Tagged: Appeal

Sixth Circuit Holds Faxes Seeking Recipient’s Information Are a Pretext to Advertisement and Thus Within the Purview of the TCPA

The Sixth Circuit in Matthew N. Fulton, D.D.S., P.C. v. Enclarity, Inc., on remand from the Supreme Court, upheld its previous ruling that faxes seeking the recipient’s information are considered a “pretext” to an advertisement, and thus fall within the scope of the Telephone Consumer Protection Act (TCPA). The June 19, 2020 decision relies upon a 2006 Federal Communications Commission (FCC) Order stating that “any surveys that serve as a pretext to an advertisement are subject to the TCPA’s facsimile advertising rules.” The fax requested that the recipient verify or update its information with Defendant LexisNexis “for clinical summaries, prescription renewals, and other sensitive communications.” Plaintiff’s Complaint alleged that this constituted a pretext to send additional marketing materials to recipients, as well as obtain the recipient’s involvement in Defendant LexisNexis’s database. Plaintiff asserted that Defendants and third parties would use the recipient’s data to send information “regarding products, services, competitions, and promotions,” thereby constituting “a pretext to increase awareness and use of Defendants’ proprietary database service and increase traffic to Defendants’ website.” Defendants moved to dismiss, arguing that the fax did not constitute an advertisement as defined by the TCPA. The Michigan district court dismissed, finding that since the fax did not state that anything was available for purchase or sale, it “lack[ed] the commercial...

New Jersey Supreme Court Holds That CFA and PLA Claims Can Be Pleaded in the Same Action

In a recent decision answering a question certified to it by the Third Circuit, the New Jersey Supreme Court held that claims brought under New Jersey’s Consumer Fraud Act (CFA) may be brought in the same action as claims brought pursuant to the Products Liability Act (PLA), provided each claim is based on distinct conduct. In Sun Chemical Corporation v. Fike Corporation and Suppression Systems, Inc., the Court explained that it is the nature of the actions—not the resulting damages—that determines when claims may be brought under either the CFA or the PLA. The Court clarified that CFA claims may be brought in instances where a party alleges “express misrepresentations — deceptive, fraudulent, misleading, and other unconscionable commercial practices,” while PLA claims are reserved for claims based upon “product manufacturing, warning, or design defects.” The claims in Sun Chemical arose out of the plaintiff’s purchase of an explosion isolation and suppression system from the defendant to be used to “prevent and contain potential explosions” in the plaintiff’s new dust collection system. Plaintiff’s federal court complaint alleged that on the first day it used the suppression system, a fire broke out in the dust collection system and while the alarm in the suppression system was activated, it was inaudible. Plaintiff alleged that, as a result, several...

Third Circuit Holds Solicitations to Purchase Products and for Participation in Surveys can be Advertisements Under the TCPA

On May 15, 2020, the Third Circuit in Fishbein v. Olson Research Group, Inc. held “that solicitations to buy products, goods, or services can be advertisements under the TCPA and that solicitations for participation in . . . surveys in exchange for [money] by the sender were for services within the TCPA” making such solicitations advertisements that fall within the TCPA’s ambit. This opinion comes just one year after the Third Circuit issued its precedential decision in Mauthe v. Optum, Inc., holding that, in order for a fax to be considered an advertisement under the TCPA, “there must be a nexus between the fax and the purchasing decision of an ultimate purchaser whether the recipient of the fax or a third party,” meaning that “the fax must promote goods or services to be bought or sold, and it should have profit as an aim.” The consolidated appeal in Fishbein arose from two District Court decisions, Fishbein v. Olson Research Group, Inc., which involved a fax offering the recipient money in exchange for participating in a medical study, and Mauthe v. ITC, Inc., which involved faxes that offered the recipient money in exchange for completing surveys. After applying the Third Circuit’s precedential opinion in Optum, the District Courts dismissed the plaintiffs’ cases under Federal Rule of...

Appellate Division Enforces Provision Prohibiting Class Arbitration

In Curiale v. Hyundai Capital America Inc., the New Jersey Appellate Division reversed an order denying a motion to compel arbitration by Hyundai’s financing company (“HCA”), based on an arbitration clause in a motor vehicle retail order. The Appellate Division rejected the trial court’s finding that the arbitration clause was ambiguous because it stated that the parties must arbitrate any claims and then explicitly stated that the provision bars “class action arbitration.” The Arbitration clause provided: AGREEMENT TO ARBITRATE ANY CLAIMS. READ THE FOLLOWING ARBITRATION PROVISION CAREFULLY, IT LIMITS YOUR RIGHTS, INCLUDING THE RIGHT TO MAINTAIN A COURT ACTION. The parties to this agreement agree to arbitrate any claim, dispute, or controversy, including all statutory claims and any state or federal claims, that may arise out of or relating to the sale or lease identified in this agreement. By agreeing to arbitration, the parties understand and agree that they are waiving their rights to maintain other available resolution processes, such as a court action or administrative proceeding, to settle their disputes. … The parties also agree to waive any right (i) to pursue any claims arising under this agreement including statutory, state or federal claims, as a class action arbitration, or (ii) to have an arbitration under this agreement consolidated with any other arbitration or...

