modified by Simon v. United States, 341 F.3d
193 (3d Cir. 2003). For a factual attack, “the court may consider and weigh evidence outside the
pleadings to determine if it has jurisdiction.” Id. at 178. The burden is on the Plaintiff to prove
the Court has jurisdiction. Id.
Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss when a complaint
fails “to state a claim upon which relief can be granted[.]” For a complaint to survive dismissal
under Rule 12(b)(6), it must contain sufficient factual matter to state a claim that is plausible on
its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id. Further, a plaintiff must “allege sufficient facts to raise a reasonable expectation that
discovery will uncover proof of her claims.” Connelly v. Lane Const. Corp., 809 F.3d 780, 789
v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). A court may also consider any document
integral to or relied upon in the complaint. Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014)
(citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)). As a result,
the Court considers the faxes that were attached to the pleading.
3
This Court also has an independent obligation to establish that it has subject-matter jurisdiction.
Morel v. INS, 144 F.3d 248, 251 (3d Cir. 1998) (“[A federal] court . . . will raise lack of subjectmatter jurisdiction on its own motion.”) (quoting Ins. Corp. of Ir. v. Compagnie des Bauxites de
Guinee, 456 U.S. 694, 702 (1982)).
3
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(3d Cir. 2016). In evaluating the sufficiency of a complaint, district courts must separate the
factual and legal elements. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009).
Restatements of the elements of a claim are legal conclusions, and therefore, not entitled to a
presumption of truth. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011). The
Court, however, “must accept all of the complaint’s well-pleaded facts as true.” Fowler, 578 F.3d
at 210. Even if plausibly pled, however, a complaint will not withstand a motion to dismiss if the
facts alleged do not state “a legally cognizable cause of action.” Turner v. J.P. Morgan Chase &
Co., No. 14-7148, 2015 WL 12826480, at *2 (D.N.J. Jan. 23, 2015).
III.
ANALYSIS
1. Count One - Junk Fax Prevention Act of 2005
Count One asserts a violation of the Telephone Consumer Protection Act (“TCPA”), as
amended by the Junk Fax Prevention Act of 2005, 47 U.S.C. § 227 (“JFPA”), which makes it
unlawful to “use 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). 4 It further
allows for a private right of action by a recipient of an unsolicited fax advertisement against the
sender. 47 U.S.C. § 227(b)(3). Under the TCPA, an unsolicited advertisement is “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). Plaintiff alleges that Defendants violated the TCPA when
they faxed eight unsolicited advertisements between March 7, 2013 and April 22, 2013.
4
The JFPA was a limited amendment to the TCPA’s prohibition against unsolicited fax
advertisements. The purpose was to establish an exemption for senders having an established
business relationship with the recipient and to clarify the ability of the recipient to “opt-out.” See
S. Rep. 109-76 (June 7, 2005). It did not alter the primary purpose of the TCPA.
4
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Defendants move to dismiss Count One based on both a lack of standing and because the alleged
faxes do not qualify as advertisements as defined by the TCPA.
A. Standing
a. Article III Standing
A party must have standing for a court to have subject matter jurisdiction. The Constitution
provides that “judicial Power” extends to “Cases” and “Controversies[.]” U.S. Const. art. III, § 2.
To meet the case-or-controversy requirement, a plaintiff must show that she has standing to sue.
See Raines v. Byrd, 521 U.S. 811, 818 (1997) (citation omitted). To establish Article III standing,
a plaintiff “must demonstrate ‘(1) an injury-in-fact, (2) a sufficient causal connection between the
injury and the conduct complained of, and (3) a likelihood that the injury will be redressed by a
favorable decision.”’ Finkelman v. Nat'l Football League, 810 F.3d 187, 193 (3d Cir. 2016)
(quoting Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 358–59 (3d Cir. 2015) (internal
quotation marks omitted and punctuation modified)). An injury-in-fact requires a plaintiff to show
that she suffered “an invasion of a legally protected interest” that is “concrete and particularized[.]”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). A particularized injury means that it
“must affect the plaintiff in a personal and individual way.” Id. at 560 n. 1. A concrete injury
refers to one that actually exists; one that is real and not abstract. Spokeo, Inc. v. Robins, 136 S.
