Wednesday, August 22, 2018

FYI: 8th Cir Holds TCPA Plaintiff Lacked Standing, But Case Should Be Remanded Not Dismissed With Prejudice

The U.S. Court of Appeals for the Eighth Circuit held that a plaintiff lacked standing to pursue an alleged violation of the Telephone Consumer Protection Act ("TCPA") against a defendant that supposedly did not provide a proper opt-out notice in its advertisement faxes because the plaintiff invited and did not rebuke the faxes, and the faxes did not cause the concrete harm required to establish Article III jurisdiction.


Separately, the Eight Circuit reversed the dismissal with prejudice in this removed case, holding that the proper remedy when no case or controversy exists was to return the matter to the state court that is not bound by Article III's case or controversy requirement.


A copy of the opinion is available at:  Link to Opinion


A medical provider ("Plaintiff") filed a putative class action suit against the defendant company ("Defendant") in in Missouri state court alleging Defendant violated the TCPA by faxing twelve advertisements to Plaintiff without including a proper opt-out notice on each advertisement. See id. § 227(b)(l )(C)(iii); 47 C.F.R. § 64.1200(a)(4)(iii).


Defendant promptly removed the matter to federal court.  Defendant moved to dismiss arguing that Plaintiff lacked Article III standing.


Relevant to the appeal, Plaintiff alleged that Defendant sent plaintiff twelve fax advertisements promoting a potassium tablet.  Each fax listed a fax number for the Plaintiff to return a form to request product samples and provided the name, telephone number, and e-mail address of a contact person at Defendant. Six faxes included a box to check if Plaintiff no longer wished to receive faxes from Defendant.  Plaintiff alleged the faxes did not contain the required opt-out notice.  See 47 C.F.R. § 64.1200.


Plaintiff claimed several injuries.  Defendant allegedly caused Plaintiff to lose paper and toner when Plaintiff received the faxes.  Plaintiff also alleged that the faxes interfered with Plaintiff's use of its fax machine and its telephone line.  This also allegedly caused employees to waste time receiving, reviewing, and routing the faxes.  Finally, the faxes intruded upon Plaintiff's "privacy interests in being left alone."  Plaintiff sought injunctive relief and treble damages.


Plaintiff supposedly did not consent to receive Defendant's faxes, but Plaintiff acknowledged that it did not base its lawsuit "upon the fact that consent was not given."  Indeed, Plaintiff request product samples from Defendant at least four times.


The trial court found that "the opt out notice" on defendant's faxes "conveys to fax recipients the means and opportunity to opt-out of receiving future faxes, regardless of whether the faxes also meet all of the technical requirements of 47 C.F.R. § 64.1200."  Further, the trial court held, Plaintiff did not allege "a concrete or particularized harm resulting from faxes that [Plaintiff] both invited and did not rebuke." 


The trial court separately concluded that 28 U.S.C. § 1447(c) did not mandate remanding the case to state court.  Thus, the trial court ruled that plaintiff lacked standing and dismissed the matter with prejudice.


This appeal followed. 


As you may recall, the TCPA prohibits faxing an "unsolicited advertisement" to another person unless the fax contains a "clear and conspicuous" notice "on the first page of the advertisement," allowing the recipient to "opt-out." See 47 U.S.C. § 227(b)(1)(C)(iii); 47 C.F.R. § 64.1200(a)(4)(iii); 47 C.F.R. § 64.1200(a)(4)(iii)(A).  


The opt-out notice must "state that the recipient may request that the sender not send future advertisements and that the sender must comply within 30 days, id. § 64.1200(a)(4)(iii)(B); set forth the requirements for an opt-out request, id. § 64.1200(a)(4)(iii)(C); provide a domestic contact telephone number and a fax number by which the recipient may transmit the opt-out request, id. § 64.1200(a)(4)(iii)(D)(l ); and set forth a cost-free mechanism by which the recipient can transmit the opt-out request." Id. § 64.1200(a)(4)(iii)(D)(2). The phone number, fax number, and cost-free mechanism provided must also allow the recipient to opt-out 24 hours a day, 7 days a week. Id. § 64.1200(a)(4)(iii)(E).


The Eighth Circuit observed that the TCPA created a private right of action to enjoin a violation of these provisions, or "to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater." 47 U.S.C. ' 227(b)(3).  Further, the court may award treble damages if the defendant "willfully or knowingly" violated the statute.  Id.


However, the Court noted, just because Congress created a private right of action does not automatically mean that a plaintiff alleging a TCPA violation has Article III standing.  Even though the TCPA "grants a person a statutory right and purports to authorize that person to sue to vindicate that right," a plaintiff cannot "allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III." Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016).  Instead, to invoke Article III standing, a plaintiff must demonstrate it "(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Id. at 1547.


The Eight Circuit found that the trial court's conclusion that Plaintiff "invited and did not rebuke" the faxes was not clearly erroneous because the Plaintiff requested samples "on at least four occasions." Further, Plaintiff acknowledged that its claim is not based upon withholding consent. Given this, the faxes would have used Plaintiff's "paper and toner, occupied its phone lines, and invaded its privacy" even if it contained a proper opt-out notice.  Thus, even taking Plaintiffs allegations as true, Plaintiff did not "establish that its alleged injury is fairly traceable to an alleged violation of the TCPA."  See Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992).


The Eight Circuit next examined and rejected Plaintiff's argument that Defendant's alleged failure to make all required disclosures in the opt-out notice itself establishes an "intangible injury" because it creates a "real risk of harm."  Spokeo, Inc., 136 S. Ct. at 1549; see Braitberg v. Charter Commcns, Inc., 836 F.3d 925, 930 (8th Cir. 2016).  


The trial court's finding that despite any technical deficiencies the opt-out notices all conveyed the "means and opportunity to opt-out of receiving future faxes" was not clearly erroneous because the notices "contained a box that the recipient could check if he did not wish to receive future faxes, and a domestic fax number to which the form could be returned"   Plaintiff never tried to opt-out and there is no evidence Defendant would not have honored an opt-out request.  Thus, the Eighth Circuit held that the trial court correctly found that Defendant's alleged failure to include "a proper opt-out notice compliant with the federal regulations" did not create "a risk of real harm."


The Eight Circuit then turned to Plaintiff's claim that the trial court should have remanded the case to state court instead of dismissing it with prejudice.  The removal statute provides that: "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. ' 1447(c).


The Eight Circuit addressed this issue in Wallace v. ConAgra Foods, Inc., 747 F.3d 1025 (8th Cir. 2014), finding that "when no Article III case or controversy exists and the case did not originate in federal court but was removed there by the defendants, the federal court must remand the case to the state court from whence it came." Id. at 1033. This is because "state courts are not bound by the limitations of an Article III case or controversy."




Ralph T. Wutscher
Maurice Wutscher LLP
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