It cost A-S Medication Solutions and its CEO $5,709,000 to learn two important lessons about the “prior express invitation or permission” requirements of the Telephone Consumer Protection Act. In a class action against AMS and its chief executive, the 7th U.S. Circuit Court of Appeals affirmed a summary judgment that imposed a TCPA penalty of $500 for each of the 11,418 faxed advertisements the company sent to customers of a business it acquired from Allscripts Inc.

First, consent from the Allscripts customers to receive “product information” by fax wasn’t sufficient to satisfy the TCPA. “A consumer’s statement that it gave permission to send ‘product information’ via fax, even on an ongoing basis, after purchasing products or services from a company cannot as a matter of law constitute prior express permission.” The prior consent “must explicitly convey that the consumer gives the advertiser ongoing permission to send ads via fax until such time as the consumer withdraws its consent.”

And second, even if customers gave Allscripts permission to send ads by fax, “prior express permission or invitation is not transferable under the TCPA.”

“The TCPA prohibits advertisers from sending advertisements via fax unless they have (1) an established business relationship with the recipient and follow certain requirements or (2) the recipient’s prior express permission or invitation. Given those requirements, it would seem odd if a company could solicit express prior permission to send fax advertisements, then transfer that permission to a completely different company who in turn may send advertisements with impunity until the consumer affirmatively terminates its previous permission. Indeed, such a practice could eviscerate the entire statutory scheme which is designed to protect consumers from receiving unwanted contact from unknown entities or individuals.” Physicians Healthsource v. A-S Medication Solutions, February 24, 2020).

Here are highlights of Judge Joel M. Flaum’s opinion on the first issue (with light editing and omissions not noted):

AMS concedes that the fax in question was an advertisement that lacked any kind of disclaimer explaining how to opt out of future faxes. Thus, it cannot rely on the TCPA’s established business relationship safe harbor (the so-called “EBR”), which requires, among other things, that the fax contain a notice informing the recipient of his or her ability to avoid future faxes and how to do so. See 47 U.S.C. Sec. 227(b)(1)(C)(iii), (b)(2)(D).

Consequently, AMS may avoid liability for the faxes only if it had prior express permission or invitation to send the fax in question from each of the recipients.

There is scant circuit precedent regarding what a defendant must put forward to show that it had “prior express invitation or permission.” Indeed, it appears our only substantive discussion of the topic came in the dicta of an opinion considering the propriety of class certification. See CE Design v. King, 637 F.3d 721 (7th Cir. 2011) (suggesting that a firm that affirmatively publishes its fax number in a trade publication has granted prior express permission to members of that trade association). Similarly, the Illinois courts, for example, appear to have only addressed the issue once as well. See Travel 100 Group v. Mediterranean Shipping, 889 N.E.2d 781 (Ill. App. 2008) (holding that, because plaintiff travel agency had authorized a trade group to disseminate its fax number after being explicitly informed that such dissemination would “enable suppliers to pay commissions and to market their products and services to” it directly, it had given prior express permission).

In this case, the district court relied on the Federal Communications Commission’s definition of “express permission.” See In Re Rules & Regulations Implementing the Telephone Consumer Protection Act, 18 FCC Record 14014 (2003). We are similarly bound to follow the FCC’s interpretation of a term where, as here, there is no appeal of the FCC’s interpretation.

In its 2003 order, the FCC explained that “express permission to receive a faxed ad requires that the consumer understand that by providing a fax number, he or she is agreeing to receive fax advertisements.” The FCC has explicitly found that “negative options,” in which a sender presumes consent unless advised otherwise, are insufficient to prove express permission.

In light of the FCC’s rules, neither the evidence regarding Allscripts’ general practice of getting permission before sending faxes in the course of its business (as testified to by Brian Moffett, an Allscripts executive), nor the fact that Allscripts customers could check a box within its customer database to opt out of receiving faxes, may support a finding of express permission.

