Description: Physicians Healthsource appeals from Judge Underhill’s 17 dismissal of its class action complaint asserting violations of 18 the Telephone Consumer Protection Act of 1991, as amended by the 19 Junk Fax Protection Act of 2005, 47 U.S.C. § 227 (the TCPA). The 20 complaint alleges that appellees (collectively “Boehringer”) sent 21 an unsolicited fax invitation for a free dinner meeting to 22 discuss ailments relating to appellees’ business. According to 23 appellant, this fax constituted an “unsolicited advertisement” 24 prohibited by the TCPA. 25 Judge Underhill dismissed appellant’s complaint for failure 26 to state a claim -- holding that no facts were pled that 27 plausibly showed that the fax had a commercial purpose. While we 28 agree that a fax must have a commercial purpose to be an 29 “unsolicited advertisement,” we hold that the district court 30 improperly dismissed appellant’s complaint. Where it is alleged
1 that a firm sent an unsolicited fax promoting a free event 2 discussing a subject related to the firm’s business, the 3 complaint is sufficient to state a claim. 4 We therefore vacate and remand. 5 BACKGROUND 6 In reviewing a Fed. R. Civ. P. 12(b)(6) dismissal of a 7 complaint, we accept all factual allegations as true, drawing all 8 reasonable inferences in the plaintiff's favor. See Chambers v. 9 Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). 10 The complaint alleges that, on April 6, 2010, Boehringer, a 11 pharmaceutical company, sent an unsolicited fax to appellant, 12 inviting one of appellant’s doctors to a free “dinner meeting” 13 and discussion entitled, “It's time to Talk: Recognizing Female 14 Sexual Dysfunction (FSD) and Diagnosing Hypoactive Sexual Desire 15 Disorder (HSDD).” J. App'x at 24. The “invitation” stated that 16 Boehringer Ingelheim Pharmaceuticals, Inc. 17 cordially invites you to join us for a dinner 18 meeting entitled, It’s Time to Talk: 19 Recognizing Female Sexual Dysfunction and 20 Diagnosing Hypoactive Sexual Desire Disorder. 21 Based on recent data from a large US study 22 (PRESIDE), 43% of US women aged > 18 years 23 have experienced a sexual problem in their 24 lives and 9.5% of the same group of women 25 have experienced decreased sexual desire with 26 distress. This program has been developed to 27 discuss Female Sexual Dysfunction (FSD), 28 including Hypoactive Sexual Desire Disorder 29 (HSDD) including pathophysiology models, 30 epidemiology, and diagnosis. We hope you 31 will join us for this informative and 32 stimulating program. 33
1 Id. The fax provided registration details and revealed that the 2 speaker at the dinner meeting would be David Portman, MD. 3 On March 30, 2014, appellant filed a class action lawsuit on 4 behalf of more than forty individuals against Boehringer, 5 alleging that the fax violated the TCPA as an “unsolicited 6 advertisement” without a proper opt-out notice. Id. at 11. 7 According to the complaint, the fax was an “unsolicited 8 advertisement” because it “promote[d] the services and goods of 9 [Boehringer].” Id. Appellant sought an award of statutory 10 damages in the minimum amount of $500 for each violation of the 11 TCPA, and to have such damages trebled. Appellant also requested 12 injunctive relief to enjoin Boehringer from sending similar faxes 13 in the future. 14 Boehringer moved to dismiss, arguing that appellant failed 15 to state a claim under the TCPA because the unsolicited fax was 16 not an advertisement. In its motion to dismiss, Boehringer asked 17 the district court to take judicial notice of public records of 18 the Food and Drug Administration (FDA) -- a request that was 19 unopposed and that the court granted. These records showed that, 20 at the time it faxed appellant, Boehringer had submitted for 21 approval by the FDA to market a drug named Flibanserin. The drug 22 was intended to treat HSDD. Because Flibanserin had yet to be 23 approved by the FDA, Boehringer was forbidden to promote it. 24 See 21 C.F.R. § 312.7(a)(prohibiting, inter alia, pharmaceutical 25 companies from “promoting” drugs not yet approved by the FDA). 4
