Swetlic Chiropractic & Rehabilitation Center, Inc. v. Foot Levelers, Inc. et al
ORDER denying 18 Defendant Foot Leveler's Motion to Dismiss, Motion to Strike, and Motion for a Stay. Plaintiff's Motion for Leave to File an Amended Complaint, within fourteen days, is granted. Signed by Judge George C. Smith on 1/26/17. (sem)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
SWETLIC CHIROPRACTIC &
REHABILITATION CENTER, INC., et al.,
Case No.: 2:16-cv-236
Magistrate Judge Deavers
FOOT LEVELERS, INC., et al.,
OPINION AND ORDER
This matter is before the Court upon Plaintiff Swetlic Chiropractic & Rehabilitation
Center’s “Placeholder” Motion for Class Certification (“Placeholder Motion”) (Doc. 3).
Defendant Foot Levelers, Inc. responded in opposition to the Placeholder Motion (Doc. 17) and
Plaintiff replied in support (Doc. 21). Also before the Court is Defendant Foot Leveler, Inc.’s
Motion to Stay the Case, or Alternatively to Dismiss the Complaint and Strike the Class
Definition (Doc. 18). Plaintiff opposed Defendant’s Motion and requested leave to amend the
Complaint (Doc. 24) while Defendant replied in support (Doc. 27). Last, both Plaintiff and
Defendant filed notices of Supplemental Authority (Docs. 31 and 32). These matters are now
ripe for review. For the following reasons, Defendant’s various requests for relief are DENIED,
Plaintiff’s request for leave to amend the Complaint is GRANTED, and the Court reserves
judgment on the Plaintiff’s Placeholder Motion.
This lawsuit arises out of allegedly unsolicited faxes sent by Foot Levelers and John Doe
Defendants (“Defendants”) to Swetlic Chiropractic and Rehabilitation Center, Inc. (“Swetlic”).
Swetlic alleges Defendants violated the Telephone Consumer Protection Act (“TCPA”) as
amended by the Junk Fax Prevention Act when Defendants sent advertising faxes without
insufficient opt-out notices or without prior express invitation or permission by the recipients.
Swetlic alleges that it received three unsolicited faxes in 2014 from Defendants on May
19, May 27, and June 2. (Doc. 1, Compl. at ¶ 11). The May faxes appear to be relatively
straightforward advertisements for stabilizing orthotics available for sale. (Doc. 1-1, Faxes at 2–
3). However the June fax is advertising a free webinar and gives information on receiving free
promotional material for Foot Levelers and a giveaway contest for an iPad Air and a Michael
Kors clutch. (Id. at 4). Both the giveaway and the registration for the webinar direct interested
parties to the Foot Levelers website and the free promotional material directs interested parties to
contact Foot Levelers’ Customer Service department. (Id.).
Swetlic alleges that at least twenty five other recipients received these and other faxes
without permission. (Id. at ¶ 14). Swetlic specifically alleges that the first fax did not display a
proper opt-out notice but then later also alleges that all three faxes failed to comply with the optout notice requirements. (Id. at ¶¶ 14, 29). Swetlic alleges that these faxes caused damages
including the loss of paper, toner, and the use of fax machine lines. (Id. at ¶ 34). Swetlic also
alleges that it lost time “receiving, reviewing and routing the Defendants’ unauthorized faxes.”
(Id.). Last, Swetlic alleges that the faxes imposed on Swetlic’s privacy interests. (Id.).
Swetlic filed the Placeholder Motion at the same time it filed its Complaint in this case.
Foot Levelers filed a Motion to Stay the case pending the Supreme Court’s ruling in Spokeo, Inc.
v. Robins, 578 U.S. ____, 136 S.Ct. 1540 (2016) because Spokeo may be decisive in determining
whether Swetlic has standing to pursue this action. Foot Levelers also moves for dismissal of all
of the claims and asks this Court to strike the class definition as an improper “fail-safe” class.
