September 08, 2011
Lawyer Hit With $4.2 Million Judgment in Junk Fax Class Action -- Holtzman v. Turza
[Post by Venkat Balasubramani]
Holtzman v. Turza, 08 C 2014 (N.D. Ill. Aug. 29, 2011)
Apparently reports of the fax machine's death are greatly exaggerated. People still use fax machines.
Holtzman sued Turza for receiving unsolicited faxes. The court certified the lawsuit as a class action, and granted Holtzman's motion for summary judgment as to two issues: (1) the faxes in question were "advertisements" under the TCPA, and (2) the defendant would be liable for all faxes received on a "target list."
After conducting some discovery, Holtzman files a motion for summary judgment, largely directed at damages. Holtzman takes the deposition of Michael Richard, the CFO of VillageEDocs, which is a parent company to MessageVision, the service used by Turza to send out the faxes. Richard testifies as to the approximate number of faxes he sent out on behalf of Turza, what portion of faxes sent to the "target list" were reliably transmitted, and how much he billed Turza. It turns out MessageVision sent out 8,430 faxes. At $500 in statutory damages per fax, this amounts to a damage award of $4,215,000.
Turza raised a few arguments in opposition to Holtzman's motion, but the court isn't very impressed by any of them. Turza argued that because Richard is a CFO and not a technical expert, his testimony as to fax transmission rates was not reliable. The court finds this objection curious, since Turza himself relied on the "until-now unquestioned integrity of MessageVision's system to compute the number of successful fax receipts that resulted in the charges paid by [Turza]." Turza relied on new testimony from his expert but the court finds this evidence untimely and insufficient to create a factual dispute as to Richard's testimony. Turza also argued that there was no evidence that the class members did not consent to the faxes, but this was contradicted by Turza's own testimony that he did not procure consent from any of the recipients. Turza also raises the issue of whether class members owned the fax machines to which the faxes were sent. The court says that this does not preclude summary judgment, although it's something that may bear on the individual damage award to class members.
Finally, Turza also sought to decertify the class and argued that the imposition of a $4 million award violates Due Process. As to the certification issue, Turza argues that there are other methods to adjudicate the dispute, namely that the individual class members could pursue their own claims in small claims. The court says that even if a chunk of class members have sizeable claims (e.g., those amounting to $10,000 or more) this would not mean that a class action "would be less fair or efficient than individual litigation." Since statutory damages are at issue, TCPA claims are "arguably best suited" to class resolution.
With respect to Turza's due process argument, the court notes that the class award is not excessive because of the risk of Turza having to declare bankruptcy. Turza had insurance policies in place, and these policies should cover the awards at issue. The bulk of the bill will be borne by the insurance company and not by Turza at all!
This would be a pretty unremarkable case, except for the fact that the faxes were actually newsletters that were written on behalf of a lawyer. Here is Eric's previous post on the case: "Ghostwritten Attorney Newsletter is an "Ad" for TCPA Junk Fax Law Purposes." Professional courtesy aside, it's pretty scary that sending out a bunch of faxes which contained editorial but ghostwritten content can put you at risk of an award for four million dollars. Fortunately for Turza, his insurance company may end up footing the bill.
A big takeaway from this case is that it's risky behavior to send out marketing communications to lists that you have bought. I guess it also illustrates one of the many perils of using ghostwritten content.