1 The district court dismissed the complaint for failure to 2 state a claim under Fed. R. Civ. P. 12(b)(6). Physicians 3 Healthsource, Inc. v. Boehringer Ingelheim Pharmaceuticals, Inc., 4 No. 3:14-CV-405 (SRU), 2015 WL 144728, at *6 (D. Conn. Jan. 12, 5 2015). The court interpreted Federal Communications Commission 6 (FCC) regulations as “requir[ing] plaintiffs to show that [an 7 unsolicited] fax has a commercial pretext” for it to violate the 8 TCPA. Id. at *3. The court determined that “[n]othing in the 9 [f]ax indicates that the dinner was a pretext for pitching a 10 Boehringer product or service.” Id. at *5. The court noted 11 that, “[e]ven drawing the inference that Boehringer sponsored the 12 dinner in order to inform potential future prescribers of 13 Flibanserin about the existence and nature of HSDD, the 14 hypothetical future economic benefit that the Boehringer 15 defendants might receive someday does not transform the [f]ax 16 into an advertisement.” Id. 17 DISCUSSION 18 As noted, we review de novo a district court's dismissal of 19 a complaint pursuant to Rule 12(b)(6). See Chambers, 282 F.3d at 20 152. To survive a motion to dismiss, a complaint must contain 21 sufficient factual matter, accepted as true, to “state a claim to 22 relief that is plausible on its face.” Bell Atl. Corp. v. 23 Twombly, 550 U.S. 544, 570 (2007). As the Supreme Court has 24 stated,
1 A claim has facial plausibility when the 2 plaintiff pleads factual content that allows 3 the court to draw the reasonable inference 4 that the defendant is liable for the 5 misconduct alleged. The plausibility 6 standard is not akin to a “probability 7 requirement,” but it asks for more than a 8 sheer possibility that a defendant has acted 9 unlawfully. Where a complaint pleads facts 10 that are “merely consistent with” a 11 defendant’s liability, it “stops short of the 12 line between possibility and plausibility of 13 ‘entitlement to relief.’” 14 15 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citations omitted) 16 (quoting Twombly, 550 U.S. at 557). 17 Under the TCPA, it is unlawful for “any person within the 18 United States” to send a fax that is an “unsolicited 19 advertisement” -- unless, inter alia, the fax has an opt-out 20 notice meeting certain requirements. 47 U.S.C. § 227(b)(1)(C). 21 The Act creates a private right of action, providing for 22 statutory damages in the amount of $500 for each violation as 23 well as injunctive relief against future violations. 47 U.S.C. 24 § 227(b)(3). 25 The parties do not dispute that Boehringer’s fax lacked any 26 opt-out notice, and the question is, therefore, whether it was an 27 “unsolicited advertisement.” The Act defines “unsolicited 28 advertisement” as “any material advertising the commercial 29 availability or quality of any property, goods, or services which 30 is transmitted to any person without that person’s prior express 31 invitation or permission, in writing or otherwise.” 47 U.S.C. 32 § 227(a)(5). Exercising its delegated rulemaking authority over 6
1 the TCPA pursuant to 47 U.S.C. § 227(b)(2), the FCC has 2 promulgated a rule elaborating on the Act’s definition of 3 “unsolicited advertisement.” Rules and Regulations Implementing 4 the Tel. Consumer Prot. Act of 1991; Junk Fax Prevention Act of 5 2005, 71 Fed. Reg. 25967, 25973 (May 3, 2006) (the “2006 Rule”). 6 The 2006 Rule states, in relevant part, that 7 facsimile messages that promote goods or 8 services even at no cost, such as free 9 magazine subscriptions, catalogs, or free 10 consultations or seminars, are unsolicited 11 advertisements under the TCPA’s definition. 12 In many instances, “free” seminars serve as a 13 pretext to advertise commercial products and 14 services. Similarly, “free” publications are 15 often part of an overall marketing campaign 16 to sell property, goods, or services. For 17 instance, while the publication itself may be 18 offered at no cost to the facsimile 19 recipient, the products promoted within the 20 publication are often commercially available. 21 Based on this, it is reasonable to presume 22 that such messages describe the “quality of 23 any property, goods, or services.” 24 Therefore, facsimile communications regarding 25 such free goods and services, if not purely 26 “transactional,” would require the sender to 27 obtain the recipient’s permission beforehand, 28 in the absence of an [established business 29 relationship]. 30 31 Id. The Rule itself comports with the statutory language, which 32 defines offending advertisements as those promoting “the 33 commercial availability or quality of [the firm’s] property, 34 goods, or services.” 47 U.S.C. § 227(a)(5). 35 The district court interpreted the Rule as “requir[ing] 36 plaintiffs to show that the fax has a commercial pretext -- i.e., 37 ‘that the defendant advertised, or planned to advertise, its 7
