Sandusky Wellness Ctr., LLC v. Medco Health Solutions, Inc.

• Decision Date: 03 June 2015
• Docket Number: No. 14–4201.,14–4201.
• Citation: 788 F.3d 218
• Parties: SANDUSKY WELLNESS CENTER, LLC, an Ohio limited liability company, individually and as the representatives of a class of similarly situated persons, Plaintiff–Appellant, v. MEDCO HEALTH SOLUTIONS, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

788 F.3d 218

SANDUSKY WELLNESS CENTER, LLC, an Ohio limited liability company, individually and as the representatives of a class of similarly situated persons, Plaintiff–Appellant

v.MEDCO HEALTH SOLUTIONS, INC., Defendant–Appellee.

No. 14–4201.

United States Court of Appeals, Sixth Circuit.

June 3, 2015.

Rehearing En Banc Denied July 16, 2015.^*

ON BRIEF:David M. Oppenheim, Glenn L. Hara, Anderson + Wanca, Rolling Meadows, IL, Matthew E. Stubbs, Montgomery Rennie & Jonson, Cincinnati, OH, for Appellant. JoAnn T. Sandifer, Christopher A. Smith, Husch Blackwell LLP, St. Louis, MO, Robert C. Tucker, Robison, Curphey & O'Connell, Toledo, OH, for Appellee.

Before: McKEAGUE and DONALD, Circuit Judges; and MATTICE, District Judge.^**

OPINION

McKEAGUE, Circuit Judge.

It's under attack, but the fax lives on-in homes, offices, and, yes, judges' chambers around the country. Christopher Null, Why the fax still lives (and how to kill it),PCWorld (Jan. 13, 2014 3:00 AM), http://bit.ly/1aWT 21E. And it lives on in this case. A pharmacy benefit manager sent two faxes to a chiropractic company, listing medications available in the health plans of the chiropractors' patients. Innocent enough, right? Well, no, actually, if those faxes were “unsolicited advertisements” prohibited by the Telephone Consumer Protection Act. 47 U.S.C. § 227(b)(1)(C). That's the question presented in this case: Were those faxes “advertisements”? No, we hold, because they lacked the necessary commercial aspects of ads. And so we affirm the grant of summary judgment to the defendants.

I

As a pharmacy benefit manager, Medco Health Solutions acts as an intermediary between health plan sponsors (often employers) and prescription drug companies. See Thomas Gryta, What is a ‘Pharmacy Benefit Manager?’,Wall St. J. (July 21, 2011 6:03 PM), http://on.wsj.com/1AgCGDe. Medco provides services to plan sponsors that enable the plans to offer more informed and less expensive prescription drug benefits to their members (often employees). Those services include keeping and updating a list of medicines (known as the “formulary”) that are available through a healthcare plan. Medco sends that list to the plan sponsors so they can offer the most attractive prescription drug plans to their members.

In addition to sending the formulary to its clients, Medco sends it to healthcare providers that prescribe medications to its clients' members. R. 21–2 (Medco's Statement of Undisputed Facts) at ¶ 2; see Fed.R.Civ.P. 56(e)(2) (allowing the court to treat these facts as “undisputed for purposes of [Medco's summary-judgment] motion”). That way, the healthcare providers will know which medications are covered by their patients' healthcare plans. Sandusky Wellness Center is one such healthcare provider. R. 21–2 at ¶ 2. It provides chiropractic services—and prescribes medications—to patients who are members of prescription drug plans contracted with Medco. R. 21–4 (Amy Green Decl.) at ¶ 4. Its patients use their healthcare plans—and thus indirectly use Medco's services—to obtain the medications from Sandusky.

Medco faxed part of its formulary to Sandusky in June 2010. That fax, entitled “Formulary Notification” and attached in Appendix A, informed Sandusky that “[t]he health plans of many of your patients have adopted” Medco's formulary. R. 1–1 at 2. The fax asked Sandusky to “consider prescribing plan-preferred drugs” to “help lower medication costs for [Sandusky's] patients,” and it listed some of those drugs. Id. It also told Sandusky where it could find a complete list of the formulary. Other than listing Medco's name and number, the fax did not promote Medco's services and did not solicit business from Sandusky.See id.; see also R. 21–2 at ¶¶ 6–8.

Three months later, Medco sent another fax to Sandusky. This second fax, entitled “Formulary Update” and attached in Appendix B, informed Sandusky that a certain respiratory drug brand was preferred over another brand, and that using the preferred brand could save patients money. R. 1–1 at 3. Neither this fax nor the first one contained pricing, ordering, or other sales information. R. 21–2 at ¶¶ 6–7. Nor did either fax ask Sandusky, directly or indirectly, to consider purchasing Medco's services. Id. at ¶ 8. The undisputed facts in the record instead show that each merely informed Sandusky which drugs its patients might prefer, irrespective of Medco's financial considerations. See R. 21–2 at ¶¶ 5–8.

