Consent is the most powerful weapon companies have against TCPA liability, and a recent Eleventh Circuit opinion illustrates how. In Gorss Motels, Inc. v. Safemark Systems, L.P., the Eleventh Circuit affirmed summary judgment where the plaintiffs consented to receive solicitations in their franchise agreements.
The background: Gorss and another company, E&G, operate hotels as franchisees of the Wyndham Hotel Group. In the franchise agreement, they agreed that Wyndham and its affiliates could offer assistance to the franchisees in purchasing items for their franchised hotels. In that same agreement, the franchisees included their fax numbers. Safemark, a company that provides safes to Wyndham franchisees, sent two faxes to Gorss, E&G, and more than 7,000 other recipients. Neither fax contained instructions about how to opt out of receiving future faxes. Gorss and E&G filed suit alleging TCPA violations and sought to certify two classes — one for each fax.
The district court first denied class certification, finding that individual issues of permission would predominate over common questions. That issue went up to the Eleventh Circuit on permissive appeal under Rule 23(f). But proceedings in the district court continued during that appeal, and the district court ultimately granted summary judgment for Safemark, finding that it had permission to send the faxes and that the solicited faxes did not need to include an opt-out notice.
The Eleventh Circuit panel unanimously affirmed. It concluded that the franchise agreement unambiguously gave Safemark permission to send faxes about items for purchase to be used in the plaintiffs’ hotels. In doing so, it disregarded the subjective understanding of one of the plaintiff’s agents, who testified that the faxes were not solicited. Instead of relying on a person’s subjective understanding, the Eleventh Circuit looked at the objective scope of the franchise agreement.
The court also addressed the effect of the repeal of the so-called “solicited fax rule.” The upshot is that the rule is a dead letter in the Eleventh Circuit. The rule formerly required that even solicited faxes include instructions for opting out (47 C.F.R. § 64.1200(a)(4)(iv)). But the Federal Communications Commission eliminated the rule by an order issued in November 2018, and that order was published in the Federal Register in March 2019. The Eleventh Circuit held that the elimination of the solicited-fax rule applies retroactively. It noted that the FCC had revoked the rule because courts of appeal had found it unlawful, and it found no reason why an unlawful rule should be enforced.
There are two TCPA takeaways:
- Gorss is another example of how useful effective consent can be as a defense in TCPA cases. In particular, it illustrates the value of broad consent (i.e., communications from a party or any of its affiliates) contained in the relationship-defining contract (i.e., the franchise agreement). Prudent companies may consider auditing their agreements to ensure that consent to receive communications is broadly drawn.
- This case also illustrates the value of consent at the class-certification stage, independent of the merits. While the Eleventh Circuit did not reach the certification issue, the district court denied class certification because of individualized issues relating to consent. A consent regime can force plaintiffs into taking individualized approaches to avoid the effect of written consent — such as relying on a class representative’s or putative class member’s subjective understanding of what the consent covered. These attempts at avoiding unambiguous consent can make class certification impossible.
Gorss also presents two interesting points of appellate practice:
- In a quirk of appellate opinion writing, Judge William Pryor also authored a concurrence to his unanimous panel opinion, and both of the other judges on the panel joined it, too. The concurrence addresses an issue raised in the appeal but not necessary to the result —namely, the meaning of the Hobbs Act’s grant of “exclusive jurisdiction” to the circuit courts to adjudicate the validity of certain agency orders (28 U.S.C. § 2342). The concurrence takes the position that the Hobbs Act narrowly forbids parties from directly challenging the validity of agency orders, but does not require that district courts treat such orders as binding precedent. The concurrence also invites a challenge to existing Eleventh Circuit cases that take a broader view of the Hobbs Act and outlines problems with that broad view. The 14-page concurrence addresses issues too detailed for this post, but it is gratifying to see judges writing opinions that clearly state “this part is law” and “this part is dicta.”
- For practitioners in the Eleventh Circuit: The panel opinion and concurrence cite “Reading Law: The Interpretation of Legal Texts” by the late Justice Scalia and Bryan Garner seven times. Any book so prominently cited belongs on your shelf.