1 products or services at the seminar.’” Physicians Healthsource, 2 2015 WL 144728, at *3 (quoting Bais Yaakov of Spring Valley v. 3 Richmond, the Am. Int'l Univ. in London, Inc., No. 13-CV-4564 4 (CS), 2014 WL 4626230, at *3 (S.D.N.Y. Sept. 16, 2014)). We do 5 not disagree. But, at the pleading stage, where it is alleged 6 that a firm sent an unsolicited fax promoting a free seminar 7 discussing a subject that relates to the firm’s products or 8 services, there is a plausible conclusion that the fax had the 9 commercial purpose of promoting those products or services. 10 Businesses are always eager to promote their wares and usually do 11 not fund presentations for no business purpose. The defendant 12 can rebut such an inference by showing that it did not or would 13 not advertise its products or services at the seminar, but only 14 after discovery. This interpretation comports with the 2006 15 Rule. “In interpreting an administrative regulation, as in 16 interpreting a statute, we must begin by examining the language 17 of the provision at issue.” Resnik v. Swartz, 303 F.3d 147, 151 18 (2d Cir. 2002). The 2006 Rule states that “it is reasonable to 19 presume that such messages [advertising free seminars] describe 20 the ‘quality of any property, goods, or services,’” potentially 21 violating the TCPA. 2006 Rule, 71 Fed. Reg. at 25973 (quoting 47 22 U.S.C. § 227(a)(3)).
1 Of course, as other courts have ruled, not every 1 2 unsolicited fax promoting a free seminar satisfies the Rule. 3 There must be a commercial nexus to a firm’s business, i.e., its 4 property, products, or services; that, in our view, is satisfied 5 at the pleading stage where facts are alleged that the subject of 6 the free seminar relates to that business. The Rule does not aim 7 at faxes promoting free seminars per se, but states only that, 2 8 “[i]n many instances, ‘free’ seminars serve as a pretext to
See Physicians Healthsource, Inc. v. Stryker Sales Corp.,1 65 F. Supp. 3d 482, 489 (W.D. Mich. 2015); Bais Yaakov of Spring Valley v. Richmond, the Am. Int’l Univ. in London, Inc., No. 13CV-4564 (CS), 2014 WL 4626230, at *3 (S.D.N.Y. Sept. 16, 2014) (“While the [2006 Rule] could be read to categorize all faxes promoting free seminars as unsolicited advertisements, many courts require plaintiffs to show that the defendant advertised, or planned to advertise, its products or services at the seminar.”); Addison Automatics, Inc. v. RTC Group, Inc., No. 12 C 9869, 2013 WL 3771423, at *2 (N.D. Ill. July 16, 2013) (“[F]axes promoting free seminars may be unsolicited advertisements because free seminars are often a pretext to market products or services.”) (internal quotation marks omitted); St. Louis Heart Center, Inc. v. Forest Pharms., Inc., No. 4:12-CV-02224, 2013 WL 1076540, at *4 (E.D. Mo. Mar. 13, 2013); Phillips Long Dang, D.C., P.C. v. XLHealth Corp., No. 1:09-CV-1076-RWS, 2011 WL 553826, at *4 (N.D. Ga. Feb. 7, 2011) (“[T]he Court does not read the FCC Promulgation as creating a per se ban on free seminar communications.”). Appellant relies on another provision of the 2006 Rule --2 that “applications and materials regarding educational opportunities and conferences sent to persons who are not yet participating or enrolled in such programs are unsolicited advertisements,” 2006 Rule, 71 Fed. Reg. at 25973 -- to support its argument that faxes promoting free seminars are per se violations of the TCPA. We are unconvinced. The cited provision targets pretextual materials that promote, for example, enrollment at particular educational institutions; it does not purport to create a per se rule of the sort appellant advances. See 2006 Rule, 71 Fed. Reg. at 25974. 9
1 advertise commercial products and services.” 