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January 11, 2022

Focus Forward Gets Federal Circuit Court Win Against TCPA Fax Lawsuit

As it appeared on Insights Association

By Howard Fienberg

A new federal court decision dismissing junk fax litigation against a market research survey was a win for insights company Focus Forward. While the court system is still divided on how to treat faxed surveys, the insights industry will benefit from this latest sign of legal sanity.

Kim Harrison, CEO and Founder of Focus Forward, welcomed the court’s decision. “We refused to just settle and walk away, knowing that we were conducting legitimate market research. Focus Forward is proud to beat back another litigant, and provide legal ammo for other insights companies to use against these kind of unfounded junk fax lawsuits.”

Bruce Katz (Juva Skin and Laser Center) sued Focus Forward for sending a market research invitation with an incentive offer, claiming it to be an “unsolicited advertisement” under the Telephone Consumer Protection Act (TCPA). Katz demanded “both injunctive relief and statutory damages.”

On January 6, 2022, the 2nd Circuit of the U.S. Court of Appeals ruled against the plaintiff, finding that “an unsolicited faxed invitation to participate in a market research survey in exchange for money” does not constitute an unsolicited advertisement.

A district court had previously dismissed Katz’s suit on April 6, 2021, prompting his appeal to the 2nd Circuit.

“Whether a fax inviting the recipient to take a survey in exchange for money constitutes an ‘advertisement’ under the TCPA is a question that we have not answered explicitly before,” the 2nd Circuit said.

“Confronted with this question in Fischbein v. Olson Research Group, a split panel of the Third Circuit recently held that such faxes are advertisements, reasoning that ‘an offer of payment in exchange for participation in a market survey is a commercial transaction, so a fax highlighting the availability of that transaction is an advertisement under the TCPA.’”

Of course, the 2nd Circuit noted, Katz urged them to “adopt Fischbein’s reasoning and conclusion.”

Focus Forward was able to point to more favorable recent rulings that were relevant, such as Carolyn M. Machonis, O.T., PLLC v. Universal Survey Center, Inc., “Magistrate Judge Debra Freeman examined the legislative history of the TCPA and the 2006 Rule and issued a Report and Recommendation concluding that ‘mere invitations to participate in a survey, without more to render them a pretext for advertising, should not themselves be viewed as prohibited advertisements under the TCPA.’

Based on such prior rulings, the district court in the Focus Forward case concluded that “the bulk of authority faithful to the statute’s text … hold[s] that the Faxes are not facially ‘advertisements’ under the TCPA.”

According to the 2nd Circuit, neither Katz nor Focus Forward suggested that the faxes advertised the “availability” of the $150 incentive, or that the incentive was “property” under the TCPA. “This is for good reason. … The word “property” does not appear to include money as the word is used in the TCPA.” Moreover, the definitions of “telephone solicitation” and “unsolicited advertisement” both “mitigate against defining ‘property’ so expansively as to include offers of money to consumers,” the 2nd Circuit said.

The 2nd Circuit specifically disagreed with the Fischbein decision. “The notion that such faxes might advertise the availability of a ‘service’—i.e., of the recipient’s participation in a survey—contorts the ordinary meaning of the statute too far. The faxes seek that participation from the fax recipient. The recipient may or may not participate—by definition, the fax sender does not know whether or not that participation is available to her. The faxes therefore cannot reasonably be construed as advertising the availability of such a service.”

TCPA “does not prohibit communications advertising the availability of such ‘an opportunity’” as the incentive in this case, nor does it “prohibit communications advertising the availability of transactions that are ‘commercial in character,’ as the Fischbein majority suggests,” the 2nd Circuit asserted. As the dissent in the Fischbein case “explained, faxes seeking survey participation from a recipient ‘communicat[e] the exact opposite of availability—… stating a need for something not readily available to the sender.’”

The 2nd Circuit also cited the TCPA’s legislative history, wherein the House Energy & Commerce Committee did not intend for “telephone solicitation” to “include public opinion polling, consumer or market surveys, or other survey research conducted by telephone.” The court further noted that TCPA’s original implementing regulations also excluded “research, market surveys, political polling or similar activities” from liability.

Also, according to the court, “even the FCC’s 2006 Rule itself—by creating liability for ‘any surveys that serve as a pretext to an advertisement’—implies that not all surveys are pretexts for advertisements, and that therefore not all surveys are subject to liability under the TCPA.”

The 2nd Circuit concluded that, “the statutory text, legislative history, and FCC implementation of the TCPA all support the conclusion that invitations to participate in a survey, without more, are not advertisements under the statute,” so “a faxed invitation to participate in a market research survey in exchange for money does not constitute an ‘advertisement’ under the TCPA.”

IA reminds our members that some courts will still accept junk fax litigation based on the opposite legal interpretations of surveys – that they can be (or automatically are) a pretext for advertising when an incentive is offered.

However, the Insights Association congratulates Focus Forward on this victory in the 2nd Circuit Court of Appeals, a helpful caselaw addition to M/A/R/C’s win in district court in 2020. The legal landscape is still a bit messy, so every little bit helps.