Defendant’s Motion to Stay asked the Court to stay the case pending the Supreme Court’s
resolution of Spokeo, Inc. v. Robins. Because the Supreme Court’s ruling is now published,
Defendant’s Motion to Stay is DENIED as moot. In addition, Defendant moved for dismissal of
all of Swetlic’s claims under 12(b)(6) for failing to identify how Foot Levelers violated the
TCPA toward Swetlic, to dismiss all claims relating to the June fax because it is not an
advertisement, and to strike the class definition.
Before addressing Spokeo’s effect on Swetlic’s standing in this case, it is important to
clarify which claims in the Complaint are brought by Swetlic. Foot Levelers originally argued
that Swetlic’s Complaint did not specifically address how Foot Levelers violated the TCPA.
However, Foot Levelers did not respond to Swetlic’s argument on this point. Swetlic argued that
notice pleading does not require a theory of liability and that Defendant cited no authority
requiring a detailed theory of liability. (Doc. 24, Mem. Opp. at 1, 16). Even though Swetlic’s
reference to notice pleading is inconsistent with Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)
and Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Court agrees with Swetlic that a detailed and
singular theory of liability is not required. Swetlic is alleging that Defendants sent unsolicited
faxes, or alternatively, that the faxes lacked a proper opt-out, or both:
Defendants sent on or about May 19, 2014, May 27, 2014 and June 2, 2014,
advertisements and any other advertisements sent to Plaintiff . . . to the telephone
lines and facsimile machines of Plaintiff . . . . The Faxes were transmitted to
persons or entities without their prior express permission or invitation and/or
Defendants are precluded from asserting any prior express permission or
invitation or that Defendants had an established business relationship with
Plaintiff . . . because of the failure to comply with the Opt-Out Notice
(Doc. 1, Compl. at ¶ 29 (emphasis added); see also ¶¶ 11, 14, 16). The Complaint is clear that
Swetlic is alleging alternative bases of liability, a litigation strategy explicitly authorized under
the Federal Rules of Civil Procedure and the Sixth Circuit. Fed R. Civ. P. 8(d)(3)) (“A party
may state as many separate claims or defenses as it has, regardless of consistency.”); Reg'l
Airport Auth. of Louisville v. LFG, LLC, 460 F.3d 697, 711 (6th Cir. 2006) (“Parties may, of
course, plead alternative theories of liability.”). Accordingly, Foot Levelers’s Motion to Dismiss
the Complaint for lack of specificity under Rule 12(b)(6) of the Federal Rules of Civil Procedure
is DENIED. The Court will address each remaining argument in turn.
Although Foot Levelers only moved to stay the case as opposed to moving for dismissal
under Rule 12(b)(1) of the Federal Rules of Civil Procedure, the Court will now consider
whether Swetlic has standing. Both parties offered arguments on the issue of standing in their
responses to the Foot Leveler’s Motion to Stay. This is appropriate because standing is “the
threshold question in every federal case,” and if the plaintiff lacks standing, the federal court
lacks jurisdiction. Warth v. Seldin, 422 U.S. 490, 498 (1975). “In essence the question of
standing is whether the litigant is entitled to have the court decide the merits of the dispute or of
particular issues.” Id.
Standing under Article III has three elements. “First, the plaintiff must have suffered an
‘injury in fact’-an invasion of a legally protected interest which is (a) concrete and particularized,
and (b) actual or imminent, not conjectural or hypothetical.” Lujan v. Defs. of Wildlife, 504 U.S.
555, 560 (1992) (internal citations and quotation marks omitted). Second, the injury must be
“fairly traceable to the challenged action of the defendant.” Id. (Internal alterations omitted).
Third, it must be likely that the injury will be “redressed by a favorable decision.” Id. at 561.
The burden is on the party invoking federal jurisdiction to demonstrate Article III standing.
Stalley v. Methodist Healthcare, 517 F.3d 911, 916 (6th Cir. 2008). Last, each element of
standing must be supported with the “manner and degree of evidence required at the successive
stages of litigation.” Lujan, 504 U.S. at 561.
