Aug. 27, 2013 – An Illinois attorney hired a marketing firm to develop and send “newsletters” via fax to hundreds of certified public accountants. However, those faxes did not include opt-out provisions, a violation of federal law.
Now, lawyer Gregory Turza is on the hook for $4.2 million, as the U.S. Court of Appeals recently upheld the award in Holtzman et al. v. Turza, No. 11-3188 (Aug. 26, 2013).
The Telephone Consumer Protection Act prohibits anyone from sending fax advertisements to those who don’t request them or don’t have an established business relationship with the sender. The law also requires allowable advertisements to include opt-out information telling the recipient how to stop receiving them in the future.
At Turza’s request, the marketing firm developed a “newsletter” that was sent via fax every week to certified public accountants. The newsletter, called “The Daily Plan-It,” included tips and information that would not be considered advertising on its own. Turza’s by-line was included, but he did not write or review the material.
However, in a space that took up 25 percent of the page, the newsletter also included Turza’s name, logo, address and practice areas. The Telephone Consumer Protection Act specifically prohibits sending material that advertises “commercial availability.”
“That 75% of the page is not an ad does not detract from the fact that the fax contains an advertisement,” wrote Chief Judge Frank Easterbrook for a three-judge panel.
More fatal to Turza’s case, according to the three-judge panel, was that the newsletter did not include the opt-out provision that is required by federal law.
“Turza’s faxes did not contain opt-out information, so if they are properly understood as advertising then they violate the Act whether or not the recipients were among Turza’s clients,” wrote Chief Judge Frank Easterbrook for a three-judge panel.
Individuals who violate the law are subject to a $500 fine, for each fax sent. The marketing firm, Top of Mind, hired another company to send the newsletter, and 8,430 faxes were successfully sent, as recorded by the company’s transmission log.
“It compiled information about which faxes were received, and by whom; no reasonable juror could conclude that these data are inaccurate,” Judge Easterbrook wrote.
While the appeals court upheld the $4.2 million award against Turza, is disagreed with the distribution scheme devised by the district court judge.
The district court awarded $16,000 to the representative plaintiff, Ira Holtzman, and $1.4 million for attorney’s fees and expenses. Class claimants would receive the rest, with any residue (unclaimed amounts) going to the Legal Assistance Foundation of Metropolitan Chicago. However, the appeals court noted that this case does not involve a settlement or a common-fund, and Turza may not be able to pay the entire amount.
“Once the court knows what funds are available for distribution, it should (if necessary) reconsider how any remainder will be applied,” wrote Judge Easterbrook, noting that a reconsideration of attorney fees may be necessary depending on available funds.
Turza argued that any residue should go back to him. The appeals court noted that “[m]oney not claimed by class members should be used for the class’s benefit to the extent that it is feasible,” and distributions to a judges’ favorite charity is disfavored.