Ct. 1540, 1548 (2016) (citations omitted). In addition, “’[t]he injury must be concrete in both a
qualitative and temporal sense[.]’” Kamal v. J. Crew. Grp., Inc., 918 F.3d 102, 110 (3d Cir. 2019)
(quoting Whitmore v. Arkansas, 495 U.S. 149, 155 (1990)). Defendants argue that Plaintiff lacks
standing to bring suit because Plaintiff alleges only “a bare procedural violation of a statute” and
fails to sufficiently allege the requisite concrete injury. (Def. Brf. at 4).
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In Spokeo, the Supreme Court considered Article III standing under the Fair Credit
Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. 136 S. Ct. at 1544. Robins, a consumer, filed
a class-action lawsuit against Spokeo asserting that Spokeo was a reporting agency under the
FCRA and had reported incorrect information as to Robins. Id. at 1545-46. The district court
dismissed, finding that Robins had not sufficiently pled an injury-in-fact. Id. at 1546. The Ninth
Circuit reversed, determining that Robins adequately asserted a particularized injury because
Robins alleged that his, rather than another’s, statutory rights were violated. Id. The Supreme
Court then reversed because the Ninth Circuit only considered the “particularized” prong but failed
to consider the “concrete” requirement. Id. at 1545. The Supreme Court remanded for the Ninth
Circuit to consider, in the first instance, the concreteness inquiry. Id.
The Spokeo Court recognized that a concrete injury could encompass both tangible and
intangible harm. Id. at 1549 (citations omitted). The Supreme Court then set forth the proper
analysis when addressing an intangible injury:
In determining whether an intangible harm constitutes injury
in fact, both history and the judgment of Congress play important
roles. Because the doctrine of standing derives from the case-orcontroversy requirement, and because that requirement in turn is
grounded in historical practice, it is instructive to consider whether
an alleged intangible harm has a close relationship to a harm that has
traditionally been regarded as providing a basis for a lawsuit in
English or American courts. See Vermont Agency of Natural
Resources v. United States ex rel. Stevens, 529 U.S. 765, 775–777,
(2000). In addition, because Congress is well positioned to identify
intangible harms that meet minimum Article III requirements, its
judgment is also instructive and important. Thus, we said in Lujan
that Congress may “elevat[e] to the status of legally cognizable
injuries concrete, de facto injuries that were previously inadequate
in law.” 504 U.S. at 578. Similarly, Justice Kennedy's concurrence
in that case explained that “Congress has the power to define injuries
and articulate chains of causation that will give rise to a case or
controversy where none existed before.” Id. at 580 (opinion
concurring in part and concurring in judgment).
6
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136 S. Ct. at 1549 (emphases added). Yet, the Supreme Court cautioned, a plaintiff does not
automatically satisfy the injury-in-fact requirement solely because Congress granted the plaintiff
a statutory right along with authorization to bring suit. Id. The Court in Spokeo explained that a
plaintiff “could not, for example, allege a bare procedural violation, divorced from any concrete
harm, and satisfy the injury-in-fact requirement of Article III.” Id. (citation omitted). By way of
example, the Spokeo Court observed, it would be difficult to imagine how Robins would have
suffered a concrete harm if Spokeo had merely disseminated an incorrect zip code. Id. at 1550.
Nevertheless, the Supreme Court also recognized that the “risk of real harm” could satisfy
the concreteness prong. Id. at 1550 (citation omitted). The Court continued that “the violation of
a procedural right granted by statute can be sufficient in some circumstances to constitute injuryin-fact. In other words, a plaintiff in such a case need not allege any additional harm beyond the
one Congress has identified.” Id. (emphasis in original) (citing Fed. Election Comm'n v. Akins,
524 U.S. 11, 20–25 (1998)).
The Third Circuit has, on several occasions, addressed standing challenges since Spokeo.
See, e.g., DiNaples v. MRS BPO, LLC, 934 F.3d 275, 279 (3d Cir. 2019) (finding that a plaintiff
in FDCPA case had standing to sue); Kamal v. J. Crew Group, Inc., 918 F.3d 102, 106 (3d Cir.