For an injury to be cognizable under current standing doctrine, it must be particularized
meaning it “affect[s] the plaintiff in a personal and individual way.” Spokeo, Inc. v. Robins, 578
U.S. ____, 7, 136 S.Ct. 1540 (2016) (internal quotations omitted). Additionally, the injury must
be concrete, meaning it must actually exist and must be real and not abstract. Id. at 8 (quoting
Webster’s Third New Int’l Dictionary 472 (1971); Random House Dictionary of the English
Language 305 (1967)). However, the injury need not necessarily be tangible. Id. at 8–9 (citing
Pleasant Grove City v. Summum, 555 U.S. 460 (2009) (free speech); Church of Lukumi Babalu
Aye, Inc. v. Hialeah, 508 U.S. 520 (1993) (free exercise)). Congress may “elevat[e] to the status
of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law.”
Spokeo, 578 U.S. at 9 (quoting Lujan, 504 U.S. at 578). However, this “does not mean that a
plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person
a statutory right and purports to authorize that person to sue to vindicate that right.”
Specifically, a plaintiff cannot “allege a bare procedural violation, divorced from any concrete
harm, and satisfy the injury-in-fact requirement of Article III.” Id. at 9–10.
Foot Levelers argues that both of Plaintiff’s alternative theories of liability lack standing.
Foot Levelers argues that the unsolicited fax claims have an injury that is vague and de minimis
such that the injuries are not concrete. Foot Levelers also argues that Swetlic had the power to
stop the faxes by using the provided opt-out and thus, eliminate the injury. As for the claims
based on the lack of statutorily required opt-out language, Foot Levelers argues that these faxes
could not have caused a traceable harm because such a claim presupposes that Foot Levelers had
permission to send advertising faxes, but only failed to include more robust opt-out language.
The Court will address both the unsolicited faxes and those which were allegedly permitted but
lacked the proper opt-out language.
Although the Sixth Circuit has not had an opportunity to consider a similar case since the
Supreme Court’s decision in Spokeo, in Imhoff Inv., L.L.C. v. Alfoccino, Inc., decided before
Spokeo, the Sixth Circuit found that the TCPA “gives recipients of unsolicited fax advertising the
legal right to recover damages and obtain injunctive relief from the senders of those faxes.”
Imhoff, 792 F.3d 627, 633 (6th Cir. 2015). In considering unsolicited advertisements, the Sixth
Circuit held that “viewing or printing a fax advertisement is not necessary to suffer a violation of
the statutorily-created right to have one’s phone line and fax machine free of the transmission of
unsolicited advertisements.” Id.
The Eastern District of Michigan recently had the opportunity to analyze Imhoff in the
aftermath of Spokeo. Compressor Eng’g Corp. v. Thomas, No. 10-10059, 2016 WL 7473448
(E.D. Mich. Dec. 29, 2016). In Compressor, the plaintiff alleged it received a single fax from the
defendant, did not recall receiving the fax, did not keep the fax, did not keep the fax machine,
and did not have the transmission log showing receipt of the fax. Id. at *4. Importantly, it was
undisputed that the defendant did not receive permission to send the fax. Id. Finding that Imhoff
is consistent with Spokeo, the court held that the plaintiff had standing because he “evidenced a
‘concrete’ injury of an ‘occupied’ fax or telephone line that is not merely a ‘procedural harm
divorced’ from a concrete injury,” and that “the injury is ‘particularized’ as to Plaintiff and the
proposed class because they are alleged ‘recipients’ of the offending fax advertisement.” Id. at
*10. This Court agrees with the Compressor court that the receipt of an impermissible fax
constitutes a concrete and particularized injury under Imhoff and Spokeo.
Foot Levelers also argues that there is no harm in this case because the opt-out language
in the faxes offered Swetlic a way to eliminate the injury that was within Swetlic’s control.
