TCPA Litigation Update — TCPA Fax Circuit Split in the Second and Third Circuits

A TCPA circuit split has erupted on the East Coast over faxes. The Second Circuit recently held that a fax asking recipients to participate in a market research survey in exchange for money does not constitute an “unsolicited advertisement” under the TCPA. Katz v. Focus Forward, LLC, No. 21-cv-1224 (2d Cir. Jan. 6, 2022). In contrast, the Third Circuit has 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.” Fischbein v. Olson Research Group, 959 F.3d 559, 564 (3d Cir. 2020). Acknowledging Fischbein, the Second Circuit concluded that the Third Circuit mistakenly relied “on an encyclopedia definition of what constitutes a ‘commercial transaction’ . . . rather than focusing on the definition of ‘advertisement’ that the TCPA and FCC regulations provide.”

In Katz, the plaintiff (a medical services company) claimed the defendant sent two faxes seeking participants for its market research surveys in exchange for an “honorarium of $150,” and filed a putative class action alleging violations of the TCPA. The district court agreed with the defendant that an unsolicited faxed invitation to participate in a market research survey is not an “unsolicited advertisement” under the TCPA and dismissed the case.

The TCPA defines an “unsolicited advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s prior express invitation or permission.” On appeal, the Second Circuit found that the defendant’s faxes asking participants to take part in a market survey “plainly do not advertise the availability of any of those three things, and therefore cannot be ‘advertisements’ under the TCPA.” The Second Circuit added, “[t]his is not to say that any communication that offers to pay the recipient money is thereby not an advertisement. One could imagine many examples of communications, including faxed surveys, offering the recipient both money and services, that might incur liability under the TCPA.”

The implications of this case, and the circuit split, are widespread for research companies in search of participants to engage in surveys. We will keep watching this space in the event the Supreme Court is asked to step in and provide finality on the issue.

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