Fall 2003

“JUNK FAX” REGULATION —- ANSWER TO YOUR PRAYERS
OR YOUR WORST ENEMY?

Fed up with receiving unsolicited “junk faxes”?  Perhaps you yourself use the “junk fax” as a marketing device.  In either event, a recent California appellate court decision deserves your attention. 

The federal Telephone Consumer Protection Act (“TCPA”) prohibits the sending of unsolicited advertisements to fax machines.  The rationale for the prohibition is that the “junk fax” shifts the cost of advertising from the advertiser to the unwitting customer, as unwanted faxes can tie up a fax machine for hours and prevent the receipt of other important messages.  As such, the TCPA provides that the sender of an unsolicited fax advertisement can be subject to a court action and a damages award. 

In Kaufman v. ACS Systems, the California Court of Appeal for the Second Appellate District held that there is a private right of action under the TCPA, and, thus, the TCPA can be the basis for a private class action lawsuit entitling the recipients of unsolicited faxes to recover actual monetary loss or $500 in damages, whichever is greater, for each violation of the TCPA.

In Kaufman, plaintiffs alleged that ACS Systems hired a telemarketing corporation to send 13,919 unsolicited faxes to 8,216 recipients in 1998 and 1999.  Furthermore, plaintiffs alleged Fax.com and Cynet, Inc. sent 728,776 unsolicited faxes in June of 2000.  Defendants contended that plaintiffs had no private right of action under the TCPA, that claims under the TCPA could not be brought as class actions and that, even if a private right of action did exist, it would violate the United States Constitution.

As to defendants’ contention that plaintiffs did not possess a private right of action under the TCPA, after a lengthy discussion of private rights of action, TCPA legislative history, and California’s attempts at regulating “junk faxes,” the court was unimpressed with their argument and concluded that California had not prohibited a private right of action under the TCPA. 

Defendants’ next contention was that plaintiffs could not prosecute the claim as a class action.  Again, the court ruled against defendants.  The court stated:

Having provided for a private right of action and having decided the appropriate penalty, Congress did not preclude the use of class actions to obtain redress for violations. . . .  Class action relief is unavailable only if Congress expressly excludes it. . . .  Congress provided no express exclusion of class action relief. 

Speaking practically, it only makes sense that a class action lawsuit could be brought under the TCPA.  The $500 maximum penalty imposed by the TCPA is so de minimus that the average citizen would not waste his time prosecuting an action for violation of the TCPA.  Yet, as a class action, the deterrent effect of the TCPA manifests because companies sending unsolicited faxes will be subject to much larger damage awards and will think twice before hitting the send button.

There is one caveat to a TCPA class action lawsuit:  California law requires that there be an ascertainable class and a well-defined community of interest among the class members.  Whether the law is satisfied is determined on a case-by-case basis.  A class action will be denied when plaintiffs’ allegations only imply a series of individual transmissions under individual circumstances and lack a single set of operative facts.

Defendants’ final contention in Kaufman was that the TCPA was unconstitutional.  In fact, defendants asserted several grounds to establish the unconstitutionality of the TCPA, but the court again answered in the negative.  The court found that the TCPA served a substantial governmental interest of eliminating, or at least reducing, the time and expense imposed on small businesses when dealing with unsolicited faxes.  The court further concluded that the TCPA advanced the stated governmental goals and was “narrowly tailored to the government’s asserted interest.”

Defendants also asserted a constitutional challenge that the TCPA was impermissibly vague in that it failed to define advertisement.  The court stated, “defendants have failed to show that the meaning of the TCPA is uncertain under any and all circumstances.”  In other words, persons of common intelligence know an advertisement when they see it.

Defendants’ final constitutional challenge was that the TCPA damages provision was excessive, in violation of the Due Process clause.  Again, the court summarily dismissed it.  The damages provisions of the TCPA provides that an unsuccessful defendant must compensate plaintiff for actual monetary loss or $500, whichever is greater.  In fact, willful or knowing violations may result in treble damages.  The court stated, “A statutory penalty violates due process only where the penalty prescribed is so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable.”  The court found that the intent of the TCPA was not only to compensate for actual losses, but to also act as a deterrent.  In the end, the court agreed that “a $500 penalty for violation of the TCPA is not so high in relation to actual damages as to violate the Due Process clause. . . .”

In summary, if you send an unsolicited advertisement to a fax machine, you are likely violating the TCPA.  This violation can result in an award of actual damages or $500, whichever is greater.  In fact, if the court determines that sending the unsolicited fax was willful or knowing, treble damages could be awarded.  If you engage in a pattern and practice of sending faxes to an ascertainable class of persons with a well-defined community of interest, you could be subject to a class action lawsuit. 

                                                                        GREGORY L. TORRES

Mr. Torres is an Associate with the firm’s litigation group.  Email:  glt@kpclegal.com.

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