(Doc. 27, Mot. to Stay Reply at 5). Foot Levelers cites a footnote from Lujan, stating that if
there is “a mechanism to eliminate the injury that was ‘at least partly within the plaintiff’s own
control,’” there is no standing. (Id. (citing Lujan, 504 U.S. at 564 n.2). This argument and its
quotation of Lujan are red herrings. The quote in Lujan is not referring to actual injuries—i.e. an
injury which has already occurred—as alleged in this case. Lujan, 504 U.S. at 564 n.2. The
quote in Lujan is actually discussing how a standing analysis handles alleged imminent injuries.
Finding that such injuries must be imminent, the Court noted that allowing standing for all
injuries which may happen in the future and are partly within the plaintiff’s control would stretch
standing beyond its “breaking point.” Id. The injury alleged in this case is actual because it
already occurred, meaning it need not be imminent. As in Compressor, Swetlic alleges that
“Defendants’ faxes used the Plaintiff’s and the other class members’ telephone lines and fax
machine.” (Doc. 1, Compl. at ¶ 34). Swetlic has standing to assert claims that Foot Levelers
sent impermissible unsolicited faxes.
Prior Business Relationship Faxes without Proper Opt-out Language
Foot Levelers next argues that Swetlic lacks standing to assert claims based on faxes
which were sent on the basis of a prior business relationship but allegedly without a proper optout clause. Foot Levelers argues there is no alleged harm that is traceable to the opt-out
language because the harms alleged are due to the sending of the fax, which was authorized by
the previous business relationship. As Foot Levelers only raised this argument in its reply,
Swetlic did not have an opportunity to respond.
It is clear that Imhoff and Compressor do not apply with equal weight to a claim where
the only alleged violation of the statute is the failure to include proper opt-out language. The
Court agrees that a failure to include proper opt-out language seems to be the type of “bare
procedural harm” that the Spokeo court said was insufficient to confer standing. Spokeo, 578
U.S. at 9–10. However, the TCPA made it unlawful for any person to use a fax machine to send
an unsolicited advertisement unless: “(i) the unsolicited advertisement is from a sender with an
established business relationship with the recipient . . . and (iii) the unsolicited advertisement
contains a notice meeting the requirements under paragraph (2)(D).” 47 U.S.C. § 227(b)(1)(C).
While the failure to include proper opt-out language seems like only a technical violation
of law, the Sixth Circuit has clarified that “unsolicited fax advertisements impose costs on all
recipients, irrespective of ownership and the cost of paper and ink, because such advertisements
waste the recipients’ time and impede the free flow of commerce.” Am. Copper & Brass, Inc. v.
Lake City Indus. Prod., Inc., 757 F.3d 540, 544 (6th Cir. 2014) (citing Ira Holtzman, C.P.A. v.
Turza, 728 F.3d 682, 684 (7th Cir. 2013) (“Even a recipient who gets the fax on a computer and
deletes it without printing suffers some loss: the value of the time necessary to realize that the
inbox has been cluttered by junk.”) (emphasis in original)). Am. Copper is clear that unsolicited
fax advertisements waste time and impede commerce. Id. While the statute carved out a narrow
exception to the illegality of transmitting unsolicited fax advertisements, the statute makes no
differentiation in the harm caused or the penalty assessed whether a defendant fails to meet the
opt-out language required or lacks permission to send the fax. In either case, the fax is an
impermissible unsolicited fax advertisement that wastes time and impedes commerce.
Accordingly, the Court is left with the allegations that Foot Levelers’s impermissible
faxes caused the recipients to lose paper and toner, occupied telephone lines, and cost the
recipients their time reviewing the impermissible unsolicited advertisements. (Doc. 1, Compl. at
¶ 34). Foot Levelers argues a proper opt-out would use more paper and ink and toner and waste
more time. However, that ignores the basic principle that had Foot Levelers used proper opt-out
language, there would be no statutory violation and thus, no damage whatsoever. To the extent
Foot Levelers wishes to argue that its’ opt-out language met statutory minimums; a challenge to
Swetlic’s standing is not the appropriate place for such an argument.1 The Court finds that
Swetlic has standing to assert the claims in the Complaint.
