Career Counseling, Inc. v. AmeriFactors Fin. Grp.
| Docket Number | Civil Action 3:16-cv-03013-JMC |
| Decision Date | 31 January 2022 |
| Parties | Career Counseling, Inc. d/b/a Snelling Staffing Services, a South Carolina corporation, individually and as the representative of a class of similarly situated persons, Plaintiff, v. AmeriFactors Financial Group, LLC, and John Does 1-5, Defendants. |
| Court | U.S. District Court — District of South Carolina |
Plaintiff Career Counseling, Inc. d/b/a Snelling Staffing Services, on behalf of itself and all others similarly situated, filed the instant putative class action seeking damages and injunctive relief from Defendants AmeriFactors Financial Group, LLC and John Does 1-5 (collectively “Defendants”) for alleged violations of the Telephone Consumer Protection Act (“TCPA”) of 1991, as amended by the Junk Fax Prevention Act of 2005 (“JFPA”), 47 U.S.C. § 227, and the regulations promulgated under the TCPA by the United States Federal Communications Commission (“FCC”). (ECF No. 70.)
This matter is before the court on Career Counseling's Motion for Summary Judgment pursuant to Rule 56(a) of the Federal Rules of Civil Procedure (ECF No. 233). Specifically, Career Counseling asserts that “there is no genuine issue of material fact that (1) the Fax [at issue] is an ‘advertisement' under 47 U.S.C. § 227(a)(5); (2) Defendant [AmeriFactors] is the ‘sender' of the Fax under 47 C.F.R. § 64.1200(f)(11); and (3) the Fax was sent to a ‘telephone facsimile machine' using a ‘telephone facsimile machine, computer, or other device,' in violation of 47 U.S.C. § 227(b)(1)(C).” (ECF No. 233 at 1-2.) AmeriFactors opposes the Motion arguing that it “should be denied because the record here demonstrates that factual issues remain with respect to Plaintiff's TCPA claim including whether (i) the Fax is even covered by the TCPA as an advertisement, (ii) AmeriFactors is the ‘sender' of the Fax, and (iii) Plaintiff's claim is barred by equitable defenses.” (ECF No. 237 at 5.) For the reasons set forth below, the court GRANTS Career Counseling's Motion for Summary Judgment. (ECF No 233.)
The TCPA prohibits the faxing of unsolicited advertisements without “prior express invitation or permission” from the recipient. S. Rep. No. 102-178, at 12. Congress' primary purpose in passing the TCPA was to protect the privacy interests of residential telephone subscribers and the public from bearing the cost of unwanted advertising. Id. at 1; S. Rep. No. 109-76, at 3. Congress was expressly concerned because “[j]unk faxes create costs for consumers (paper and toner) and disrupt their fax operations.” GAO@100, Telecommunications: Weaknesses in Procedures and Performance Management Hinder Junk Fax Enforcement, https://www.gao.go v/products/gao-06-425 (last visited July 15, 2021).
In 1992, the FCC released its interpretation of the TCPA, which established an exception for unsolicited advertisement faxes (“junk faxes”) between parties with an established business relationship (“EBR”). S. Rep. No. 109-76, at 2. The FCC relied on this interpretation until 2003, when it reevaluated and created a stricter standard for junk faxes. Id. at 3. Under this new standard, junk faxes could only be sent with prior express permission in the form of written consent from the receiver, and an EBR (which initially had no specified limit) could only be relied upon by the sender for eighteen (18) months after a purchase and three (3) months after an initial inquiry. Id. at 4-5.
After this change, many petitions from businesses requested that the FCC return to its previous interpretation of the TCPA, citing efficiency purposes and the enormous cost of compliance with the new interpretation. Id. at 4. This caused the FCC to order a stay on these new rules until 2005. Id.
In response, Congress passed the JFPA in 2005, codifying the EBR exception to the ban on unsolicited advertising faxes, allowing those with a business relationship to bypass the written consent rule. S. Rep. No. 109-76, at 1. The JFPA also requires that senders of junk faxes provide notice of a recipient's ability to opt out of receiving any future faxes containing unsolicited advertisements.[1] Id.
As a result of the foregoing, the JFPA expressly prohibits the faxing of unsolicited advertisements. 47 U.S.C. § 227(b)(1)(C). The JFPA 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 prior express invitation or permission, in writing or otherwise.” 47 U.S.C. § 227(a)(5). The JFPA creates a private right of action for a person or entity to sue a fax sender that sends an unsolicited advertisement and allows recovery of either actual monetary loss or $500.00 in damages, whichever is greater, for each violation. Id. at § 227(b)(3).