2019) (ruling that a plaintiff lacked standing in an action brought under the Fair and Accurate
Credit Transactions Act); Long v. Se Pa. Transp. Auth., 903 F.3d 312, 325 (3d Cir. 2018) (holding
that the plaintiff lacked standing to maintain an action under the FCRA); St. Pierre v. RetrievalMasters Creditors Bureau, Inc., 898 F.3d 351, 357-58 (3d Cir. 2018) (concluding that, in an
FDCPA class action, the lead plaintiff had standing); Susinno v. Work Out World Inc., 862 F.3d
346, 352 (3d Cir. 2017) (holding that the plaintiff had standing in matter alleging a violation of the
7
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TCPA); In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, (3d Cir. 2017)
(finding that the plaintiff had standing in FCRA case).
Following the dictates of Spokeo as to intangible harm, the Third Circuit has conducted
both a congressional and historical inquiry in deciding the standing issue. See, e.g., Kamal, 918
F.3d at 110-13. For example, in DiNaples, the plaintiff received a debt collection letter in an
envelope with a “quick response” or “QR” code; a smartphone application could scan the code and
reveal the defendant’s internal reference number for the plaintiff’s account. 834 F.3d at 278. The
Circuit previously determined in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3d Cir.
2014), that a debt collector violated the FDCPA when it sent a collection letter in an envelope that
displayed the debt collector’s internal account number for the debtor. In St. Pierre, which followed
Spokeo, the Circuit ruled that a plaintiff asserting an FDCPA action under Douglass had standing
to sue. 898 F.3d at 357-58.
The DiNaples court indicated that because the plaintiff was asserting an intangible harm,
Spokeo required the Circuit to consider both an historical perspective and Congress’ judgment. Id.
at 279 (citing Spokeo, 136 S. Ct. at 1549). In considering both the Congressional and historical
inquiries, the Court in DiNaples pointed to invasion of privacy, a harm that was traditionally
recognized as providing as basis for recovery in both English and American courts. Id. at 279-80
(citing St. Pierre, 898 F.3d at 358). The Third Circuit rejected the defendant’s argument that the
plaintiff had to show that someone had (or imminently might do so) intercepted the mail, scanned
the QR code, read the plaintiff’s account information, and determined that the envelope’s contents
concerned debt collection. Id. at 280. The DiNaples court explained that the disclosure of the
account number itself was the harm that implicated core privacy concerns. Id. As a result, the
8
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Circuit concluded, the plaintiff sufficiently alleged a concrete injury and therefore had standing to
sue. Id.
The Third Circuit has also considered whether an alleged violation of the TCPA could give
rise to a concrete, although intangible, harm. Susinno, 862 F. 3d 346. The plaintiff in Susinno
received a single telemarketing call to her cell phone, which went to voicemail. Id. at 348. The
Susinno court observed that “[w]hen one sues under a statute alleging ‘the very injury [the statute]
is intended to prevent,’ and the injury ‘has a close relationship to a harm . . . traditionally . . .
providing a basis for a lawsuit in English or American courts,’ a concrete injury has been pleaded.”
Id. at 351 (quoting In re Horizon Healthcare Services Inc. Data Breach Litigation, 846 F. 3d 625
(3d Cir. 2017)). The Third Circuit then found that the harm was exactly the kind Congress intended
the TCPA to prevent. See id. at 351 (“We therefore agree with [the plaintiff] that in asserting
‘nuisance and invasion of privacy’ resulting from a single prerecorded telephone call, her
complaint asserts ‘the very harm that Congress sought to prevent,’ arising from prototypical
conduct proscribed by the TCPA.”). Then the Susinno court engaged in historical inquiry and
determined that “when Congress found that unsolicited telemarketing phone calls or text messages,
by their nature, invade the privacy and disturb the solitude of their recipients, it sought to protect
the same interests implicated in the traditional common law cause of action [of intrusion upon
seclusion.]” Id. at 352 (internal quotation and citation omitted). As a result, the Third Circuit held
that the plaintiff had sufficiently alleged “a concrete, albeit intangible harm” that satisfied the
standing requirements. Id.
