Levine Hat Co. v. Innate Intelligence, LLC

Decision Date11 May 2021
Docket NumberNo. 4:16-cv-01132 SNLJ,4:16-cv-01132 SNLJ
Citation538 F.Supp.3d 915
Parties LEVINE HAT CO., on behalf of itself and all other similarly situated, Plaintiff, v. INNATE INTELLIGENCE, LLC, et al., Defendants.
CourtU.S. District Court — Eastern District of Missouri

Nathaniel Richard Carroll, Archcity Defenders, Ryan A. Keane, Steven William Duke, Keane Law LLC, St. Louis, MO, for Plaintiff.

Christopher Douglas Longo, Longo Biggs LC, St. Louis, MO, for Defendant Nepute Enterprises LLC.

Abby L. Risner, Mary Ann L. Wymore, Peter W. Mueller, Dawn Morville Johnson, Greensfelder Hemker PC, St. Louis, MO, for Defendant ProFax, Inc.

Innate Intelligence, LLC, Westfield, IN, Pro Se.



Plaintiff Levine Hat Co. filed this lawsuit against defendants Innate Intelligence LLC d/b/a Innate Wellness Centers ("Innate"), Nepute Enterprises LLC ("Nepute"), and ProFax, Inc.1 alleging violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"). Plaintiff sought and obtained class certification. After a lengthy period of discovery and failed settlement negotiations, the plaintiff moved for summary judgment against the three defendants. Only defendant ProFax has responded in opposition. Defendant ProFax also moved to decertify the class and for summary judgment.

I. Factual Background

The following facts are undisputed except where indicated. Defendant Innate is an umbrella organization for advertising and managing chiropractic clinics, and it operates 12 chiropractic offices in four markets across the United States. On July 5, 2016, defendant Innate, through facsimile broadcaster defendant ProFax, sent plaintiff a fax advertising "a FREE Lunch ‘n Learn on Stress Management for your employees." The following notice appears at the bottom of the fax:

To opt out from future faxes go to www.removemyfax number and enter PIN# 17204, or call 800-321-4433. The recipient may make a request to the sender not to send any future faxes and failure to comply with the request within 30 days is unlawful.

Defendant Nepute operates several chiropractic clinics in St. Louis, Missouri and was among the chiropractors that partnered with Innate to facilitate the creation of the onsite wellness programs with businesses who responded to Innate's Lunch N’ Learn faxes. Plaintiff contends that Innate contracted with defendant ProFax to send tens of thousands of unsolicited fax advertisements to persons with whom Innate had no preexisting relationship.

Plaintiff claims that the subject faxes run afoul of the TCPA. The TCPA makes it "unlawful for any person ... to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement, unless," among other things, it satisfies all of the following conditions: (i) there is an "established business relationship" between the sender and the recipient, (ii) the information was obtained from a public source or provided directly by the recipient, and (iii) the advertisement contains certain required disclosures to a telephone facsimile machine." 47 U.S.C. § 227(b)(1)(C). Plaintiff alleges that the subject faxes did not satisfy any of Section 227(b)(1)(C) ’s requirements. It appears undisputed that the subject faxes did not satisfy either (i) or (ii). Because the subject faxes did not satisfy either (i) or (ii), however, this Court need not address whether the faxes contained the required disclosures mentioned in (iii).

The TCPA creates a private right of action under which a party can bring "an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater." Id. § 227(b)(3)(B). If the court determines "the defendant willfully or knowingly violated" the TCPA, the court may award treble damages. 47 U.S.C. § 227(b)(3).

On July 12, 2016, plaintiff initiated this action under the TCPA on behalf of itself and a purported nationwide class. Plaintiff alleges it was annoyed and disturbed by receiving the fax from Innate, that it lost employee time in reviewing and disposing of the junk fax, and that it wasted the use of its fax machine and ink and paper used to print the junk fax. The total number of Innate fax recipients is 10,031 according to plaintiff.

This Court granted plaintiff's motion to certify a class using the following definition:

All persons who received a facsimile transmission sent by ProFax, Inc., on behalf of Innate Intelligence LLC or its chiropractic clinics between January 27, 2016 and July 13, 2016, as confirmed by either:
(1) presence on a facsimile transmission log produced by Innate Intelligence LLC in this case showing one or more transmissions "sent" and complete"; or
(2) presence on a list of those who opted out from receiving future faxes from Innate Intelligence LLC, produced by ProFax, Inc. in this case.