Appellate Division Creates Split on Learned-Professionals Exception to New Jersey Consumer Fraud Act

In a recent opinion, Shaw v. Shand, the Appellate Division held that home inspectors are not “learned professionals” exempt from liability under the New Jersey Consumer Fraud Act (CFA). Instead, the court held that only professionals who have historically been recognized as “learned” based on the requirement of extensive learning or erudition are exempt under the CFA. In Shaw, the plaintiffs hired the defendant, a licensed home inspector, to examine a home for defects. The defendant wrote a report concluding that the property was built with professional workmanship, was made of quality materials, and would only require typical maintenance and upgrades. The plaintiffs purchased the property in reliance on that report. Soon after the plaintiffs made the purchase, however, the property’s front porch collapsed. Plaintiffs then learned that the roof, windows, and sliding glass doors all leaked and required complete replacement and that the driveway would need to be replaced as well. They then discovered that the house had a significant mold problem. At the time the Appellate Division decided Shaw, the plaintiffs had spent tens of thousands of dollars repairing those conditions, and expected to spend tens of thousands more. Defendant’s inspection of plaintiffs’ home was his first as a licensed inspector. As a licensed inspector, defendant was subject to the requirements set forth...

FOI-led: Supreme Court Restricts Public Access to Confidential Business Information

In Food Marketing Institute v. Argus Leader Media, the United States Supreme Court expanded the meaning of “confidential” information exempt from disclosure under Exemption 4 of the Freedom of Information Act (FOIA). In doing so, the Court reversed the decision of the Court of Appeals for the Eighth Circuit and definitively rejected the “competitive harm” requirement adopted by the D.C. Circuit in National Parks & Conservation Assn. v. Morton. Respondent Argus Leader Media filed a FOIA request with the United States Department of Agriculture (USDA), seeking the names and addresses of all retail stores that participate in a federal food stamp program known as SNAP. Argus Leader also sought each store’s annual redemption data from 2005 to 2010. The USDA declined to disclose store-level SNAP data based on Exemption 4 of FOIA, which precludes disclosure of “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” Argus Leader sued the USDA. The district court ordered disclosure based upon the failure to satisfy the “competitive harm” test, which requires a party to establish confidentiality by proving that disclosure is “likely … to cause substantial harm to [its] competitive position.” The Eighth Circuit affirmed the judgment. In a 6-3 decision delivered by Justice Gorsuch, the Court rejected the competitive harm test and...

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...

NJ Supreme Court Narrowly Construes Shareholder’s Right to Inspection of Corporate Records

In R.A. Feuer v. Merck & Co., Inc., the New Jersey Supreme Court affirmed the Appellate Division’s narrow construction of the scope of a shareholder’s right to inspect a corporation’s records under N.J.S.A. 14A:5-28 and the common law. In the underlying case, a Merck & Co, Inc. shareholder sought documents in order to elicit evidence that Merck acted wrongfully in its acquisition of another pharmaceutical firm. Merck appointed a “Working Group” to respond to the shareholder’s demand, which rejected the shareholder’s request for documents relating to the acquisition. Following this rejection, the shareholder sought twelve broad categories of corporate documents, including documents pertaining to the Working Group’s activities, communications, and formation; documents provided to the board regarding the target pharmaceutical firm and two of its drugs; and the board’s consideration of the shareholder’s demands and the Working Group’s recommendation. Merck disclosed pertinent minutes of the board and of the Working Group, but denied the remainder of the shareholder’s demand. The shareholder sued Merck, alleging entitlement to the documents under N.J.S.A. 14A:5-28(4), which permits a shareholder to compel the corporation to produce its “books and records of account, minutes, and record of shareholders,” and the common law. The trial court denied the shareholder’s request and the Appellate Division affirmed. In a per curiam decision, the New...

Supreme Court Further Restricts Class Arbitration Finding It Must be Unambiguously Authorized

In a 5-4 decision authored by Chief Justice Roberts, joined by Justices Thomas, Alito, Gorsuch, and Kavanaugh, the U.S. Supreme Court in Lamps Plus Inc. v. Varella held that courts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis. Lamps Plus Inc. v. Varella involved an employee who had filed a class action against his employer. Lamps Plus responded by seeking to compel arbitration on an individual rather than a classwide basis. The district court dismissed the case and compelled arbitration, but on a class basis. Lamps Plus appealed, and the Ninth Circuit upheld the district court’s decision. The Ninth Circuit’s reasoning hinged on the fact that the arbitration agreement was ambiguous about the availability of class arbitration. The Ninth Circuit thus distinguished Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662 (2010), arguing that in Stolt-Nielsen the parties had stipulated that the agreement was silent about class arbitration, whereas the parties had no such stipulation in Lamps Plus. Because the Ninth Circuit held that the agreement was ambiguous, the appellate court turned to California’s contra proferentem rule and held that this state law contract principle required the court to interpret the ambiguous language against the drafter—here, Lamps Plus. The Supreme Court reversed because the principle...

Supreme Court Holds That 14-Day Appeal Deadline Established by Rule 23(f) Cannot Be Tolled

On February 26, 2019, the Supreme Court unanimously held in Nutraceutical Corporation v. Lambert, that the 14-day deadline imposed by Federal Rule of Civil Procedure 23(f), seeking permission to appeal an order granting or denying class certification, cannot be tolled. After initially certifying a class, the District Court, on February 20, 2015, decertified the class after finding that common issues did not predominate among the class members. Pursuant to Rule 23(f)’s 14-day deadline, the plaintiff, Lambert, had until March 5, 2015 to seek permission to appeal. But, on March 2, 2015, Lambert orally informed the District Court that he would seek reconsideration and did not file his motion for reconsideration until March 12, 2015. Lambert’s motion for reconsideration was denied on June 24, 2015. Fourteen days after that, almost four months past his 14-day deadline, Lambert petitioned the Ninth Circuit seeking permission to appeal the District Court’s order decertifying the class. The Court of Appeals granted Lambert’s petition, finding that the 14-day deadline under Rule 23(f) should be tolled given the circumstances. Specifically, the Court of Appeals found that because Lambert had informed the court within 14 days that he would be seeking reconsideration, he acted diligently. The Supreme Court disagreed, however, and found that the 14-day deadline imposed by Rule 23(f) could not be...