2006 Rule, 71 Fed. 2 Reg. at 25973 (“[M]essages that promote goods and services even 3 at no cost, such as . . . free . . . seminars, are unsolicited 4 advertisements under the TCPA’s definition.”). In a different 5 but relevant context, the Rule states that ”a trade 6 organization’s newsletter sent via facsimile would not constitute 7 an unsolicited advertisement, so long as the newsletter's primary 8 purpose is informational, rather than to promote commercial 9 products.” Id. 10 Requiring plaintiffs to plead specific facts alleging that 11 specific products or services would be, or were, promoted at the 12 free seminar would impede the purposes of the TCPA. See Gager v. 13 Dell Fin. Servs., LLC, 727 F.3d 265, 271 (3d Cir. 2013) (“Because 14 the TCPA is a remedial statute, it should be construed to benefit 15 consumers.”); Physicians Healthsource, Inc. v. Alma Lasers, Inc., 16 No. 12 C 4978, 2012 WL 4120506, at *2 (N.D. Ill. Sept. 18, 2012) 17 (“Congress enacted the TCPA to prevent the shifting of 18 advertising costs to recipients of unsolicited fax 19 advertisements.”) (citing H.R. Rep. No. 102-317, at 10 (1991); S. 20 Rep. No. 102–78, at 2, 5 (1991), reprinted in 1991 U.S.C.C.A.N. 21 1968, 1972 (“[U]nsolicited calls placed to fax machines, and 22 cellular or paging telephone numbers often impose a cost on the 23 called party (fax messages require the called party to pay for 24 the paper used . . .)”)). And -- unless plaintiffs actually 25 attended the free seminar -- in many cases it will be difficult 10
1 for plaintiffs to know whether it was in fact used to advertise a 2 defendant’s products or services. See Arista Records, LLC v. Doe 3 3, 604 F.3d 110, 120 (2d Cir. 2010) (“The Twombly plausibility 4 standard, which applies to all civil actions . . . does not 5 prevent a plaintiff from pleading facts alleged upon information 6 and belief where the facts are peculiarly within the possession 7 and control of the defendant.”) (internal quotation marks 8 omitted). 9 Two fanciful examples illustrate the distinction. If a 10 complaint alleged that the Handy Widget Company funded a 11 professorship at a local law school in the name of its deceased 12 founder and faxed invitations on its letterhead to an inaugural 13 lecture entitled “The Relevance of Greek Philosophers to 14 Deconstructionism,” the complaint would not state a claim under 15 the TCPA because the Handy Widget Company is not in the business 16 of philosophical musings. In contrast, if the Handy Widget 17 Company faxed invitations to a free seminar on increasing 18 widgets’ usefulness and productivity, a claim under the TCPA 19 would be validly alleged. Of course, the Handy Widget Company 20 could rebut at the summary judgment stage with evidence showing 21 that it did not feature its products or services at the seminar. 22 Boehringer’s fax advertised a “dinner meeting” to discuss 23 two medical conditions -- Female Sexual Dysfunction (FSD) and 24 Hypoactive Sexual Desire Disorder (HSDD) -- and their 25 “pathophysiology models, epidemiology, and diagnosis.” J. App’x 11
1 at 24. As a pharmaceutical company, Boehringer was generally in 2 the business of treating diseases and medical conditions, such as 3 FSD and HSDD. Moreover, the fax makes clear to the invitee that 4 the dinner meeting was “sponsored by Boehringer Ingelheim 5 Pharmaceuticals, Inc.” Id. The fax invitation was sent to a 6 doctor, whom Boehringer would presumably hope to persuade to 7 prescribe its drugs to patients. Therefore, facts were alleged 8 that Boehringer’s fax advertised a free seminar relating to its 9 business. 10 In addition, Boehringer’s seeking approval from the FDA for 11 the marketing of Flibanserin is relevant, although not 12 dispositive. Although not approved, the drug is intended as a 13 remedy for the ailments to be discussed at the event. To be 14 sure, Boehringer was prohibited from, inter alia, “promoting” an 15 unapproved drug, 21 C.F.R. § 312.7(a), but that prohibition is 16 not necessarily inconsistent with the free dinner’s mentioning 17 the possible future availability of the drug. Nothing in the 18 statute or Rule limits their scope to the advertisement of 19 products or services then available. 20 In defense, Boehringer can present, inter alia, testimony of 21 the dinner meeting participants as well as provide the meeting’s 22 agenda, transcript, presentation slides, speaker list, or any 23 internal emails or correspondences discussing the meeting. See 24 Physicians Healthsource, Inc. v. Stryker Sales Corp., 65 F. Supp. 25 3d 482, 492 (W.D. Mich. 2015) (holding that “the TCPA’s text does 12
1 not require a court to put on evidentiary blinders in deciding 2 whether a particular fax amounts to an advertisement” and 3 allowing parties to present evidence beyond the four corners of 4 the fax -- such as presentation slides -- to determine if a fax 5 promoting a free seminar was pretextual). It is also possible 6 that Boehringer used the seminar to advertise other drugs or 7 services in its inventory –- which would certainly support 8 finding a violation of the TCPA.