Court Opinion

ID: 2799767
Source: CourtListenerOpinion
Date Created: 2015-05-11 14:01:31.568466+00
Date Added: 2024-06-11T11:31:16.310569
License: Public Domain

UNITED STATES DISTRICT COURT
                                                     FOR THE DISTRICT OF COLUMBIA

_________________________________________
                                          )
Drug Reform Coordination Network, Inc.,   )
                                          )
      Plaintiff,                          )
                                          )
             v.                           )                                   Civil No. 1:14-cv-00701 (APM)
                                          )
Grey House Publishing, Inc.,              )
                                          )
      Defendant.                          )
_________________________________________ )

                                                               MEMORANDUM OPINION

I.            INTRODUCTION

              Plaintiff Drug Reform Coordination Network, Inc., brought this action against Defendant

Grey House Publishing, Inc., alleging that Grey House sent it an unsolicited facsimile

advertisement in violation of the Telephone Consumer Protection Act of 1991.1 Grey House has

moved to dismiss Plaintiff’s Second Amended Complaint on the ground that the facsimile at issue

does not meet the Act’s definition of “unsolicited advertisement.” The court disagrees and denies

Defendant’s Motion.

II.           BACKGROUND

              Defendant Grey House Publishing, Inc. (“Grey House”), is a New York-based corporation

that publishes Hudson’s Washington News Media Contact Directory, a reference source for media

contacts in the District of Columbia area (the “Directory”). See Pl.’s Second Am. Compl., ECF

No. 12 ¶ 6-7 [hereinafter Compl.]. Plaintiff Drug Reform Coordination Network, Inc. (“DRCN”),

                                                            
1
 Plaintiff filed suit on behalf of itself and “on behalf of a class of persons similarly situated.” Pl.’s Second Am.
Compl., ECF No. 12 at 1. The court stayed all proceedings in this matter, including those related to Plaintiff’s
Amended Motion for Class Certification, ECF No. 13, pending the resolution of Defendant’s Motion to Dismiss.
is a non-profit organization registered to do business in the District of Columbia that publishes a

weekly electronic newsletter entitled “Drug War Chronicle.” Id. ¶ 5. On or about February 12,

2014, Grey House sent DRCN a one-page facsimile (the “Fax”). See id. ¶ 9; see also Compl., Ex.

A, ECF No. 12-1. The Fax read as follows:

       The 2014 edition of Hudson’s Washington News Media Contact Directory is a
       publication that provides the most accurate and up-to-date information for media
       contacts in and around our nation’s capital. Below is the chance for your FREE
       LISTING to appear in the next edition. This is an opportunity to include as much
       information as possible. Please take a moment to fill out the form with your
       organization’s information, as well as information on key contacts and executives.
       Accurate representation of your company is important to us. . . . You will not be
       charged for this listing, nor are you under any obligation to purchase the work.

ECF No. 12-1. Immediately below the quoted text, the Fax identified DRCN’s directory listing

information, including its “Contact Name,” address, phone number, fax number, and website URL.

Id. The bottom of the Fax included the notice: “You are entitled to opt out of future faxes. To

opt out, please call 1-800-562-2139 x 123 or check the box below and fax the form back to us.

You may also e-mail KBierfeldt@greyhouse.com.” Id.

       Seven days after transmitting the Fax, on February 19, 2014, Grey House sent a colorful,

multi-page email to DRCN’s Executive Director, David Borden, featuring a picture of the

Directory and offering it for sale. See ECF No. 12-2. The email touted the Directory as a “must-

have resource”—“the perfect research tool for Public Relations, Marketing, Networking, and so

much more”—and offered it at a discounted price. Id. The email also provided purchasing

instructions for the Directory, including a link to a “Discount Order Form.” Id. Grey House sent

additional emails to Borden on April 15, 2014, and June 11, 2014. These emails, like the earlier

one, heralded the Directory as “the most accurate, most up-to-date source for media contacts in

our nation’s capital,” ECF No. 12-3—“a gold mine of information [that] would be a welcome

addition to any reference collection,” ECF No. 12-4—and similarly offered it for sale.