Career Counseling is an employment staffing agency, which acts as a middleman between employers and prospective workers. (ECF No. 197-7 at 4/27:6-13.[2]) AmeriFactors is an accounts receivable financing firm that engages in factoring. (ECF No. 206-2 at 74/4:17-19.) Factoring is a process in which AmeriFactors purchases a business's accounts receivable of unpaid invoices for a discounted price with the intention of collecting the full value of the unpaid invoices at a later date. (ECF No. 206-2 at 74/4:17-23; ECF No. 197-4 at 4/6:12-7:4.) Factoring is beneficial to businesses because it allows them to gain early access to cash prior to the payment of an invoice. (ECF No. 197-4 at 4/6:18-23.)
In June of 2016, AmeriFactors became interested in marketing by fax and, as a result, contracted with AdMax Marketing, a fax marketer. (ECF No. 197-4 at 4/7:5-25.) AmeriFactors' Vice President of Marketing Jeff Speiser worked with AdMax's operator Chad Komniey to identify businesses to target with a fax and the content of the fax AdMax would use. (ECF No. 197-4 at 8/22:1-24:4) According to Speiser, Komniey did not discuss with him the legality of sending advertisements by fax.[3] (Id. at 11/34:17-36:6.)
On or about June 28, 2016, Career Counseling received the following unsolicited fax[4] (the “Fax”) on its stand-alone fax machine[5]:
(Image omitted)
(ECF Nos. 70 at 3 ¶ 13, 70-1 at 2, 197-8 at 3 ¶ 6.)
On September 2, 2016, Career Counseling filed a putative Class Action Complaint in this court alleging violation of the TCPA.[6] (ECF No. 1 at 8 ¶ 27-13 ¶ 36.) On October 28, 2016, AmeriFactors filed a Motion to Dismiss. (ECF No. 29.) After the parties responded and replied to the Motion to Dismiss (ECF Nos. 43, 47), the court entered an Order that granted AmeriFactors' Motion to Dismiss pursuant to Rule 12(b)(1) and dismissed the Class Action Complaint without prejudice. (ECF No. 61 at 10.) After receiving leave from the court (see ECF No. 67), Career Counseling filed a First Amended Class Action Complaint on November 28, 2017, alleging revised class claims for violation of the TCPA. (See ECF No. 70.) AmeriFactors then filed a Motion to Dismiss (ECF No. 72) on December 21, 2017, and a Motion to Stay Litigation Pending Resolution of Petition Before the FCC (ECF No. 76) on February 2, 2018.[7] On September 28, 2018, the court granted the stay, but denied the Motion to Dismiss with leave to refile. (ECF No. 88.) The court subsequently extended the stay twice. (ECF Nos. 92, 96.)
In response to the petition by AmeriFactors asking the FCC “to clarify that faxes sent to ‘online fax services' are not faxes sent to ‘telephone facsimile machines, '” the Consumer and Government Affairs Bureau[8] (“CGAB”) issued a declaratory ruling on December 9, 2019, finding that an online fax service that receives faxes “sent as email over the Internet” is not protected by the TCPA. See AmeriFactors Fin. Grp., LLC, CG Docket Nos. 02-278, 05-338, DA 19-1247, 2019 WL 6712128 (CGAB Dec. 9, 2019) (Pet. for Expedited Declaratory Ruling). Specifically, the CGAB found in relevant part:
By this declaratory ruling, we make clear that an online fax service that effectively receives faxes ‘sent as an email over the internet' and is not itself ‘equipment which has the capacity . . . to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper' is not a ‘telephone facsimile machine' and thus falls outside the scope of the statutory prohibition.
AmeriFactors Fin. Grp., LLC, 2019 WL 6712128, at *1.
The court lifted the stay on January 8, 2020, but stayed the case again on April 16, 2020, after being informed by AmeriFactors that it had sent a Notice of Constitutional Challenge (ECF No. 120) to the Attorney General of the United States pursuant to Rule 5.1(a) of the Federal Rules of Civil Procedure drawing into question the constitutionality of the TCPA, as amended by the JFPA. On May 18, 2020, the Government filed a response to AmeriFactors' Notice of Constitutional Challenge asserting that “intervention [wa]s premature prior to Defendants' filing[] a motion to dismiss on constitutional grounds.” (ECF No. 126 at 2.)
On July 15, 2020, AmeriFactors filed a Motion to Dismiss Plaintiff's First Amended Complaint pursuant to Rules 12(b)(1) and 12(b)(6). (ECF No. 137.) While AmeriFactors' Motion to Dismiss was pending, the CGAB on September 21, 2020, adopted and released a declaratory ruling on a petition filed by the law firm Akin Gump Strauss Hauer & Feld LLP (the “Akin Gump Ruling”), which held as follows:
To continue reading
Request your trial