Minnesota ex rel. Hatch v. Sunbelt Comm. and Market

Decision Date30 September 2002
Docket NumberNo. 02-CV-770(JEL/JGL).,02-CV-770(JEL/JGL).
Citation282 F.Supp.2d 976
PartiesState of MINNESOTA, by its Attorney General, Mike HATCH, Plaintiff, and United States of America, Intervenor, v. SUNBELT COMMUNICATIONS AND MARKETING, d/b/a Sunbelt Communications, Sunbelt Marketing and Lara Horne Albrecht, individually, and as President of Sunbelt Communications and Marketing, LLC, Defendants.
CourtU.S. District Court — District of Minnesota

Catherine M. Powell, Prentiss Cox, Assistant Minnesota Attorneys General, St. Paul, MN, for Plaintiff State of Minnesota.

Mary Ann Wymore, pro hac vice, St. Louis, MO, Richard M. Carlson, Minneapolis, MN, for Defendants Sunbelt Communications and Marketing, LLC, and Lara Horne Albrecht.

James S. Alexander, Assistant United States Attorney, St. Paul, MN, was present.


ERICKSEN, District Judge.

THIS MATTER came before the undersigned Judge of the District Court on July 10, 2002, for a hearing on Plaintiff's Motion for a Preliminary Injunction. On July 24, 2002, Plaintiff filed a Supplemental Memorandum in Support of Its Motion for a Preliminary Injunction. On August 5, 2002, the United States moved to intervene pursuant to Fed.R.Civ.P. 24 and 28 U.S.C. § 2403(a) (2000) and filed a Memorandum in Support of the Constitutionality of the Telephone Consumer Protection Act of 1991; the Court granted the Motion to Intervene on August 9, 2002. On August 5, 2002, Defendants filed a Response to the Plaintiff's Supplemental Memorandum. On August 20, 2002, Defendants filed a Response to the United States's Memorandum in Support of the Constitutionality of the Telephone Consumer Protection Act of 1991. For the reasons detailed below, the Court grants Plaintiff's motion.

1. Background

Defendant, Sunbelt Communications and Marketing, LLC (Sunbelt), is a Nevada business entity whose principal place of business is in Addison, Texas. Sunbelt has never registered with the Office of the Secretary of State of Minnesota to transact business in Minnesota. Nonetheless, Sunbelt acquired office space in Minneapolis and began advertising its services to Minnesota residents and businesses.

Sunbelt estimated that it has the phone numbers of 183,000 fax machines in the Twin Cities area. Sunbelt's service, which was advertised as "a great way to meet new customers," consists of faxing its clients' advertisements to fax machines in Minnesota. Sunbelt offers several advertising packages to its clients. For $700, Sunbelt will fax 10,000 copies of an advertisement; for $1,200, it will fax 20,000 copies; for $2,000, it will fax 40,000 copies. Without the prior consent of or an invitation from the recipient, Sunbelt bundled the advertisements of its clients and faxed them to various businesses and individuals in the area. Each advertisement contained a phone number that recipients could call to request that their numbers be removed from Sunbelt's fax list.

On or about March 3, 2001, the Office of the Minnesota Attorney General began receiving complaints about the advertising practices of Sunbelt, or one of its predecessor companies. Since approximately October 2001, they have received over 100 complaints about Sunbelt. In connection with its motion, the State included several affidavits that illustrate the effects of Sunbelt's practices.

For instance, one company manages between 400 and 500 fax machines, which are regularly used in the course of business. Several times per week, the company received advertisements from Sunbelt. Each bundle of advertisements lasted for one to two hours. Over a six-month period, fax advertising constituted approximately 50-60% of the company's fax "traffic." This traffic cost the company money in several ways. The company had to pay for toner and paper used by the advertisements; the advertisements tied up the company's fax system, hampering its efficiency; at times, the advertisements caused the company's system to "crash," further hampering its efficiency; and human resources were expended both in sorting through the advertisements and in attempting to block Sunbelt's transmissions to the company's fax machines.

In another case, an individual received so many advertisements on her home fax machine that they used all of the toner and caused her to miss faxes that she expected and wanted to receive. She was forced to pay for the cost of the toner and the paper used to print Sunbelt's advertisements.

Another individual maintained a fax machine on the computer system in his home office. His computer system was used in connection with his consulting business. He received approximately five advertisement bundles from Sunbelt each week. He, also, paid for the paper and printer cartridges used to print Sunbelt's advertisements. In addition, the advertisements "froze" his computer, diminishing his productivity.