                                                2
 
        On July 3, 2014, DRCN filed a complaint against Grey House claiming that the Fax was

an “unsolicited advertisement” in violation of the Telephone Consumer Protection Act of 1991

(TCPA). Compl. ¶ 1. DRCN alleged that the Fax “advertised the Defendant’s products and/or

services, and offered [it] a free listing in one of Defendant’s directories.” Id. ¶ 9. It further alleged

that the three emails it received from Grey House “followed up” the Fax and were “part of an

overall marketing campaign by the Defendant, both directly advertising one of the Defendant’s

directory publications, and also serving as a prelude to subsequent offers for the sale of that

publication.” Comp. ¶ 12. “Upon information and belief,” DRCN averred, “part of Defendant’s

business practice is to market its directories by transmitting a facsimile advertisement, such as [the

Fax], that advertises a free listing in one of Defendant’s directories, to potential and existing

customers, and to then follow up that facsimile advertisement with subsequent email, fax,

telephone communications, and other methods that solicit the purchase of Defendant’s directories

from those who may have been offered a free listing.” Id. ¶ 13.

III.    LEGAL STANDARD

        In evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court

must accept Plaintiff’s factual allegations as true and “construe the complaint ‘in favor of the

plaintiff, who must be granted the benefit of all inferences that can be derived from the facts

alleged.’” Hettinga v. United States, 677 F.3d 471, 476 (D.C. Cir. 2012) (quoting Schuler v. U.S.,

617 F.2d 605, 608 (D.C. Cir. 1979). The Court need not accept as true, however, “a legal

conclusion couched as a factual allegation,” Papasan v. Allain, 478 U.S. 265, 286 (1986), nor

“inferences . . . unsupported by the facts set out in the complaint,” Kowal v. MCI Commc’ns Corp.,

16 F.3d 1271, 1276 (D.C. Cir. 1994).

                                                   3
 
       To survive a motion to dismiss, a complaint must contain “sufficient factual matter,

accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009) (quoting Bell Atlantic 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. (citing Twombly,

550 U.S. at 556). The factual allegations in the complaint need not be “detailed”; however, the

Federal Rules demand more than “an unadorned, the-defendant-unlawfully-harmed-me

accusation.” Id. (citing Twombly, 550 U.S. at 555). “Threadbare recitals of the elements of a cause

of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S.

at 555). If the facts as alleged fail to establish that a plaintiff has stated a claim upon which relief

can be granted, a court must grant defendant’s Rule 12(b)(6) motion. See Am. Chemistry Council,

Inc. v. U.S. Dep’t of Health & Human Servs., 922 F. Supp. 2d 56, 61 (D.D.C. 2013).

IV.    ANALYSIS

       A. Unsolicited Advertisement

       Grey House argues that the Fax is not an “unsolicited advertisement” under the TCPA.

It contends that “there are no statements included in the content of the facsimile that promote the

Directory” and thus the Fax is not an advertisement. Mem. of Law in Supp. of Def.’s Mot. to

Dismiss, ECF 15-1 at 2 [hereinafter Def.’s Mem. in Supp.] (emphasis added). Grey House further

asserts that it sent the Fax “for the sole and expressly stated purpose of requesting updated

information from an existing listee in its Directory,” id. at 14, and not as part of “an overall

marketing campaign to promote the commercial availability” of the product, id. at 15.

       In 1991, Congress enacted the TCPA in part to address the growing problem of unwanted

facsimile advertising. See Telephone Consumer Protection Act, Pub. L. No. 102-243 (2001)

                                                   4
 
(“Unrestricted telemarketing . . . can be an intrusive invasion of privacy . . . .”). Under the TCPA,

Congress prohibited any person from using “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). The statute defines “unsolicited advertisement” as “any material advertising the

commercial availability or quality of any property, goods, or services which is transmitted to any

person without that person’s express invitation or permission, in writing or otherwise.” Id.

§ 277(a)(5).

