Eric B. Fromer Chiropractic, Inc. v. Inovalon Holdings, Inc., Case No.: GJH-17-3801

• Decision Date: 04 September 2018
• Docket Number: Case No.: GJH-17-3801
• Citation: 329 F.Supp.3d 146
• Parties: ERIC B. FROMER CHIROPRACTIC, INC., Plaintiff, v. INOVALON HOLDINGS, INC., et al., Defendants.
• Court: U.S. District Court — District of Maryland

329 F.Supp.3d 146

ERIC B. FROMER CHIROPRACTIC, INC., Plaintiff,

v.INOVALON HOLDINGS, INC., et al., Defendants.

Case No.: GJH-17-3801

United States District Court, D. Maryland, Southern Division.

Signed September 4, 2018

Stephen Howard Ring, Stephen H. Ring PC, Rockville, MD, Ross M. Good, Pro Hac Vice, Ryan M. Kelly, Pro Hac Vice, Anderson and Wanca, Rolling Meadows, IL, for Plaintiff.

Daniel Scott Blynn, Venable LLP, Washington, DC, Dino S. Sangiamo, Elizabeth Catherine Rinehart, Venable LLP, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

GEORGE J. HAZEL, United States District Judge

Plaintiff Eric B. Fromer Chiropractic, Inc., ("Fromer" or "Plaintiff") on behalf of itself and others similarly situated, brings this putative class action against Defendants Inovalon Holdings, Inc., Inovalon, Inc., and Inovalon SME, LLC (collectively, "Inovalon" or "Defendants") alleging that Defendants sent Plaintiff an unsolicited advertisement via facsimile transmission in violation of the Telephone Consumer Protection Act of 1991 ("TCPA"), as amended by the Junk Fax Prevention Act of 2005, 47 U.S.C. § 227. ECF No. 1. Presently pending before the Court is Plaintiff's "Placeholder" Motion to Certify Class, ECF No. 3, to which Defendants have not responded, and Defendants Motion to Dismiss, ECF No. 22. No hearing is necessary. Loc. R. 105.6 (D. Md. 2016). For the following reasons, Defendants' Motion to Dismiss is granted, in part, and denied, in part, and the case is stayed pending resolution of Defendants' Petition for Expedited Declaratory Ruling presently pending before the Federal Communications Commission ("FCC"). ECF No. 22-4.

I. BACKGROUND¹

The TCPA makes it unlawful to send an "unsolicited advertisement" by fax unless 1) the unsolicited advertisement is from a sender with an established business relationship with the recipient, 2) the sender obtained the recipient's fax number through either voluntary communication or public distribution of the recipient's number, and 3) the unsolicited advertisement contains an opt-out notice in accordance with paragraph (2)(D) of that section. See 47 U.S.C. § 227(b)(1)(C). The TCPA 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." § 227(a)(5).

On or about November 14, 2017, Defendants sent an unsolicited facsimile transmission ("the Fax") to Plaintiff. ECF No. 1 ¶ 12. The Fax offers medical providers, like Plaintiff, free access to Inovalon's electronic record retrieval system. ECF No. 1-1 (copy of the Fax). Plaintiff alleges that it did not give prior express invitation or permission to Defendants to send the Fax and that Plaintiff does not have an established business relationship with Defendants to otherwise authorize the Fax. Id. ¶ 14. In addition to being unsolicited, the Fax does not display an opt-out notice as required by the TCPA. Id. ¶ 15. Plaintiff alleges that it lost paper and toner consumed in printing the Fax. Id. ¶ 35. Plaintiff also wasted time in receiving, reviewing, and routing the Fax, and receipt of the Fax interrupted Plaintiff's interest in being left alone. Id. Plaintiff further alleges that Defendants profit and benefit from the sale of the products, goods and services advertised in the Fax. Id. ¶ 13. According to Plaintiff, Defendants have faxed the same, or similar, unsolicited fax in violation of the TCPA to at least 40 other recipients without first obtaining the recipient's express invitation or permission. Id. ¶ 15.

Plaintiff filed its putative class action on December 26, 2017. On February 19, 2018, Defendants filed a petition with the FCC seeking an expedited declaratory ruling that because Inovalon does not sell the products or services mentioned in the Fax to recipients of the Fax, the Fax was not an "unauthorized advertisement" otherwise prohibited by the TCPA. See In re Inovalon, Inc.'s Pet. for Expedited Declaratory Ruling , CG Docket No. 02-278 (FCC Feb. 19, 2018) (ECF No. 22-4). In its Petition, Defendants ask the FCC to declare:

1. Faxes sent by a health insurance plan's designee to a patient's medical provider, pursuant to an established business relationship between the health plan and provider, requesting patient medical records are not advertisements under the TCPA; and

2. Faxes that offer the free collection and/or digitization of patient medical records, and which do not offer any commercially available product or service to the recipients are not advertisements under the TCPA.

