In the three years since the U.S. Congress enacted the Junk Fax Prevention Act, a growing number of lawsuits have been filed against companies across the country for sending junk faxes. Litigation is no longer limited to those marketing companies that use blast faxing as an advertising method. More recent cases filed in Ohio and elsewhere indicate that even a fax or two can open a company to significant liability under the Junk Fax Prevention Act. Because inadvertent violations of the Act are easy, and because penalties are relatively high, a growing cottage industry of plaintiffs and their attorneys has sprung up to sue companies that use fax advertising.
Before you send a fax, even to your existing customers, please be certain that you are familiar with all of the requirements of the Junk Fax Prevention Act. Doing so can save you from expensive litigation and penalties in the future.
Junk Fax Prevention Act
Congress passed the Junk Fax Prevention Act of 2005 (“JFPA”) to amend the Telephone Consumer Protection Act (“TCPA”). The TCPA was primarily aimed at aggressive telemarketers and telephone calls. As originally passed, only one provision of the TCPA addressed unsolicited faxes. 47 U.S.C. 227(B)(1) contained a broad prohibition making it unlawful to “send an unsolicited advertising to a telephone facsimile machine.” After years of litigation and numerous attempts at rule-making, Congress passed the JFPA to provide greater clarification to the prohibitions against sending faxes found in the TCPA.
Among other things, the TCPA now provides greater clarity to an exception to the Act, which permits unsolicited fax advertisements to be sent if an “established business relationship” is shown. The TCPA makes it unlawful to send an unsolicited advertisement to a fax machine unless:
1) There is an established business relationship with the recipient of the fax; and
2) The fax number was obtained by a directory, advertisement, or website for public distribution, or was given voluntarily within the context of the established business relationship; and
3) The unsolicited advertisement contains a clear and conspicuous notice on the first page of the fax that meets all of the following requirements:
Failure to meet any of the requirements listed above, can subject your company to complaints to the FCC or litigation, even if the unsolicited fax was sent to an existing customer or was sent inadvertently.
Ohio Law
Ohio law generally mirrors federal law related to junk faxes. Ohio Revised Code Section 4931.75 prohibits a person from transmitting any advertisement to any facsimile device without the prior permission from the owner or lessor of the device or the person has a pre-existing business relationship with the recipient of the fax. In addition, the Ohio Consumer Sales Practices Act (“OCSPA”) allows individuals to bring claims for recovery of damages in addition to any claims under federal law.
Penalties
State and federal laws provide a menu of various penalties and actions that the recipient of an unsolicited fax can bring. Several plaintiffs and Ohio counsel have created a formula of sorts for bringing lawsuits against those who send fax advertisements that maximize civil penalties and assure recovery of their attorney fees.
An individual who receives an unsolicited fax may file a complaint with the Federal Trade Commission or bring a private lawsuit against the violator in state court. The TCPA allows a plaintiff to recover either the actual monetary loss that resulted from the violation or up to $500 dollars in damages for each violation, whichever is greater. If the court finds that the violation was willful or knowing, the court may impose treble damages. Thus, unless your company can demonstrate that it has an established business relationship and meets all of the criteria set forth above, the recipient of an unsolicited fax may demand damages of up to $1500 per knowing violation of the TCPA.
Ohio Revised Code Section 4931.75 permits damages of up to $1,000 for each violation. But the Ohio Consumer Practices Sales Act (“OCPSA”) allows for recovery of up to $200 per violation which can be added to any damages permitted by federal law. The OCSPA also allows for recovery of attorney fees, even though the TCPA does not.
Thus, a typical complaint in Ohio is brought under both state and federal law and alleges that an unsolicited fax was sent knowingly. This allows the plaintiff to seek statutory damages under federal law in the amount of $1500 per violation, plus an additional $200 per violation under Ohio law. Ohio plaintiffs also seek attorney fees and pre-judgment interest under Ohio law. Finally, many of these cases allege that a much larger number of faxes were sent -- a fact plaintiffs attempt to prove through discovery— and seek to certify the litigation as a class action lawsuit.