Nevertheless, Sandusky (individually and on behalf of a proposed class) sued Medco over these two faxes, claiming that they were “unsolicited advertisements” prohibited by the Telephone Consumer Protection Act. Medco moved for summary judgment, arguing that the faxes were not advertisements as a matter of law because their primary purpose was informational rather than promotional. The district court agreed. R. 29 at 4–5. It did not find the question close, calling it “not far off the mark, if off it at all here” that Sandusky's suit was “frivolous litigation.” Id. at 5 n. 1. It warned Sandusky and others like it “not to file similar fruitless litigation in the future” or else the court's “colleagues [would] respond appropriately.” Id.

Sandusky and its attorneys did not heed that warning. Not only did Sandusky appeal in this case, its attorneys have filed suits (and appeals after losing) in other courts as well. E.g., Physicians Healthsource, Inc. v. Boehringer Ingelheim Pharm., Inc., No. 3:14–CV–405 SRU, 2015 WL 144728 (D.Conn. Jan. 12, 2015), appeal filed No. 15–288 (2d Cir. Feb 03, 2015) ; see also R. 21–1 (collecting faxes and cases from other Sandusky-related lawsuits). Yet Sandusky raises non-frivolous arguments on appeal. We freshly review those arguments to see if there is any genuine dispute of material fact and to determine whether Medco is entitled to judgment as a matter of law. EEOC v. Ford Motor Co., 782 F.3d 753, 760 (6th Cir.2015) (en banc).

II

We begin with an overview of the Telephone Consumer Protection Act. Passed in response to “[v]oluminous consumer complaints about abuses of telephone technology—for example, computerized calls dispatched to private homes”—the Act restricts certain kinds of telephonic and electronic solicitations. Mims v. Arrow Fin. Servs., LLC, ––– U.S. ––––, 132 S.Ct. 740, 744, 181 L.Ed.2d 881 (2012). At issue in this case is the Act's prohibition on sending unsolicited advertisements to fax machines. 47 U.S.C. § 227(b)(1)(C). The Act provides a $500 penalty for such a violation. § 227(b)(3)(B). Sandusky alleges that Medco violated the Act by sending two advertisements to its fax machine, but Medco responds that the faxes it sent were not “advertisement[s]” at all.

A

So were these faxes advertisements? It is a question of law our court has never addressed. But the Act provides a definition. It defines “advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services.” § 227(a)(5).

We can glean a few things from that definition. For one thing, we know the fax must advertise something. Advertising is “[t]he action of drawing the public's attention to something to promote its sale,” Black's Law Dictionary 65 (10th ed.2014), or “the action of calling something (as a commodity for sale, a service offered or desired) to the attention of the public,” Webster's Third New International Dictionary 31 (1986). So material that advertises something promotes it to the public as for sale. For another thing, we know that what's advertised—here, the “availability or quality of any property, goods, or services”—must be commercial in nature. Commercial means “of, in, or relating to commerce”; “from the point of view of profit: having profit as the primary aim.” Webster's Third at 456. It's something that relates to “buying and selling.” Black's Law Dictionary 270 (6th ed.1990). So to be an ad, the fax must promote goods or services to be bought or sold, and it should have profit as an aim.

This refinement puts meat on the Act's bones: An advertisement is any material that promotes the sale (typically to the public) of any property, goods, or services available to be bought or sold so some entity can profit. See 47 U.S.C. § 227(a)(5) ; see also Black's Law Dictionary (10th ed.) at 65 (defining advertisement as a “commercial solicitation; an item of published or transmitted matter made with the intention of attracting clients or customers”).

Everyday people recognize everyday ads as fitting within this definition. When McDonald's runs a television ad for a new McCafé item (complete with a jingle, of course), viewers understand that McDonald's is promoting that item to the public's attention, that it is available to be bought, and that McDonald's hopes to gain a profit from it. So too when a law firm buys space in a newspaper for its logo, slogan, areas of expertise, and contact information: Readers understand that the firm is soliciting the public to pay for its services (which are available for sale) with making money in mind. And probably so too when an orthopedic-implant manufacturer sends potential buyers a fax containing a picture of its product on an invitation to a free seminar: It is drawing the relevant market's attention to its product to promote its sale (albeit indirectly). Cf. Physicians Healthsource, Inc. v. Stryker Sales Corp., No. 1:12–CV–0729, 65 F.Supp.3d 482, 488–90, 2014 WL 7109630, at *5–*6 (W.D.Mich. Dec. 12, 2014) ; see In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 18 FCC Rcd. 14014, 14097 (2003). But see Phillip Long Dang, D.C., P.C. v. XLHealth Corp., 1:09–CV–1076–RWS, 2011 WL 553826, at *3–*4 (N.D.Ga.2011). These are all (likely) ads under the Act's definition.

The same cannot be said of these two faxes. They call items (medications) and services (Medco's formulary) to Sandusky's attention, yes. But no record evidence shows that they do so because the drugs or Medco's services are for sale by Medco, now or in the future. In fact,...