The plaintiff has filed motions for summary judgment against the three remaining defendants in the case. Only ProFax has responded in opposition. ProFax also moved for summary judgment and to decertify the class.

II. Motions for Summary Judgment

Pursuant to Federal Rule of Civil Procedure 56(c), a district court may grant a motion for summary judgment if all of the information before the court demonstrates that "there is no genuine issue as to material fact and the moving party is entitled to judgment as a matter of law." Poller v. Columbia Broadcasting System, Inc. , 368 U.S. 464, 467, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). The burden is on the moving party. City of Mt. Pleasant, Iowa v. Assoc. Elec. Co-op., Inc. , 838 F.2d 268, 273 (8th Cir. 1988). After the moving party discharges this burden, the nonmoving party must do more than show that there is some doubt as to the facts. Matsushita Elec. Industrial Co. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Instead, the nonmoving party bears the burden of setting forth specific facts showing that there is sufficient evidence in its favor to allow a jury to return a verdict for it. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Celotex Corp. v. Catrett , 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

In ruling on a motion for summary judgment, the court must review the facts in a light most favorable to the party opposing the motion and give that party the benefit of any inferences that logically can be drawn from those facts. Buller v. Buechler , 706 F.2d 844, 846 (8th Cir. 1983). The court is required to resolve all conflicts of evidence in favor of the nonmoving party. Robert Johnson Grain Co. v. Chem. Interchange Co. , 541 F.2d 207, 210 (8th Cir. 1976).

Here, plaintiff has moved for summary judgment against the remaining defendants Innate, Nepute, and ProFax. ProFax also moved for summary judgment. Each defendant is discussed in turn.

A. ProFax

Plaintiff brings its Count VIII against ProFax for violation of the TCPA in that it failed to include proper opt-out notices on unsolicited advertisements. Fax broadcasters such as ProFax are liable under the TCPA for sending junk faxes, including the inclusion of opt-out notices on unsolicited advertisements, if they demonstrate "a high degree of involvement in or actual notice of the unlawful activity" and the fax broadcaster "fails to take steps to prevent such facsimile transmissions." 47 C.F.R. § 64.1200.

Here, it is undisputed that ProFax was the broadcaster of the subject faxes. ProFax disputes two other aspects of plaintiff's claim: that the faxes were advertisements and that ProFax had a high degree of involvement in the unlawful activity.

1. Advertisements

Not all faxes are prohibited by the TCPA. To be liable, the fax broadcaster must have sent an "unsolicited advertisement." According to the TCPA, the term "unsolicited advertisement" means "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.A. § 227(a)(5). The Eighth Circuit does not provide much guidance in this regard. Looking to the oft-cited Sandusky case, the Sixth Circuit relied on the statutory definition and concluded, "to be an ad, the fax must promote goods or services to be bought or sold, and it should have profit as an aim." Sandusky Wellness Ctr., LLC v. Medco Health Sols., Inc. , 788 F.3d 218, 221–22 (6th Cir. 2015). Sandusky thus held that a list of medications covered by health insurance faxed by a pharmacy benefit manager to a chiropractic clinic was not an "advertisement." The court so-held because the faxes "list the drugs in a purely informational, non-pecuniary sense: to inform Sandusky what drugs its patients might prefer, based on Medco's formulary—a paid service already rendered not to Sandusky but to Medco's clients." Id. at 222.

Sandusky recognized, however, that "a fax need not be an explicit sale offer to be an ad. It's possible for an ad to promote a product or service that's for sale without being so overt, as in the free-seminar example. The best ads sometimes do just that." Id. at 225 (internal citations to Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991; Junk Fax Prevention Act of 2005 , 71 Fed. Reg. 25967, 25973 (May 3, 2006) (the "2006 FCC Order") and Ira Holtzman, C.P.A. v. Turza , 728 F.3d 682, 688 (7th Cir. 2013) omitted).

The subject faxes here carried the header "Stressed employees cost your business. Want to know how much $?" Then the fax provided two options: the recipient could choose to "get the answer" by downloading a "cost of stress article" or "schedule a FREE Lunch N’ Learn on Stress Management for your employees." The fax identified the sender "Innate Wellness Centers" as a "group of wellness consultants and clinicians dedicated to improving the health of a business one employee at a time. Our...

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