Recent Ohio Law
The Ohio Supreme Court recently issued two significant decisions which impact this area of the law. In September of 2007, the Ohio Supreme Court decided Culbreath v. Golding Enterprises LLC, 114 Ohio St.3d 357, 2007-Ohio-4278. In that case, the owners of a gentlemen’s club sent an unsolicited fax advertisement to a Columbus area law firm. The gentlemen’s club obtained the law firm’s fax number from a local bar directory. The fax failed to include the identifying information required by the TCPA. The law firm’s only practitioner filed a complaint with the Court of Common Pleas alleging violations of the TCPA and OCSPA, included a prayer for treble damages, and sought attorney fees. In addition to the per fax damages outlined above, the law firm sought additional damages for the technical defects in the fax, such as the failure to include the identifying information.
The Ohio Supreme Court ruled that the law firm could be entitled to damages for receipt of the fax in the amount of $500 and, if the violation was knowing or willful, up to $1500 under the treble damages clause of the TCPA. However, the Court ruled that additional damages under federal law for technical violations of the fax itself were not available. In other words, the Ohio Supreme Court ruled that the recipient of an unauthorized fax could be entitled to as much as $1500 per willful violation, but additional damages for other technical defects in the fax were not available.
Finally, the Supreme Court found that the OCSPA was not implicated, and denied the law firm’s OCSPA claims. The Court ruled that the transmission of an unsolicited fax to a business entity did not constitute a consumer transaction, which is defined as a transaction to an individual. The Court found that consumer transactions are expressly restricted by statute to transactions “for purposes that are primarily personal, family, or household.” The Court refused to recognize the law firm’s claim under the OCSPA because the law firm is not an individual for purposes of Ohio consumer sales protection laws.
The law firm filed a Motion for Reconsideration of the decision, which included a request for the Supreme Court to reconsider its denial of the law firm’s OCSPA claims. As of this writing, the Motion for Reconsideration is still pending before the Ohio Supreme Court. Thus, it is possible that this ruling could be amended or further explained.
In another decision issued on December 27, 2007, the Ohio Supreme Court clarified what a plaintiff must prove to establish a “knowing” or “willful” violation of the TCPA. Charvat v. Ryan, 116 Ohio St.3d 394, 2007-Ohio-6833. Although the Charvat case dealt with a telephone call, the Ohio Supreme Court’s definitions of “knowing” or “willful” will apply to all TCPA cases. In Charvat, the Ohio Supreme Court ruled that in order to show a knowing violation of the TCPA, and thus be entitled to an award of treble damages, the plaintiff must prove that the sender of the fax “consciously and deliberatively committed or omitted an act that violated the statute, irrespective of any intent to violate the law.
The Court found that since the TCPA is not a criminal statute, nor a highly technical one, ignorance of the law is no defense. In short, the Court found that treble damages could be awarded so long as the sender of the fax knew that they had undertaken the actions that led to the sending of an unsolicited fax. A plaintiff need not establish that the sender of the fax knew about the TCPA or had any intent to violate it. Similarly, in its analysis of the OCSPA, the Court found that the recipient of the fax need only prove that the sender of the fax “knowingly and purposefully” intended to commit the act that caused the violation, and not that the sender of the fax specifically intended to violate the Act.
This case was remanded to the trial court to determine whether there was a knowing violation in light of the new standard announced by the Ohio Supreme Court. Thus both recent cases could result in additional precedent in this area.
Conclusion
As noted above, case law in this area continues to develop. A review of the case law suggests that a core group of plaintiffs and attorneys continue to bring litigation against Ohio businesses that send unsolicited fax advertisements. These cases are not limited to large telemarketing firms, but have also included solo practitioners or small businesses that may have no intention of telemarketing in the traditional sense.
Any business that intends to send an advertisement via facsimile should very carefully review the requirements of the TCPA before sending any advertisement via fax. Failure to do so could result in significant legal fees, penalties, and the imposition of attorney fees.