7th Circuit Remands TCPA Appeal to Resolve Fax Consent Issue

The 7th U.S. Circuit Court of Appeals remanded to U.S. District Court for Northern Illinois in Chicago the appeal of two hardware stores, Bay Hardware and Lunada Bay Hardware, that had argued unsuccessfully in the lower court that their supplier, Generac Power Systems, inundated them with fax solicitations in violation of the Telephone Consumer Protection Act.

The district court concluded Thursday that the hardware stores consented to receiving the faxes and granted summary judgment to the defendant supplier. “Because we find a dispute of fact as to consent, we remand to the district court for further proceedings,” said the 7th Circuit decision (dockets 21-2858 and 21-3393).

As the 7th Circuit had noted when an earlier version of the same case was before the court, whether it’s good public policy to use the “cumbersome and costly process of adjudication” to resolve disputes about annoying fax ads is for Congress to decide, said the decision. “Congress has not told us otherwise, and so we continue to diligently decide cases as they travel from district court to appellate court and back again, as this one illustrates,” it said.

Bay Hardware and Lunada Bay Hardware belong to the Do It Best (DIB) hardware industry cooperative and wholesaler for access to better prices from vendors, plus advertising and buying assistance, said the decision. Generac supplied goods to DIB, and hired an independent sales and marketing firm, Comprehensive Marketing, that sent faxes to DIB-member hardware stores advertising deals on Generac products as part of its role, it said.

When Bay Hardware and Lunada Bay Hardware sued Generac for TCPA wrongdoing, Generac’s defense cited the TCPA’s exemption for faxes sent where the recipient gave prior express invitation or permission, in writing or otherwise. As evidence of consent, Generac cited the agreement the stores signed when they joined the DIB cooperative.

The district court ultimately granted summary judgment for Generac, saying the contract between the stores and DIB “evinced an agreement by the former to receive faxes, including from vendors,” said the decision. Prior express consent “is an affirmative defense on which Generac bears the burden of proof,” it said.

The “implication” of the language in the agreement is that DIB will provide marketing materials for the member hardware store to distribute to their customers, in exchange for payment, said the decision. “In other words, the intended audience for the advertising” that Bay Hardware and Lunada Bay Hardware opted into when they joined DIB was the store’s retail customers, not the stores themselves, it said. The agreement between the stores and DIB certainly didn’t give Generac permission to send fax advertising, it said. But since Generac wasn’t a party to the agreements, “we have concluded that express permission under the TCPA is not transferable, as it is the sender itself who must procure that permission,” it said.

In sum, “we can rule out the contract language as sufficient evidence” that the stores gave Generac affirmative and explicit prior express permission to receive the faxes, said the decision. But our conclusion about the contract language, “does not end the matter,” it said. Generac alleges it received permission in a “second and more direct fashion” when a Comprehensive Marketing representative phoned one of the stores to ask for and got a fax number to receive ongoing promotions, it said.

The contract language couldn’t have been interpreted to mean the stores granted anyone permission to send them fax advertisements, said the decision. But because there’s a “material factual dispute” about whether one of the stores gave Comprehensive Marketing permission to send it faxes, “we remand for further proceedings,” it said.