Moffett’s testimony provides no insight as to whether any customer ever consented to receive fax advertisements. And, as just explained, advertisers cannot rely on a recipient’s failure to “opt out” of receiving faxes to prove that it had prior express permission to send a fax advertisement. Thus, AMS must rely upon affidavits of customers asserting they gave Allscripts prior express permission to fax them ads.

These affidavits fall into three general categories. The first category includes statements suggesting that the individual or entity generally gave permission to receive faxes from Allscripts. As just explained, however, evidence of permission to generally send faxes does not establish prior express permission to fax ads.

Similarly, the second category includes post hoc statements that an individual would have given consent. These also fail because they do not show AMS had prior express permission to send the faxes in question.

The third and closest category includes statements that the affiants and their employers consented to receive “Allscripts’ product information” at the beginning of their business relationship with Allscripts. For example, an employee of one of Allscripts’ customers provided an affidavit attesting that after her employer bought some medication and software from Allscripts, she wanted information regarding them and thus consented to receive this information via fax. Similarly, AMS submitted several identical affidavits from other Allscripts customers stating that:

“I do not specifically remember receiving any particular faxes from Allscripts (or a predecessor) promoting its (or others’) products or services, but in general, I have consented to receiving such communications from Allscripts and others, in the past and currently as well.”

The district court found these uniformly “too thin to permit a reasonable jury to conclude that ‘consented,’ as used in the declarations, meets the legal definition of ‘prior express permission.’” Specifically, the court explained that the affidavits and other testimony (1) did not permit an inference that the recipient understood he or she was expressly giving, in advance, permission to send faxed advertisements and (2) did not describe the content of the faxes that the declarant purportedly consented to receive.

We agree.

First, at a general level, we must ask whether a consumer must renew its permission for every fax advertisement, or whether a consumer’s consent at one point in time gives ongoing consent. Both CE Design and Travel 100, as well as the FCC’s regulations, imply that a party may consent on an ongoing basis to faxed advertisements.

Given the impracticality of any other rule, we make our ruling explicit: Provided a customer gives consent in the manner described below, we will presume that the customer has given permission on an ongoing basis to fax advertisements.

The second and more challenging question is how that permission should be phrased. In light of the FCC’s explanation that, for prior express permission to be valid, “a consumer must understand that by providing a fax number, he or she is agreeing to receive fax advertisements,” we conclude that the consumer must affirmatively and explicitly give the advertiser permission to send it fax advertisements on an ongoing basis.

The invitation or permission cannot simply authorize a single, specific fax, or state that the consumer consented to receive faxed ads from the defendant in the past. Instead, it must explicitly convey that the consumer gives the advertiser ongoing permission to send ads via fax until such time as the consumer withdraws its consent.

This framework is both consistent with the FCC’s statements on the matter and conforms to the TCPA’s text. See, e.g., 18 F.C.C. Record 14129 (“For example, a company that requests a fax number on an application form could include a clear statement indicating that, by providing such fax number, the individual or business agrees to receive facsimile advertisements from that company. Such statement, if accompanied by the recipient’s signature, will constitute the necessary prior express permission to send facsimile advertisements to that individual or business.”).

With that rule in mind, the third category of affidavits does not demonstrate that the affiants gave prior express permission for faxed advertisements.

A statement explaining that a consumer agreed to receive “product information” via fax after purchasing some products or services from a company is not the same as agreeing to accept faxed advertisements. As the FCC and now we have explained, a recipient must specifically acknowledge that faxed advertisements will follow its consent to constitute prior express permission.

A consumer’s statement that it gave permission to send “product information” via fax, even on an ongoing basis, after purchasing products or services from a company cannot as a matter of law constitute prior express permission. (It would be a different matter if the affidavits explicitly suggested that consent included promotional materials or product information regarding products or services not yet purchased.)

Similarly, that one had consented to receive a fax advertisement in the past and would have consented to fax advertisements if asked again does not establish ongoing permission to send fax advertisements.

Thus, AMS has not shown that Allscripts had prior express permission to send faxes.