Defendants argue that the purpose of the fax component of the TCPA as amended by the
JFPA is different from the overall purpose of the TCPA. In their view, the JFPA sought only to
limit (1) the costs incurred by the recipient whose paper and ink are wasted and (2) the occupation
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of the fax machine by the advertiser, which renders it unavailable to receive legitimate business
messages. (Def. Brf. at 6). Defendants are no doubt correct that these are reasons faxes were
included in the TCPA and JFPA. See H.R. REP. No. 102-317, at 10 (1991). But the Court does
not agree that these are the only reasons. Unsolicited faxes were included in the TCPA because
they, like unsolicited telemarketing calls, are a nuisance and an unwanted intrusion. See Van
Patten v. Vertical Fitness Group, LLC, 847 F. 3d 1037 (9th Cir. 2017) (“[Through the TCPA,]
Congress sought to protect consumers from the unwanted intrusion and nuisance of unsolicited
telemarketing phone calls and fax advertisements.” (citing Pub. L. 102-243, § 2, ¶ 12)). 5
Plaintiff need not have alleged the tangible harms that were among the reasons faxes were
included in the TCPA. 6 The allegation that it received the faxes, and their attendant nuisance and
invasion of privacy, is sufficiently concrete. (See SAC ¶ 3). This is not, as Defendants argue, a
bare procedural violation. Defendants did not violate a procedure designed to prevent the
5
In their reply brief, Defendants direct the Court to a recent Eleventh Circuit case which found
the Van Patten court’s reasoning unpersuasive regarding the judgment of Congress. However, the
Eleventh Circuit was analyzing the judgment of Congress as to unsolicited text messages, not
unsolicited faxes. Text messages, unlike faxes, were not expressly included in the TCPA. The
Eleventh Circuit took issue with the Van Patten court’s generalization that unsolicited contact in
itself was the harm contemplated by Congress. See Salcedo v. Hanna, 936 F. 3d 1162, 1168-1170
(11th Cir. 2019). Because Congress had not weighed in on text messages, the court was reticent
to assume Congress had adjudged unsolicited text messages harmful. Here, in contrast, Congress
expressly found unsolicited faxes harmful. Moreover, the Eleventh Circuit still assumed that the
appropriately analogous traditional common-law harm was intrusion upon seclusion, even if it did
not find that a single text message was similar enough to that tort to be actionable. Id. at 11701172.
6
In any event, Plaintiff has allegedly suffered these more tangible harms. See SAC ¶ 3 (“A junk
fax recipient loses the use of its fax machine, paper, and ink toner. An unsolicited fax wastes the
recipient’s valuable time that would have been spent on something else. A junk fax interrupts the
recipient’s privacy. Unsolicited faxes prevent fax machines from receiving authorized faxes,
prevent their use for authorized outgoing faxes, cause undue wear and tear on the recipients’ fax
machines, and require additional labor to attempt to discern the source and purpose of the
unsolicited message.”).
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statutorily invented injury, they caused the very injury the statute was designed to prevent—the
invasive nuisance of an unsolicited fax. Engaging in the two-prong inquiry articulated by the Third
Circuit in Horizon and Susinno, receiving unsolicited fax messages is (1) exactly the harm that
Congress contemplated in enacting the TCPA and (2) is, like an unsolicited telephone call, closely
related to the traditional common law causes of action of nuisance and intrusion upon seclusion.
The intangible harm caused by receipt of an unsolicited fax advertisement is therefore a sufficiently
concrete injury that gives rise to Article III standing.
b. Other Arguments against Standing
Defendants make a number of other arguments that Plaintiff lacks standing. 7 First, they
argue that “the Complaint contains zero facts to establish that the document which started this
lawsuit was even received by Physicians Healthsource via fax because the document does not
contain a fax header at the top of the document or contain any information from which the Court
could infer that it was received on a fax machine.” (Def. Brf. at 10). Defendants, however, offer
no authority requiring a “fax header” to be alleged. Of course, Defendants are free to explore
during discovery whether Plaintiff actually received the relevant documents by way of fax.
