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L.L.C. v. Spectrum Pharmacy Products, Inc.

United States District Court, E.D. Louisiana

February 5, 2018


         SECTION “N” (2)

          ORDER & REASONS

          KURT D. ENGELHARDT, United States District Judge.

         Before the Court is a Motion to Dismiss for Lack of Subject Matter Jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) filed by the defendant, Spectrum Laboratory Products, Inc. (“Spectrum” or “Defendant”).[1] (Rec. Doc. 13). Plaintiff Casso's Wellness Store and Gym, LLC (“Casso” or “Plaintiff”) opposes the Motion. (Rec. Doc. 20). Spectrum filed a reply in support of its Motion (Rec. Doc. 26), which was followed by Casso's sur-reply (Rec. Doc. 32). Now, having considered the extensive submissions of the parties, the record, and the applicable law, the Court DENIES the Motion to Dismiss for Lack of Subject Matter Jurisdiction for the reasons stated herein.

         I. BACKGROUND

         Casso's Wellness Store and Gym, LLC (“Casso” or “Plaintiff”) filed a putative class action suit against Spectrum Laboratory Products, Inc. (“Spectrum” or “Defendant”) under the Telephone Consumer Protection Act of 1991 (“TCPA”), as amended by the Junk Fax Protection Act of 2005 (“JFPA”), seeking to recover damages for and to enjoin Spectrum's massive junk faxing campaign.[2] (Rec. Doc. 1, as amended by Rec. Doc. 9). In its Complaint, Casso defines the “Plaintiff Class” to include:

[A]ll persons and entities that are subscribers of telephone numbers to which within four years of the filing of this Complaint, Defendant sent facsimile transmissions with content that discusses, describes, promotes products and/or services offered by Defendant, and does not contain the opt-out notice required by 47 U.S.C. § 227(b)(1)(C)(iii), (b)(2)(D), (b)(2)(E), (d)(2) or 47 C.F.R. § 64.1200(a)(4)(iii)-(vii).

(Rec. Doc.1 at p. 6).

         Casso alleges that Spectrum violated the TCPA and the regulations promulgated under the Act by the Federal Communications Commission (“FCC”) by “blasting thousands of [unsolicited] junk faxes nationwide” to advertise their goods and/or services. (Rec. Doc. 1 at p. 4). “Plaintiff further alleges that Defendant has blasted junk faxes without complying with the Opt-Out Notice Requirements, in direct violation of the TCPA, JFPA and the FCC's regulations.” (Id.). Casso identifies Spectrum's alleged violations of the Act as including, but not limited to, the unsolicited facsimile advertisements sent to Casso's facsimile telephone number on December 21, 2016; February 14, 2017; February 17, 2017; and February 24, 2017.[3] (Id. at p. 9).

         Casso alleges that it has suffered the following damages as a result of Spectrum's unsolicited faxes:

Defendant has imposed disruption, annoyance and cost on Plaintiff. Among other things, these faxes tie up Plaintiff's telephone lines and facsimile machines, misappropriate and convert Plaintiff's fax paper and toner, require Plaintiff to sort through faxes to separate legitimate fax communications from junk fax advertisements and to discard the latter.

(Rec. Doc. 1 at p. 5). Additionally, Casso claims to have “suffered an injury in that it has also been deprived of its right, created by Congress, to receive the required opt-out notice disclosures on facsimile advertisements governed by the TCPA.” (Id. at p. 6). Casso, on behalf of itself and members of the purported class, seeks the issuance of a permanent injunction, as well as damages in the amount of $500 for each violation of the TCPA by Defendant, and trebled statutory damages for violations Defendant committed “willfully or knowingly.” (Id. at pp. 10-11).

         On July 31, 2017, Spectrum filed the instant Motion to Dismiss for Lack of Subject Matter Jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1) and Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), alleging that the Court lacks subject matter jurisdiction because Casso lacks standing to sue. (Rec. Doc. 13-1 at p. 11). Specifically, Spectrum contends that Casso's claim involves “a strictly statutory violation (the alleged failure to include a complaint opt-out notice), not a concrete injury sufficient to satisfy Article III standing requirements.” (Id. at p. 2). Spectrum argues that, in addition to failing to allege a sufficient injury in fact, Casso has also failed to show that the injury is traceable to the alleged TCPA violation. (Id. at p. 15). Spectrum further contends that the “safe-harbor exception” applies because the parties had an “established business relationship (“EBR”).” (See Id. at p. 17). Moreover, Spectrum moves for dismissal because it claims it sufficiently complied with the opt-out notice requirements by including the following language on the referenced faxes: “To unsubscribe please call us at 800.370.6231 or fax this special back to us with your fax number at 800.901.5518.” (Id. at p. 14).

         In its opposition, Casso contends that (1) the EBR defense fails as a matter of law because Casso has “never done any business with, voluntarily communicated with, or in any way asked to receive correspondence of any type from Spectrum;” and (2) even if the EBR defense applies, Spectrum's unsolicited facsimile advertisements do not comply with the TCPA's requirements for a valid opt-out notice. (See Rec. Doc. 20 at pp. 2-3). Further, Casso asserts that substantial compliance with the opt-out requirements is inadequate and not a defense to a violation of the TCPA. (Id. at p. 8). Next, Casso asserts that both of its claims-that Spectrum's junk fax campaign violates the TCPA because the faxes are unsolicited and fails to contain the statutorily-mandated opt-out language-confer Article III standing. (Id. at p. 4). Casso states that Paragraph 16 of its Complaint identifies the actual, concrete harm Casso suffered by being a target of Spectrum's junk fax campaign. (Id. at p. 11). Moreover, Casso argues that “courts have found, in the wake of Spokeo, that receipt of unsolicited fax advertisements satisfies Article III standing under the TCPA.” (Id. at p. 13).

         In reply, Spectrum reiterates the applicability of the EBR safe-harbor defense and that substantial compliance with the opt-out requirements is sufficient. (Rec. Doc. 26 at p. 2). Spectrum claims the parties had an established business relationship based on prior business dealings between Spectrum and OncologyRX, LLC, a company formerly owned by Mike Casso (also the owner of Casso's Wellness Store & Gym, LLC). (Id. at p. 3). Spectrum argues that this relationship applies to Casso's Wellness Store & Gym, LLC because both companies were owned by Mike Casso and Mike Casso chose to utilize the same fax number for his subsequent company. (Id.) Moreover, Spectrum argues that the language included on its faxes “conveys the essence of the required information” and that at least one court has deemed substantial compliance satisfactory as a defense. (Id. at pp. 4-5). Spectrum asserts that the applicability of the EBR defense strips Casso of a concrete injury ...

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