Third Circuit Establishes Framework for Determining Third-Party Based Liability under the TCPA
In a recent precedential decision, the Third Circuit held that an unsolicited fax seeking information does not constitute an unlawful advertisement under the Telephone Consumer Protection Act (TCPA). Now, to “establish third-party based liability under the TCPA, a plaintiff must show that the fax: (1) sought to promote or enhance the quality or quantity of a product or services being sold commercially; (2) was reasonably calculated to increase the profits of the sender; and (3) directly or indirectly encouraged the recipient to influence the purchasing decisions of a third party.”
In Robert W. Mauthe, M.D., P.C. v. Optum, Inc., the plaintiff claimed that it received unsolicited faxes from Defendants in violation of the TCPA. Defendants maintain a national database of healthcare providers, containing providers’ contact information, demographics, specialties, education, and related data. Defendants market, sell, and license the database typically to healthcare, insurance, and pharmaceutical companies, who use it to update their provider directories, identify potential providers to fill gaps in their network of providers, and validate information when processing insurance claims. To maintain the accuracy of the database, Defendants send unsolicited faxes to healthcare providers listed in the database, requesting them to respond and correct any outdated or inaccurate information. These faxes also advised recipients that “[t]here is no cost to you to participate in this data maintenance initiative. This is not an attempt to sell you anything.”
The Third Circuit held that Defendants’ faxes were not advertisements because they were sent to update the database and not to “promote goods or services to be bought or sold,” and did not “have profit as an aim.” In other words, for there to be a TCPA violation, “there must be a nexus between the fax and the purchasing decisions of an ultimate purchaser whether the recipient of the fax or a third party.” It is not enough that the “sender sent a fax with a profit motive.” Ultimately, the Third Circuit confirmed that the TCPA does not prohibit all unsolicited faxes, just advertisements.