              Congress expressly delegated authority to the Federal Communications Commission

(“FCC”) to develop regulations implementing the TCPA. 47 U.S.C. § 227(b)(2) (“The [FCC] shall

prescribe regulations to implement the requirements of this subsection.”). The regulations provide

guidance on what constitutes an “unsolicited advertisement” under the TCPA and illustrate the

types of facsimile communications that violate the statute. See In the Matter of Rules &

Regulations Implementing the Tel. Consumer Prot. Act of 1991 Junk Fax Prevention Act of 2005,

21 F.C.C.R. 3787, 3810-15 (2006) [hereinafter Rules & Regulations].2 As applicable here, the

regulations provide that even a facsimile that promotes a free good or service might be an

unsolicited advertisement. “[F]acsimile 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.” Id. at 3814. Such communications may be

unlawful, the regulations explain, because they often serve as a “pretext to advertise commercial

products and services” and “are often part of an overall marketing campaign.” Id.; see also

Physicians Healthsource, Inc. v. Boehringer Ingelheim Pharm., Inc., No. 3:14-cv-405, 2015 WL

                                                            
2
 Although the 2006 regulations are most relevant to this case, the FCC has issued several sets of regulations since the
enactment of the TCPA. See, e.g., Rules and Regulations Implementing the Telephone Consumer Protection Act of
1991, 7 F.C.C.R. 8752 (1992); Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991,
18 F.C.C.R. 14014 (2003).

                                                               5
 
144728, at *4-5 (D. Conn. Jan. 12, 2015) (applying the regulations addressing pretexts to

advertisements to a fax inviting physicians to a free dinner meeting). For example, facsimiles

regarding “‘free’ seminars [that] serve as a pretext to advertise commercial products and services”

and “‘free’ publications[, which] are often part of an overall marketing campaign to sell property,

goods, or services,” may violate the TCPA. Rules & Regulations at 3814; see also North Suburban

Chiropractic Clinic, Ltd. v. Merck & Co., Inc., No. 03 C 3113, 2013 WL 5170754, at *4 (N.D. Ill.

Sept. 13, 2013) (denying motion to dismiss where the defendant sent a fax promoting a free

seminar, which did “not mention explicitly any of Defendant’s commercially available products

or services or express an intent by Defendant to market its products or services,” but was alleged

to be “part of its work or operations to market its goods and services”). The regulations thus

provide that a fax that does not on its face promote a product or service may nonetheless violate

the TCPA if it is a precursor to a future solicitation. Id.3

              Taking the complaint’s allegations as true and drawing all inferences in DRCN’s favor, the

court concludes that Plaintiff has sufficiently alleged that the Fax is an “unsolicited advertisement”

because it is a “pretext to advertise commercial products and services” and is “part of an overall

marketing campaign” to sell the Directory. Rules & Regulations at 3814. Standing alone, the Fax

does not promote the Directory for sale. Rather, it apprised Plaintiff of the Directory’s upcoming

                                                            
3
  Grey House does not contend that the FCC’s regulations arbitrarily and capriciously interpret the TCPA. In fact, it
relies on them extensively in its pleadings. See, e.g., Def.’s Mem. in Supp. at 9 (“The Rules and Regulations constitute
a body of experience and informed judgment which provides guidance for the judiciary.”); id. at 15 (“As explained in
the Rules and Regulations . . . .”). Even though Grey House has not challenged the validity of the FCC’s regulations,
the court here expresses its agreement with courts in other jurisdictions that have afforded the regulations, at the least,
persuasive weight, because Congress expressly delegated rulemaking authority to the FCC and because of the FCC’s
experience with the general subject matter. See, e.g., Physicians Healthsource, Inc. v. Janssen Pharmaceuticals, Inc.,
Civ. Action No. 12-2132, 2013 WL 486207, at *3 (D.N.J. Feb. 6, 2013) (citation omitted) (“[T]he FCC’s examples
of what constitutes an advertisement do provide some guidance on how courts should apply the statutory definition of
‘advertisement.’ In that connection, the examples are helpful and persuasive given that these interpretations and
examples are based on the FCC’s experience and informed judgment.”); see also N.B. Indus. v. Wells Fargo & Co.,
No. C 10-03203, 2010 WL 4939970, at *5 (N.D. Cal. Nov. 30, 2010). (“[T]he court considers and gives weight to the
FCC’s examples because they are persuasive and helpful.”).

                                                               6
 
edition and offered the opportunity to update Plaintiff’s “free listing” so that its contact information

would be accurate. ECF No. 12-1. Thus, on its face the Fax is not an “unsolicited advertisement.”