Defendants next argue that most faxes are now received through a computer server which
allows the recipient to view the message and choose whether or not to print it. Since the recipient
has agency, the argument goes, then any harm caused is actually self-inflicted. Whether or not
this is an accurate description of modern fax servers, it is pure speculation at this stage to assume
that is the manner in which Plaintiff received the relevant faxes here. Again, if discovery bears
out Defendants theory, Defendants are free to make any motion they deem appropriate.
7
Some of the arguments appear more properly categorized as an attack on the sufficiency of the
pleadings. However, because the parties address them vis-à-vis standing, the Court does as well.
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Defendants also allege that Physicians Healthsource is an entity that has teamed up with a
law firm in order to seek out and file TCPA claims. In support, Defendants rely on Stoops v. Wells
Fargo Bank, N.A., 197 F. Supp. 3d 782 (W.D. Pa. 2016) for the proposition that a plaintiff which
seeks out TCPA claims has not suffered an injury-in-fact. In Stoops, the plaintiff alleged a TCPA
violation after receiving an automated telemarketing call from the defendant. Stoops, however,
was decided at the summary judgment stage. In that case, the plaintiff admitted during her
deposition that she purposely bought a large number of cell phones in order to receive
telemarketing calls and then file TCPA claims. Id. at 798-799. The court in Stoops concluded that
plaintiff’s privacy was not invaded since she affirmatively sought out the calls, and therefore could
not claim that she suffered the injury contemplated by the statute—invasion of privacy. Id. at 800.
Again, if after discovery, Defendants believe that they have sufficient evidence to make a similar
allegation, Defendants can make the appropriate motion. Cf. Robert W. Mauthe, M.D., P.C. v.
MCMC LLC, 387 F. Supp. 3d 551, 564 (E.D. Pa. 2019) (“Although [the plaintiff] has filed other
TCPA lawsuits, there is no evidence in the record to suggest that he seeks out unsolicited
communications the way the Stoops plaintiff did.”).
Defendants’ additional arguments as to prudential standing (Def. Brf. at 13-16) are
similarly unavailing. “In addition to the Article III standing requirements, federal courts have
developed prudential standing considerations ‘that are part of judicial self-government.’” UPS
Worldwide Forwarding, Inc. v. U.S. Postal Service, 66 F. 3d 621, 626 (3d Cir. 1995) (quoting
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). Defendants argue that Plaintiff has
failed to meet one of the requirements for prudential standing, which is that “ a litigant demonstrate
that her interests are arguably within the ‘zone of interests’ intended to be protected by the statute,
rule or constitutional provision on which the claim is based.” Id. (quoting Wheeler v. Travelers
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Ins. Co., 22 F. 3d 534, 538 (3d Cir. 1994). This “zone of interest” test “has focused its inquiry on
the Congressional intent of the statute and whether the complainant’s interests ‘were among the
sorts of interests those statutes were specifically designed to protect.’” Chem Service, Inc. v.
Environmental Monitoring Systems Laboratory-Cincinnati, 12 F. 3d 1256, 1262 (3d Cir. 1993)
(quoting National Wildlife Federation, 497 U.S. 871, 886 (1990)).
Defendants argue that
Plaintiff’s “entrepreneurial interests” fall outside the zone of interest. (Def. Brf. at 14). Once
again, following discovery, if Defendants still believe this argument has merit, they can make the
appropriate motions.
The motion to dismiss Count One on standing grounds is denied.
B. Whether the Alleged Faxes were Advertisements
Defendants also argue that, even if Plaintiff did have standing to sue, its TCPA claims are
insufficient. They assert that (1) the alleged faxes did not constitute prohibited “advertisements”
and (2) one of the alleged faxes was not transmitted via fax.
