The Eastern District of Michigan recently rejected an expansive interpretation of “sender” liability for unsolicited fax advertisements alleged to violate the TCPA, ruling that the mere inclusion of a company’s products on fax advertisements sent by a third party is not enough, standing alone, to saddle the company with liability for sending the faxes. Rather, to be liable for the faxes, the company must have taken affirmative steps to advertise its products through the faxes. This common-sense ruling, which further aligns Sixth and Seventh Circuit case law on this important issue, should provide ammunition for companies defending TCPA claims based on faxes sent by others in the distribution chain without the authorization or approval of the defendant. The Court also issued another in the litany of recent decisions confirming the limits on personal jurisdiction over foreign corporations.

TCPA “Sender” Liability

In Health One Medical Center, Eastpointe, P.L.L.C. v. Bristol-Myers Squibb Co. & Pfizer, Inc., No. 16-13815, 2017 U.S. Dist. LEXIS 110285 (E.D. Mich. July 17, 2017), the plaintiff brought a putative class action, claiming that three defendants violated the TCPA by sending unsolicited advertising faxes that did not contain the required opt-out notice. The faxes, however, only contained one defendant’s name, address and website. That defendant, Mohawk, Inc., did not appear in the case; a default judgment was entered against it. The other two defendants, Bristol-Myers and Pfizer, were not mentioned in the faxes, but the faxes promoted their pharmaceutical products (and directed the recipients to order those products through Mohawk).

Although the Complaint contained conclusory allegations that all three defendants sent or participated in sending the faxes, Bristol-Myers and Pfizer moved to dismiss for failure to state a claim, arguing that the plaintiff alleged no facts showing any actions by them regarding the creation or transmission of the faxes; or awareness that Mohawk was sending the faxes; or any relationship with Mohawk at all; or even awareness of Mohawk’s existence. Id. at *5. The plaintiff argued that Bristol-Myers and Pfizer were liable under the TCPA for “sending” the faxes even if they had no involvement in directing or authorizing Mohawk to send the faxes or even any relationship with Mohawk, pointing to the FCC’s definition of “sender” as “the person or entity on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement.” 47 C.F.R. § 64.1200(f)(10) (emphasis added). Relying on the FCC’s disjunctive formulation, the plaintiff argued that a company is liable whenever its products are promoted in an unsolicited fax advertisement, regardless of whether the company took affirmative steps to authorize or allow the fax campaign.

The Court disagreed. In granting the motions to dismiss, the Court found that “the conclusory allegations by plaintiff, undermined by the plain text and image of the faxes, do not plausibly suggest that [Bristol-Myers and Pfizer] played a role in sending the faxes.” Id.at *6. Moreover, the Court held that “because plaintiff has not alleged any action or relationship between defendants that would raise an inference that [they] knew [the third defendant] was sending the faxes, plaintiff has not sufficiently pleaded that [they] ‘caused the faxes to be sent, participated in the activity giving rise to or constituting the violation, [or] the faxes were sent on [their] behalf.’” Id. (citation omitted). In reaching this conclusion, the Court rejected the plaintiff’s argument that “it need not allege more than that defendant[s’] products are listed in the advertisements.” Id. at *6-7. It found both Sixth Circuit cases cited by the plaintiff for this proposition, Siding & Insulation Co. v. Alco Vending, Inc., 822 F.3d 886 (6th Cir. 2016), and Imhoff Inv., LLC v. Alfoccino, Inc., 792 F.3d 627 (6th Cir. 2015), to be inapposite because they involved manufacturer defendants that hired advertising agencies to send the faxes at issue. Here, on the other hand, the plaintiff did not allege that Bristol-Myers and Pfizer even knew of the sending company. Furthermore, the Court noted that while the plaintiff’s interpretation could be a plausible reading of the FCC’s definition of “sender” and the Sixth Circuit has yet to address “whether an advertisement that includes an entity’s products is sufficient for that entity to be liable as a sender . . . the Seventh Circuit [and the Northern District of Ohio have] rejected” that position. Health One, 2017 U.S. Dist. LEXIS 110285 at *8. Specifically, the Court relied on Paldo Sign and Display Co. v. Wagener Equities, Inc., 825 F.3d 793, 797 (7th Cir. 2016), in which the Seventh Circuit recognized that “a literal interpretation of the regulation ‘would lead to absurd and unintended results’ by vastly expending the scope of liability, and held instead that an entity ‘must have done something to advertise goods or services.’” Health One, 2017 U.S. Dist. LEXIS 110285 at *8 quoting Paldo Sign, 825 F.3d at 797 (emphasis added). Thus, the Health One Court held that “plaintiff’s expansive reading of the statute in this case is not justified,” and its “allegation that [Bristol-Myers and] Pfizer’s product[s] [are] listed on the faxes is insufficient to sustain the TCPA claim.” Id. at *9.

Limits of Personal Jurisdiction

In addition to arguing that the plaintiff failed to state a TCPA claim against it, Bristol-Myers also argued that the Court lacked personal jurisdiction over it. The Court agreed. It held that it did not have general jurisdiction over Bristol-Myers because the company is not incorporated in Michigan, did not consent to jurisdiction, and was not shown to have had systematic contacts with Michigan. The Court also found that it did not have specific jurisdiction over Bristol-Myers because while the company transacted business and was licensed to sell products in Michigan, these acts did not establish a “substantial connection with sending or causing to be sent faxes advertising products.” Id. at *15-16. Thus, the Court held that plaintiff “failed to state a prima facie case that the causes of action arise out of this defendant’s contacts with Michigan,” and therefore, “the due process inquiry is not satisfied, and this Court lacks personal jurisdiction over” Bristol-Myers. Id. at *16. As a result, Bristol-Myers’ motion to dismiss on this ground was granted as well.

Conclusions

The Court’s analysis in granting Bristol-Myers’ motion to dismiss on personal jurisdiction grounds closely followed the Supreme Court’s reasoning in the company’s recent victory on the same issue. See Bristol-Myers Squibb Co. v. Super. Ct. of Cal., S.F. Cty., 137 S. Ct. 1773 (2017). In view of recent favorable developments in the law, corporate defendants sued outside of their home states are well advised to consider raising such jurisdictional objections.

For defendants in TCPA fax cases, the Court’s well-reasoned rejection of an expansive interpretation of “sender” liability provides hope that defendants will not be forced to litigate claims over faxes they neither sent nor authorized, but that merely advertise their products.