       But a different conclusion obtains when the Fax is read together with the three direct

solicitation emails that followed. Only seven days after it sent the Fax, on February 19, 2014,

Grey House sent an email to DRCN’s Executive Director promoting the Directory and offering it

for sale for $289. See ECF No. 12-2 (“Order today and save 10%. Prepay your order and get

FREE SHIPPING TOO! Call (800) 562-2139 or Download your DISCOUNT ORDER FORM

NOW”). The April 15, 2015, email similarly publicized the commercial availability of the

Directory. It included language akin to that contained in the February 19, 2014, email—“[d]on’t

miss the opportunity to have this important resource in your collection, and start saving time and

money today”—and attached a blank “Order Form.” See ECF No. 12-3. And the June 11, 2014,

email likewise promoted the Directory and informed the reader of its availability for purchase.

See ECF No. 12-4 (“‘[T]he directory is the single most compressive source available for

Washington D.C. area press contract information.’ . . . Prepay and [g]et FREE SHIPPING TOO!

Download your Discount Order Form.”). The timing and content of these emails give rise to the

plausible inference that, as alleged, “Defendant’s business practice is to market its directories by

transmitting a facsimile advertisement, such as [the Fax] . . . and to then follow up that facsimile

advertisement with subsequent email, fax, telephone communications, and other methods that

solicit the purchase of Defendant’s directories from those who may have been offered a free

listing.” Compl. ¶ 13. Plaintiff therefore has sufficiently alleged that the Fax is an “unsolicited

advertisement” under the TCPA.

                                                   7
 
              Two recent FCC adjudications lend support to the court’s conclusion.4 In 2010 and 2011,

the FCC found that Presidential Who’s Who, Inc. (“Presidential Who’s Who”)—a producer of a

directory similar to that produced by Defendant—violated the TCPA by sending “unsolicited

advertisements” via facsimile. See In the Matter of Presidential Who’s Who dba Presidential

Who’s Who, Inc., 25 F.C.C.R. 13759 (2010), ECF No. 18-3 at 10-17 [hereinafter 2010 Notice]; In

the Matter of Presidential Who’s Who dba Presidential Who’s Who, Inc., 26 F.C.C.R. 8989 (2011),

ECF No. 18-3 at 1-9 [hereinafter 2011 Notice]. Like the Fax in this case, the faxes at issue in the

Presidential Who’s Who adjudications were single-page communications offering a “free listing”

in the sender’s directory but not directly promoting it for sale.5 The FCC nevertheless determined

that the faxes “serve[d] as a pretext to advertise a commercial product or service - the ‘Presidential

Who’s Who’ publication and associated products.” 2010 Notice ¶ 7; see also 2011 Notice ¶ 8

(“While the faxes do not charge individuals for listings in the ‘Presidential Who’s Who’

publication, they do either offer for sale the publication itself, or serve as prelude to such an

offer.”). The FCC explained:

              First, these faxes invite individuals to share information and give their permission
              to have it included in its publication. Although there is no cost for inclusion in the
              publication, the products associated with the publication, such as professional
              directories or plaques, are later commercially available. For example, a
              complainant indicated that the offer to be included in the publication was free of
                                                            
4
  Congress expressly delegated authority to the FCC to enforce the TCPA. See 47 U.S.C. § 503(b)(1). Like its rule-
making authority, supra note 3, at 6, the FCC’s interpretation of the TCPA in the context of an adjudication is accorded
some persuasive weight. See U.S. v. Mead Corp., 533 U.S. 218, 219 (2001) (noting that congressional “[d]elegation
of . . . authority may be shown in a variety of ways, as by an agency’s power to engage in adjudication or notice-and-
comment rulemaking” and determining the degree of deference afforded to an agency adjudication by applying the
same framework of analysis applied to notice-and-comment rulemaking).
5
  Plaintiff obtained two “representative fax[es] from Presidential Who’s Who in case number EB-08-TC-2507.” ECF
No. 18-4 at 1-3. Those faxes notified the recipient that it had been selected for inclusion in Presidential Who’s Who’s
directory and provided a returnable blank form for the recipient’s contact information. See id. at 4-5. The faxes at
issue in the Presidential Who’s Who adjudications differ from the facsimile at issue here in certain ways—notably,
the Presidential Who’s Who faxes appear unsolicited because they contain blank spaces for the recipient’s contact
information, whereas the Fax here pre-populated those same fields with known contact information. But their
substantial similarities—both are single-page faxes soliciting contact information and offering a “free” listing in a
directory, followed by direct solicitation efforts—support applying the FCC’s interpretation of the term “unsolicited
advertisement” to this case.