The Third Circuit has recently addressed the kinds of faxes which are prohibited by the
TCPA in two companion cases: Robert W. Mauthe, M.D., P.C. v. National Imaging Associates,
Inc., 767 F. App’x 246 (3d Cir. 2019) and Robert W. Mauthe, M.D., P.C. v. Optum Inc., 925 F. 3d
129 (3d Cir. 2019). “[T]he TCPA only prohibits unsolicited advertisements, not any and all faxes
even if sent for a commercial purpose.” Optum, 925 F. 3d at 133. An unsolicited advertisement
is defined under the TCPA 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). “[T]o violate
the TCPA [the fax] must directly or indirectly inform the recipient that the sender of some other
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entity sells something of value.” National Imaging, 767 F. App’x 246 at 249. As the Third Circuit
explained:
[T]he fax either must (1) notify a potential buyer that he or she can
purchase a product, goods, or services from the sending entity or
perhaps another seller or (2) induce or direct a willing buyer to seek
further information through a phone number, an email address, a
website, or equivalent method for purposes of making a purchase.”
Id. “Thus, the fax must convey the impression to its recipient that a seller is trying to make a sale
to him.” Id.
The first alleged fax advertises a system offered by Advanced Data Systems Corporation
and invites the recipient to contact the seller for more information. (SAC, Ex. A at 2-3).
Defendants do not dispute that this is an advertisement, but instead dispute that it is a fax because
it does not contain a fax header. However, for the purposes of this motion to dismiss, it is plausible
to infer that it is a fax. Such an allegation is not, contrary to Defendants’ assertion, conclusory. It
is a simple factual allegation—the document is a fax.
The next fax offers the recipient an opportunity to win a free iPad mini by watching a live
demo of an ADS product. (Id. at 4). It also lists a number of products and encourages the recipient
to “[s]ee why over 30,000 of your colleagues rely on systems from ADS every day.” (Id.). Finally,
it directs the recipient to a phone number it can call for additional information. (Id.). Defendants
argue that an invitation to watch a demo in order to win an iPad is not an advertisement. That may
be true if that were all the fax contained, but it also describes products by ADS. Defendants’
argument is essentially that these are hardly effective advertisements since they do not describe
products with precision, and that the Defendants are not fully identified, since the faxes only refer
to “ADS.” But Defendants cite to no precedent that requires an advertisement to be effective. If
not plain from the face of the fax, it is at least a reasonable inference that the sender was trying to
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induce the recipient to seek further information through the provided phone number to make a
purchase, which fits within the parameters of the Mauthe cases. It is likewise a reasonable
inference that “ADS” refers to the Defendants. The same reasoning applies to the next two faxes.
(Id. at 6, 7).
Defendants then argue that two faxes which encourage the recipient to enter to win a gift
card do not contain enough information to be advertisements. (Id. at 8, 9, the “Gift Card Faxes”).
Defendants note that neither of their names are identified on this fax. But the Mauthe standard
does not require an advertisement to feature the sender’s name, only that it inform the recipient
that the sender or some other entity sells something of value. The Gift Card Faxes encourage the
recipient to “[s]ee a free presentation of our award[-]winning medical software.” This is sufficient
to “convey the impression to its recipient that a seller is trying to make a sale to him” as required
by the Mauthe decisions. The clear implication is that the sender wants to sell its “award-winning
software” to the recipient.
The next fax also conveys the impression of a sale, describing a particular system and its
attributes, as well as a pricing incentive. (Id. at 10). Defendants argue that the product and seller
need to be described with greater specificity to be actionable. They further argue that since it is
facially ambiguous as to whether it is an advertisement, it would be improper to extrapolate that
this is an advertisement from the recipient’s outside knowledge of the industry and products. (Def.
Brf. at 20). However, their reliance on National Imaging is misplaced, because the fax in that case
was merely a satisfaction survey from a company the recipient knew to be a seller of medical
products. National Imaging, 767 F. App’x at 248. The Third Circuit refused to allow the
recipient’s knowledge that the sender does sell products and services inform its interpretation of
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an otherwise innocuous fax. Id. at 249. Here, the fax is facially an advertisement and expressly
encourages the recipient to seek further information regarding the product that it describes.
The final fax also advertises a product from the sender. It invites the recipient to “watch
one of our EMR Demos And be enter to WIN!” before describing a prize in detail. (SAC, Ex. A
at 11). This communication induces the recipient to seek further information for the purpose of
making a purchase, which again is sufficient under the Mauthe cases. 8 It informs the recipient that
the sender sells something of value (“our EMR”) and entices the recipient to watch a demonstration
of the product. Other courts have, at least on occasion, determined that purely informational faxes
describing certain products are not advertisements. See, e.g., Sandusky Wellness Center, LLC v.
