Marketing research company M/A/R/C Research has decisively prevailed against a junk fax lawsuit, setting a great precedent for the insights industry. A federal court ruled in favor of the research company on March 16, 2020, with significant details in its order that will benefit any other researchers who might potentially face such TCPA litigation.
A veterinary hospital had sued M/A/R/C Research for faxing them a research invitation that included a respondent incentive, a supposed violation of the Telephone Consumer Protection Act (TCPA) restrictions on sending an unsolicited advertisement by fax. The plaintiff also claimed that the fax illegally "converted" their office supplies by using up paper and toner, and thus they asserted that the case should be allowed to be pursued at the state level as well.
The court ruling in this most recent case was warmly welcomed by the primary association representing the marketing research and data analytics industry.
“We applaud M/A/R/C Research for confronting in court such bogus trial lawyer schemes against bona fide research,” said Howard Fienberg, VP Advocacy for the Insights Association. “It is much easier to just settle the case and let the plaintiff slink away to find another victim, so IA appreciates when researchers stand and fight.”
This litigation was both an individual lawsuit and an attempted class action, with significant dollars potentially at stake. Merrill Dubrow, CEO of M/A/R/C Research, urged his fellow insights company leaders to not run away from such fights.
“If this happens to you, if you get sued for conducting real research, don’t settle right away,” Dubrow said. “On the deterrence side, if this court decision can prevent even one more insights company from being targeted, one more company having to burn through time and resources defending themselves, it will have all been worth it.”
On March 16, 2020, the U.S. District Court of Eastern Michigan conclusively rejected the plaintiff’s claims against M/A/R/C Research: “Is a facsimile transmission in the form of an opinion survey, seeking information but offering for sale no product, service, or anything else, an “advertisement” the purveying of which is prohibited by federal law? The court, in agreement with Defendant, says “no.” Secondarily, what if the fax also contains an offer of nominal compensation (e.g., with a $25 gift card)? Does the survey become an advertisement? Again, “no.” Thirdly, does Michigan law recognize a claim for conversion of property based upon the unsolicited use of a sheet of paper and a small amount of printer toner to produce the fax image? This court says “we do not know,” and therefore declines to exercise jurisdiction in the absence of a federal claim.”
The court explained further that: “An analysis of Sandusky [a similar case cited] and the statutory and regulatory text of the TCPA demonstrates that surveys are not advertisements subject to liability. Surveys, such as the one Defendant proffered to veterinarians employed at Plaintiff’s firm, are offering no good or service ‘for sale.’ … Requests to submit information regarding preferences, beliefs, and attitudes instead enhance knowledge and understanding. Whether they are used to develop better goods or services used by market participants, relied on to develop market research on the trends and developments in an industry for investment or news reporting, or compiled with other indicators to develop more clearly a picture of the national or international economy, they are not sent to merely rake a percentage off the top of monetary receipts. They strengthen economic understanding and allow for better functioning markets. … Of course, surveys can be conducted by for-profit commercial entities. That however does not convert a survey into an advertisement for sale and thus a commercial transaction under the TCPA.”
The court order also cited the law and regulations directly, noting that the "statutory text of the TCPA and the text of FCC implementing regulations reinforce the finding that surveys are not advertisements."
Although the FCC has dealt with sugging (a sales/marketing communication masquerading as research) in the context of “pretext,” the court decision pointed out that “the FCC purposefully chose not to state that all surveys are advertisements under the TCPA and explicitly narrowed its analysis to surveys sitting in for commercial offers. Implicit in the FCC’s analysis is the assumption that surveys generally are not advertisements under the TCPA.” The court also pointed out that “the FCC has found surveys outside the bounds of the TCPA in the context of telephonic communications.”
Respondent incentives were specifically highlighted as "ad-ons... sweeteners to incentivize higher response rates," and the decision stated that "merely offering benefits to participation does not transform Defendant’s survey into a commercial offer to promote a product as opposed to gathering information."
See the full court decision in Exclusively Cats Veterinary Hospital, P.C. v. M/A/R/C Research, L.L.C., 2020 U.S. Dist. LEXIS 45181, Case No. 19-11228, United States District Court for the Eastern District of Michigan, March 16, 2020: “OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS AND DENYING AS MOOT PLAINTIFF’S MOTION TO CERTIFY CLASS."
Insights Association members can also review a pair of dueling fax litigation decisions from 2019, IA's guide to faxes and avoiding litigation, and a recent FCC order on online fax services that should also help deter or defeat some junk fax lawsuits.
This information is not intended and should not be construed as or substituted for legal advice. It is provided for informational purposes only. It is advisable to consult with private counsel on the precise scope and interpretation of any laws/regulation/legislation and their impact on your particular business.