Another individual maintained a fax machine in her home for her personal and business use. She complained that she received fax advertisements between 4:15 a.m. and 7:15 a.m., intruding upon her privacy. She also complained that she had to pay for the fax paper and toner upon which Sunbelt's advertisements were printed.

Finally, an individual maintained a fax machine at his Insty Prints franchise, where he received a fax advertisement for Sunbelt's services. He responded to the advertisement and spoke to one of Sunbelt's representatives. The individual asked if it was "okay" to send fax advertisements in Minnesota. Sunbelt's representative explained that its services were legal, so long as the advertisement contained a phone number that recipients could call to request that their fax numbers be removed from Sunbelt's list. Relying upon the statements of Sunbelt's representative, the individual purchased three blocks of advertisements. After two advertisements were sent, the person received complaints from recipients of his advertisement. In response, he cancelled his third block of advertisements. He was later contacted by the Minnesota Attorney General's Office and informed that there was a federal law prohibiting fax advertising.

Plaintiff, State of Minnesota (State), seeks to enjoin Sunbelt and Sunbelt's principal, Defendant, Lara Horne Albrecht (Albrecht), from continuing its practice of faxing unsolicited advertisements to Minnesota residents. The United States has intervened and has submitted a memorandum and supporting affidavit, arguing that the Telephone Consumer Protection Act of 1991 (TCPA) is constitutional.

2. Legal Standard for Preliminary Injunction

"When an injunction is explicitly authorized by statute, proper discretion usually requires its issuance if the prerequisites for the remedy have been demonstrated and the injunction would fulfill the legislative purpose." United States v. White, 769 F.2d 511, 515 (8th Cir.1985); Donovan v. Brown Equip. & Serv. Tools, 666 F.2d 148, 157 (5th Cir.1982) (same); see also United States v. Estate Pres. Servs., 202 F.3d 1093, 1098 (9th Cir.2000) (noting traditional requirements for injunctive relief need not be satisfied where injunction is expressly authorized by statute); Envtl. Def. Fund v. Lamphier, 714 F.2d 331, 338 (4th Cir.1983) (stating where a statute authorizes injunctive relief for its enforcement, plaintiffs need not plead and prove irreparable injury).

3. Preliminary Injunction Analysis

This is a case in which an injunction is expressly authorized by statute. The TCPA provides that "it shall be unlawful for any person within the United States ... to use any telephone facsimile machine ... to send an unsolicited advertisement to a telephone facsimile machine." 47 U.S.C. § 227(b)(1)(C) (2000).1 The TCPA provides that "whenever the attorney general of a State ... has reason to believe that any person has engaged or is engaging in a pattern or practice ... in violation of this section ..., the State may bring a civil action on behalf of its residents to enjoin such calls, an action to recover for actual monetary loss or receive $500 in damages for each violation, or both such actions." 47 U.S.C. § 227(f)(1).

The Court concludes that the prerequisites for the remedy have been demonstrated. In Paragraph 8 of their Answer, Defendants admit that "Sunbelt has been sending advertising to Minnesota recipients both with and without their permission." They further "admit that Sunbelt advertises its services by sending unsolicited and solicited faxes to Minnesota recipients." However, they "deny that Sunbelt's conduct is illegal." The affidavits submitted by the State further demonstrate that Defendants have violated 47 U.S.C. § 227(b)(1)(C).

The injunction requested by the State would also fulfill the legislative purpose of the statute. The TCPA was enacted to protect the privacy interests of residential telephone subscribers by restricting certain uses of fax machines. Int'l Sci. & Tech. Inst., Inc. v. Inacom Communications, Inc., 106 F.3d 1146, 1150 (4th Cir.1997) (citing S.Rep. No. 102-178, at 1 (1991), reprinted in 1991 U.S.C.C.A.N.1968). The statute permits an injunction to prevent calls that violate the statute. The State has demonstrated that Sunbelt has violated the TCPA. Furthermore, it is evident that, absent an injunction, Sunbelt would continue to violate the TCPA.2 Because the State seeks to enjoin Defendants from further violating the statute, the injunction requested by the State would fulfill the legislative purpose of the statute.

Sunbelt argues that an injunction is not appropriate because the harm will fall disproportionately on it, effectively putting it out of business. The plea to remain in business while blatantly violating a federal statute is not persuasive to this Court. Even if the statute were ultimately found to be unconstitutional—which, as discussed below, does not appear likely—Defendants have offered no justification for why they are entitled to profit in the interim, unencumbered by competition that is now undoubtedly suppressed due to the existence of a clear...

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