June Fax as an Advertisement
Foot Levelers next moves for dismissal of any claims related to the June fax which
publicized the free webinar. Foot Levelers argues that the June fax is not an advertisement
because it does not offer anything for sale. Swetlic argues that the FCC has ruled that an
announcement of a free seminar is an advertisement.
The TCPA provides: “[t]he term ‘unsolicited advertisement’ means 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. Although helpful, the definition does not lend any clarity to
the issue of whether the June fax is an unsolicited advertisement.
Both Swetlic and Foot
Levelers cite the FCC’s most recent ruling on this issue, In re Rules & Regulations Implementing
the Tel. Consumer Prot. Act of 1991 Junk Fax Prevention Act of 2005, 21 F.C.C. Rcd. 3787,
3788 (2006), and the Sixth Circuit’s ruling in Sandusky Wellness Ctr., LLC v. Medco Health
Sols., Inc. 788 F.3d 218, 222 (6th Cir. 2015).
Plaintiff alleges that notice “(1) is not ‘clear and conspicuous,’ (2) does not state a sender’s failure to comply with
an opt-out request within 30 days is unlawful, and (3) does not ‘set forth the requirements’ for the recipient to make
an enforceable opt-out request, each of which are required by 47 C.F.R. § 64.1200(a)(4)(iii).” (Doc. 24, Mot. to
Stay Mem. Opp. at 16–17).
The FCC’s ruling “conclude[d] that facsimile messages that promote goods or services
even at no cost, such as free magazine subscriptions, catalogs, or free consultations or seminars,
are unsolicited advertisements under the TCPA’s definition.” In re Rules, 21 F.C.C. Rcd. at
3814. The FCC noted that “while [a] publication itself may be offered at no cost to the fascimile
[sic] recipient, the products promoted within the publication are often commercially available.”
Accordingly, the FCC found that “it is reasonable to presume that such messages describe the
‘quality of any property, goods, or services.’”
Further, the FCC clarified that such
transmissions are different from industry news articles, legislative updates, and employee benefit
information which contain only information and incidental advertisements. Id.
The Sixth Circuit considered the definition in the TCPA and added to it using various
Sandusky, 788 F.3d at 222.
Ultimately, the Sixth Circuit held that “[a]n
advertisement is any material that promotes the sale (typically to the public) of any property,
goods, or services available to be bought or sold so some entity can profit.” Id. Although it did
not cite the FCC’s 2006 decision, the Sixth Circuit noted that “when an orthopedic-implant
manufacturer sends potential buyers a fax containing a picture of its product on an invitation to a
free seminar: It is drawing the relevant market’s attention to its product to promote its sale (albeit
indirectly)” and accordingly, is an advertisement. Id. (citing Physicians Healthsource, Inc. v.
Stryker Sales Corp., 65 F. Supp. 3d 482, 489 (W.D. Mich. 2014), as amended (Jan. 12, 2015)
(finding issue of fact whether reasonable fact-finder would consider a fax an advertisement
which contained invitation to a free seminar)).
In this case, based on the allegations in the Complaint and the fax as presented, the Court
finds that taking all inferences in favor of the Swetlic, the June fax is sufficiently alleged to be an
advertisement. First, although the largest part of the fax contains information for a webinar
regarding support staff and not Foot Levelers’ products, the fax also contains information
regarding free point-of-sale promotional material from Foot Levelers. Promotional materials for
point-of-sale stations that could be passed on to a practice’s customers falls into a type of
advertisement described by the Sixth Circuit as one which “draw[s] the relevant market’s
attention to its product to promote its sale (albeit indirectly).” Sandusky, 788 F.3d at 222. It also
falls directly into the FCC’s statement that even when a publication is offered at no cost “the
products promoted within the publication are generally commercially available . . . [thus], it is
reasonable to presume that such messages describe the ‘quality of any property, goods, or
services.’” In re Rules, 21 F.C.C. Rcd. at 3814. Accordingly, Foot Leveler’s Motion to Dismiss
the claims relating to the June fax are DENIED.