                                                               8
 
              charge, but when she later called the company, “they try to sell you the publication
              at a ridicu[lous] price.” Moreover, other complainants indicate that the faxes also
              offered the opportunity to purchase the publication. . . . In this instance, we find
              that the faxes serve as part of an overall campaign to sell the “Presidential Who’s
              Who” publication and associated products, and as such they are advertisements
              within the meaning of the section 227.

2010 Notice ¶ 7. The above reasoning applies with equal force to the Fax at issue here. Like the

Presidential Who’s Who facsimiles, the Fax offered a free listing, which allegedly served as a

prelude to later solicitations to purchase the Directory. It remains for discovery to determine

whether the Fax was in fact “part of an overall campaign” to sell the Directory, as the FCC

concluded in the Presidential Who’s Who adjudications. But at this stage, Plaintiff has pled

enough to allege a violation of the TCPA.

              B. The “Established Business Relationship” Exception

              Grey House also argues that it is not subject to liability under the TCPA because its Fax

falls within a statutory safe harbor to the general prohibition on “unsolicited advertisements”—the

“established business relationship” exception.                     Def.’s Mem. in Supp. at 7.   According to

Defendant, that exception applies here because “Plaintiff is and has been listed in the Directory

that Grey House Publishing publishes annually since at least 2006” and “[o]n prior occasions the

listing information for Plaintiff has been updated.” Id. at 2.6

              The TCPA exempts from liability “unsolicited advertisements” sent to recipients with

whom the sender has an “an established business relationship.” 47 U.S.C. § 227(b)(1)(C)(i). An

“established business relationship” is “a prior or existing relationship formed by a voluntary two-

way communication . . . on the basis of an inquiry, application, purchase or transaction . . .

regarding products or services . . . , which . . . has not been previously terminated by either party.”

                                                            
6
  These are factual assertions without any evidentiary support. Nevertheless, the court considers Defendant’s
argument, without converting its Motion into one for summary judgment.

                                                               9
 
Rules & Regulations at 3797-98. Merely demonstrating an “established business relationship”

between the sender and recipient, however, is insufficient to come within the safe harbor. To

qualify, a facsimile also must contain a “notice,” 47 U.S.C. § 227(b)(1)(C)(iii), that includes

certain statutorily required elements, id. at § 227(b)(2)(D). Those elements include a specific

written disclosure “that the recipient may make a request to the sender of the unsolicited

advertisement not to send any future unsolicited advertisements . . . and that failure to comply,

within the shortest reasonable time, as determined by the [FCC], . . . is unlawful.” Id. at

§ 227(b)(2)(D)(ii) (emphasis added). The FCC has issued rules that define “shortest reasonable

time” as 30 days and provide that “failure to comply [with a request to opt out], within 30 days . .

. is unlawful.”   47 C.F.R. § 64.1200(a)(4)(iii)(B); see also City Select Auto Sales, Inc. v.

David/Randall Assocs., Inc., Civ. Action No. 11-2658, 2015 WL 1421539, at *11 (D.N.J. Mar. 27,

2015) (“[T]he advertisement . . . must state that the sender’s failure to comply with a request for

removal within 30 days violates applicable law[.]”).

       Grey House does not qualify for the “established business relationship” safe harbor because

the Fax failed to include all of the statutorily mandated disclosures. The Fax stated only that the

recipient is “entitled to opt out of future faxes” and provided instructions as to how the recipient

could do so. ECF No. 12-1. It did not state, however, that Grey House must honor an opt-out

within 30 days and that the failure to do so would be unlawful. Accordingly, even if Grey House

could demonstrate that it had an “existing business relationship” with DRCN, its non-compliance

with the TCPA’s strict notice requirements disqualifies it from the safe harbor.

V.     CONCLUSION

       For the reasons stated above, Defendant’s Motion to Dismiss is denied. The court will

issue a separate order regarding further proceedings in this case.

                                                10