ECF No. 22-4.²

II. STANDARD OF REVIEW

A. Motion to Dismiss Pursuant to Rule 12(b)(1)

A motion to dismiss based on lack of subject-matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1), raises the question of whether the court has the competence or authority to hear and decide a particular case. See Davis v. Thompson , 367 F.Supp.2d 792, 799 (D. Md. 2005). The court may properly grant a motion to dismiss for lack of subject-matter jurisdiction "where a claim fails to allege facts upon which the court may base jurisdiction." Id. (citing Crosten v. Kamauf , 932 F.Supp. 676, 679 (D. Md. 1996) ). A federal court does not have subject-matter jurisdiction where Article III standing is not satisfied, Beck v. McDonald , 848 F.3d 262, 269 (4th Cir. 2017), cert. denied sub nom. Beck v. Shulkin , ––– U.S. ––––, 137 S.Ct. 2307, 198 L.Ed.2d 728 (2017), and must determine if it has subject matter jurisdiction before ruling on the merits of the case. Sinochem Int'l Co. Ltd. v. Malaysia Int'l Shipping Corp. , 549 U.S. 422, 430–31, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007).

B. Motion to Dismiss Pursuant to Rule 12(b)(6)

Pursuant to Rule 12(b)(6), a court may dismiss a complaint for failure to state a claim upon which relief can be granted. When deciding a motion to dismiss, a court "must accept as true all of the factual allegations contained in the complaint," and "draw all reasonable inferences [from those facts] in favor of the plaintiff." E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc. , 637 F.3d 435, 440 (4th Cir. 2011) (citations and internal quotation marks omitted). To survive a motion to dismiss invoking Rule 12(b)(6), "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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

III. DISCUSSION

Defendants move to dismiss Plaintiff's complaint for lack of subject-matter jurisdiction or for failure to state a claim upon which relief can be granted. Alternatively, Defendants ask the Court to stay the case pending resolution of its FCC Petition for Expedited Declaratory Ruling.

A. Lack of Subject-Matter Jurisdiction

Article III of the Constitution limits federal judicial powers to "cases and controversies," and a plaintiff may only seek redress for a legal wrong if that plaintiff 1) suffered an injury-in-fact 2) the plaintiff's injury is fairly traceable to the defendant's conduct and 3) the injury is likely to be redressed by a favorable judicial decision. See Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). A plaintiff establishes injury-in-fact if he or she suffered " ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ " See Spokeo v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1548, 194 L.Ed.2d 635 (2016) (quoting Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ). Because injury-in-fact is a Constitutional requirement, Congress cannot simply grant, by statute, the right to sue to a plaintiff who would not otherwise have legal standing. Spokeo , 136 S.Ct. at 1547–48.

In Spokeo, Inc. v. Robins , the Supreme Court considered when a plaintiff's injury, recognized through an act of Congress, is sufficiently "concrete" to meet the injury-in-fact requirement.³ The Court stated that a "concrete injury must be de facto ; that is, it must actually exist." Id. at 1549 (citing Black's Law Dictionary 479 (9th ed. 2009) ). Although tangible harms are easier to recognize, the Court reiterated that intangible harms can nevertheless be concrete. In determining whether an intangible harm is sufficient to establish standing, the Court stated that "it is instructive to consider whether an alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts." Id. Because Congress is well positioned to identify such intangible harms, Congress may "elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law." Id. (citing Lujan , 504 U.S. at 578, 112 S.Ct. 2130 ). However, such harms must go beyond bare procedural violations. Id. at 1550.

Defendants argue that "Plaintiff's allegations of harm rest on the intangible injury of receiving a fax without the proper opt-out notice," and, as a result, Plaintiff has not pleaded a "concrete and particularized" injury.⁴ ECF No. 22-1 at 6.⁵ According to Defendants, following Spokeo , "[a] distinct schism has developed" as to whether a TCPA statutory violation is a sufficient injury to establish Article III standing. ECF No. 22-1 at 7 n.5 (citing Gorss Motels, Inc. v. Sysco Guest Supply, LLC , No. 3:16-CV-01911-VLB, 2017 WL 3597880, at *4–5 (D. Conn. Aug. 21, 2017) ). In response, Plaintiff argues that following Spokeo , at least 80 district court decisions have found Article III standing in TCPA cases, including 29 cases involving fax transmissions. See ECF No. 23 at 6. While the Fourth Circuit has yet to address the issue, three other circuits have determined that, post- Spokeo , a TCPA statutory violation is sufficient...