Having settled which claims from the Complaint should survive Foot Levelers’ Motion to
Dismiss, the Court must now address the class claims and allegations. First, Foot Levelers
argues that the proposed class definition should be stricken from the Complaint because it is an
improper fail-safe class. Swetlic argues that the class definition is only broad because there has
been no discovery yet. However, recognizing that the class definition may be improper, Swetlic
asks for leave to amend the Complaint in the alternative.
A fail-safe class is a class definition where it only includes those who are entitled to
relief. Randleman v. Fid. Nat. Title Ins. Co., 646 F.3d 347, 352 (6th Cir. 2011). In an improper
fail-safe class, “[e]ither the class members win or, by virtue of losing, they are not in the class
and, therefore, not bound by the judgment.” Id. The class definition in the Complaint is as
All persons who (1) on or after four years prior to the filing of this action, (2)
were sent telephone facsimile messages of material advertising the commercial
availability or quality of any property, goods, or services by or on behalf of
Defendants, and (3) which Defendants did not have prior express permission or
invitation, or (4) which did not display a proper opt-out notice.
(Doc. 1, Compl. at ¶ 17). The Court agrees with Foot Levelers that the class definition in the
Complaint would constitute an improper fail-safe class in any attempt to certify. The class only
includes persons who either did not give permission or received a fax which did not contain a
proper opt-out notice. However, the Court also agrees with Swetlic that at this early stage in the
litigation, amending the class definition as Swetlic suggests is the proper course. Sauter v. CVS
Pharmacy, Inc., No. 2:13-CV-846, 2014 WL 1814076, at *9 (S.D. Ohio May 7, 2014) (citing
Powers v. Hamilton Cty. Pub. Def. Comm’n, 501 F.3d 592, 619 (6th Cir. 2007)) (Graham, J.).
Accordingly, Swetlic will have fourteen days from the date of this order to file an amended
complaint containing the proposed class definition.
Last, Swetlic filed the Placeholder Motion to prevent a pick-off or buy-off attempt by
Foot Levelers. Defendant opposed the Motion, arguing that the motion is premature 2 and that
the Supreme Court’s decision in Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016) obviates
the need for such a motion.3 Plaintiff argues that because of the uncertainty following CampbellEwald and the Defendant’s signaled intent to compensate Plaintiff, the motion should remain
pending. Although the Placeholder Motion is currently pending, Swetlic asked for and was
granted relief to amend the Complaint and change the class definition. Accordingly, when
Courts typically deny premature motions. See Serv., Hosp., Nursing Home & Pub. Emps. Union, Local No. 47 v.
Commercial Prop. Servs., Inc., 755 F.2d 499, 507 (6th Cir. 1985) (finding district court properly denied summary
judgment motion because it was premature); Nationwide Children’s Hosp., Inc. v. D.W. Dickey & Son, Inc. Emp.
Health & Welfare Plan, No. 2:08-CV-1140, 2009 WL 5216041, at *6 (S.D. Ohio Dec. 29, 2009) (striking premature
motion for judgment on the pleadings) (Frost, J.).
Campbell-Ewald held that an unaccepted Rule 68 offer of judgment does not moot a Plaintiff’s class claims such
that dismissal would be appropriate. 136 S.Ct. at 665.
Plaintiff amends the Complaint, the Placeholder Motion will become moot. Accordingly, the
Court reserves judgment until the time period for amendment has passed.
Based on the foregoing, Foot Levelers’s Motion to Dismiss, Motion to Strike, and Motion
for a Stay are DENIED.
Swetlic’s request for leave to file an amended complaint is
GRANTED. The Court orders that the Plaintiff is granted leave to amend the Complaint within
fourteen days of the date of this order. Last, the Court withholds its ruling on the Placeholder
Motion until the end of Plaintiff’s fourteen day amendment period. The Clerk shall REMOVE
Document 18 from the Court’s pending motions list.
IT IS SO ORDERED.
__/s/ George C. Smith
GEORGE C. SMITH, JUDGE
UNITED STATES DISTRICT COURT
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