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January 9, 2017

CT attorneys, businesses seek legal payday with junk faxes

PHOTO-Illustration | FabrikaSimf, and C!

Ever get to work and find a stack of unsolicited advertisements waiting in the fax machine?

Most office dwellers likely toss them into the recycling bin without a second thought. But an increasing number of companies, including some in Connecticut, are trying to turn the annoyances into a legal payday.

Under federal law, it is illegal in most circumstances to send an unsolicited fax advertising commercial products or services. There are similar rules governing text messages, robocalls and other advertising communications, and each pestersome pitch could be costly to the sender.

The 1991 Telephone Consumer Protection Act (TCPA), which established the national do-not-call registry, allows for damages of $500 per fax, call or text. Penalties can spike as high as $1,500, if an aggrieved party can prove in court that the sender “willfully or knowingly” violated the law.

Additional provisions enacted by Congress in 2005 have led to an increasing number of lawsuits — and some multimillion-dollar judgements and settlements — in federal courts across the country.

One Norwalk doctor, for example, won a $2.5 million judgement in 2011 against WebMD, which was accused of sending unsolicited faxes. And a former Cromwell hotelier filed a dozen TCPA lawsuits last year, including one against United Technologies subsidiary Otis Elevator in late October, according to court records.

Nationally, one of the largest settlements involved Capital One, which had to pay more than $75 million in 2014 for making autodialed and prerecorded calls to debtors.

TCPA lawsuits are a growing niche in the consumer legal field, according to WebRecon LLC, which provides data on consumer-financial litigation to creditors and collection agencies.

There were a record 4,499 TCPA plaintiffs involved in federal lawsuits across the country between Jan. 1 and Nov. 30 in 2016, WebRecon said, up nearly 33 percent over the same period in 2015.

Plaintiff volumes breached 1,100 in 2012 and grew to 3,710 in 2015, according to WebRecon data.

Sergei Lemberg, a Stamford consumer attorney who has represented TCPA plaintiffs, said legal activity has been increasing as the Federal Communications Commission (FCC) has tightened the rules in recent years, causing both consumers and attorneys to take notice.

“More people are getting caught in the crosshairs,” Lemberg said.

While some may not see much harm in a few faxes, Lemberg said the impacts can add up over time in the form of staff time and printer ink and maintenance.

“What harm does one junk fax do? Maybe not much,” he said. “What harm can 15 to 20 faxes a day do? It can be a lot.”

Lemberg said companies and marketers would be wise to be well versed in the TCPA's provisions.

“They need to ensure they don't break the rules, because the penalties can be high,” he said.

CT hotelier throws hat in TCPA ring

Among the growing number of TCPA lawsuits — often proposed class actions — are a dozen filed in 2016 by Steven J. Gorss, who sold his 112-room Cromwell/Middletown Super 8 in August for $2.7 million. Gorss alleges violations of TCPA's fax provisions between 2012 and 2015.

Many of the defendants in Gorss' complaints offer products and services that target the hospitality industry, including an exercise equipment provider in Indiana, a safe manufacturer in Florida and a telephone maker in Colorado.

Otis Elevator is also named as a defendant in one of the suits.

Gorss alleges that the various companies sent him between one and eight unsolicited faxes during the approximately four-year period.

“It's a nuisance and he's doing something about it by retaining us,” said Brian Wanca, managing partner at Illinois-based Anderson + Wanca, one of the law firms representing Gorss. “Recipients shouldn't have to pay for someone else's advertising.”

Wanca said his firm has certified more than 150 TCPA plaintiff classes in more than 20 states.

As of December, two of Gorss' suits had been voluntarily dismissed, at his request, which could indicate a private settlement was reached.

The complaints reveal the kinds of violations consumer attorneys hunt for when reviewing fax cases — often missing language on the documents that are required by the TCPA and FCC.

Specifically, the faxes must contain instructions on how to opt-out of receiving future notices.

The FCC said in 2006 that faxes must contain opt-out language even if recipients had previously consented to receiving them. That rule was upheld by the FCC in 2010, but the agency, acknowledging some contradicting language in its rules, has since granted retroactive TCPA waivers to more than 130 companies.

But a number of plaintiffs — including some represented by Wanca — are appealing the FCC's waiver-granting to the D.C. appeals court.

Oral arguments took place in November, and consumer attorneys are hoping for a ruling that invalidates FCC waivers or otherwise stops them from protecting fax senders from legal liability in ongoing lawsuits.

As of press time, the court had not yet ruled on the appeal.

Also on Gorss' legal team is New York attorney Aytan Bellin, whose firm has filed at least two dozen class action TCPA suits in Connecticut since 2010.

Bellin settled at least three TCPA suits between 2009 and 2011 on behalf of Dr. Roger Kaye, a Norwalk physician who also practices law, according to court records.

The largest settlement garnered $2.5 million in 2011 from WebMD. The others settled for $57,000 and $5,000, respectively.

Of those sums, court records show that Kaye's attorneys received the lion's share, while Kaye, as lead plaintiff, received more than $10,000. He declined to comment for this story.

Bellin deferred comment to Wanca, who said cases usually involve a “ typically modest time commitment” for lead plaintiffs, who must sit for depositions, answer discovery, attend case conferences and complete other duties.

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