Medco Health Solutions, Inc., 788 F. 3d 218, 222 (6th Cir. 2015) (determining that a fax was not
an advertisement because no record evidence showed it was sent with the intention of making a
profit and because the sender did not sell the drug described in the fax). However, having
informational content does not conclusively prevent a fax from being classified as an
advertisement. See, e.g., Ira Holtzman, C.P.A. v. Turza, 728 F. 3d 682, 688 (7th Cir. 2013)
(classifying a fax formatted as a newsletter as an advertisement because “the plug for [the sender’s]
services was not incidental to a message that would have been sent anyway; promotion or
marketing was the reason the faxes were transmitted.”). Here, it is reasonable to infer that that the
purpose of this fax was to promote the sender’s commercially available product. If not to promote
8
In support of this inducement theory, the Third Circuit cited to Chesbro v. Best Buy Stores, L.P.,
705 F. 3d 913, 918 (9th Cir. 2012). In that case, the Ninth Circuit analyzed an automated phone
call in which the message did not explicitly reference any goods or services. Id. But,
“approach[ing] the problem with a measure of common sense[,]” the court noted that by urging
the listener to redeem reward points that could only be redeemed by shopping at the sender’s store,
the “calls encouraged the listener to make future purchases [from the sender].” Id. Here, not only
does the fax encourage the recipient to further engage with the sender, it expressly references one
of the sender’s products.
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its EMR product, then why was it sent? It is therefore plausible that this fax was intended to induce
the recipient to make a purchase and is accordingly an actionable unsolicited advertisement under
the TCPA.
Plaintiff has stated a claim that the faxes attached to its second amended complaint are
advertisements as defined by the TCPA.
2. Count Two - New Jersey Junk Fax Act
The New Jersey Junk Fax Act (“NJJFA”) prohibits “a person within this State [from using]
any telephone facsimile machine, computer, or other device to send an unsolicited advertisement
to a telephone facsimile machine within this State.” N.J.S.A. § 56:8-158(a) (emphasis added).
NJJFA violations, therefore, require an allegation that the fax was received in New Jersey. Plaintiff
has not made such an allegation. It argues only that since it seeks to represent a class all persons
who received faxes from the Defendants, some of those putative class members “likely received
these faxes in New Jersey and may, therefore, be entitled to additional remedies under New Jersey
law.” (Pl. Opp. at 14). This allegation is speculative and insufficient. See Horizon, 846 F. 3d at
634 (“Named plaintiffs who represent a class must allege and show that they personally have been
injured, not that injury has been suffered by other, unidentified members of the class to which they
belong and which they purport to represent.”) (quoting Lewis v. Casey, 518 U.S. 343, 357 (1996)).
Accordingly, Plaintiff has failed to sufficiently state a claim under the NJJFA and Count Two is
dismissed.
3. Count Three - New Jersey Consumer Fraud Act
Plaintiff’s claim under the New Jersey Consumer Fraud Act (“CFA”), N.J.S.A. 56:8-1, et
seq. is premised on the Defendants’ violation of the NJJFA. Violations of the NJJFA also
constitute violations of the CFA. N.J.S.A. 56:8-160. Because Plaintiff has not adequately stated
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a claim for violation of the NJJFA, it has also not stated a claim for violation of the CFA.
Accordingly, Count Three is dismissed.
IV.
CONCLUSION
For the reasons stated above, Defendants’ motion to dismiss (D.E. 82) is GRANTED as to
Counts Two and Three and otherwise DENIED. Counts Two and Three are DISMISSED. The
dismissal is without prejudice and Plaintiff is granted leave to file a Third Amended Complaint.
Plaintiff has thirty (30) days to file a Third Amended Complaint, if it so chooses, consistent with
this Opinion. If Plaintiff fails to file a Third Amended Complaint, the dismissal of Counts Two
and Three will be with prejudice. An appropriate Order accompanies this Opinion.
Dated: May 27, 2020.
________________________________________
John Michael Vazquez, U.S.D.J.
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