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Junk faxes. They’re not as worthless as they sound. At least not for lawyers who are using a 13-year-old federal law to parlay them into a lucrative niche practice. Since late 2003, Springfield, N.J.’s Robert Blau has filed about 100 junk fax lawsuits under the Telephone Consumer Protection Act of 1991, which provides for strict liability and the prospect of up to $1,500 per fax in statutory damages. The TCPA, 47 U.S.C. §227, prohibits unsolicited commercial faxes without the recipient’s “prior express invitation or permission” and requires that all facsimile machines made after Dec. 20, 1991, print on each page the date and time sent, the sender, and the sender’s telephone number to identify senders. The act creates a private right of action in state courts for the greater of the actual monetary loss or $500 per violation, which can be increased to as much as $1,500 where the violation was knowing and willful. State attorneys general are also authorized to sue in federal court. Like other lawyers filing junk fax claims, Blau did not go looking for TCPA work. It found him. He learned of the TCPA from a Missouri lawyer whose practice is almost completely devoted to such claims. With his own firm, Blau & Blau, inundated with unwanted faxes, and hearing the same from clients — some of them “madder than hell” — he let them know there was something they could do about it. Most of Blau’s TCPA cases were filed on behalf of existing clients and all but one were filed in Special Civil Part. None have gone to trial. Most were resolved by settlement, the rest on summary judgment. He has won some and lost some, and his wins have ranged from $250 to $10,000. West End, N.J., solo Ryan Betts also got into TCPA litigation by accident. He says his first efforts were on behalf of his father, who was aggravated by the faxes flooding his construction business. When Betts asked around, he discovered friends and clients who were also fed up. TPCA cases now make up about half his practice, and he hopes to get more. Betts also found ignorance of the law among defense lawyers, one of whom threatened him with sanctions for filing the suit. Once he explains the law, they tend to “calm down” and take the case more seriously, says Betts, who has sued companies in Florida, Pennsylvania, and New York, as well as in New Jersey. In-state or out, “the tricky part is trying to find them,” he says, adding he turns down a lot of cases where “I can tell they won’t go anywhere” because he can’t tell who the sender is or if it appears it will be too costly to pursue. He has recovered an extra $500 for a total of $1,000 on a single fax, based on what he refers to as “a header violation,” where the fax lacks identifying information. Christine Vanek of Lyndhurst, N.J.’s Scarinci & Hollenbeck, which has handled several TCPA cases, says, “The typical defense is ‘we didn’t send the fax,’ which puts the onus on the plaintiff to show who sent it.” It helps if the client saved the unwanted fax, she adds. Glenn Chulsky, a Dover, N.J., solo with five or six active TCPA cases, says most faxes sent to his clients lack identifying information and therefore require added effort to track them down. On top of that, many defendants default, he says. On the plus side, the “knowing and willful” standard for additional damages is easy to meet, requiring only that the faxer did not dial a wrong number, he says. Chulsky points out that the TCPA differs from standard treble damages clauses in that it does not require trebling but merely authorizes up to $1,500 in damages. A judge who finds a willful and knowing violation could theoretically boost the award by a mere $1, to $1,501. The TCPA does not provide for fees, but lawyers have been adding Consumer Fraud Act claims to complaints, in the hope of winning fees under that statute. The argument is that unwelcome faxes constitute an unconscionable business practice under the fraud statute, says Blau. “What could be more unconscionable than conversion of someone else’s property for advertising purposes?” he asks, referring to the use of a recipient’s ink, paper, and machine time. Other lawyers have tackled junk faxing on a grander scale, filing class actions with mixed success. Judge Arthur D’Italia in Hudson County, N.J., denied class certification in a TCPA case, Levine v. 9 Net Avenue Inc., L-7965-99, which was affirmed on appeal. But last year, in Spectracom v. Cell Direct Corp., CAM-C-116-02, Judge Theodore Davis in Camden County, N.J., granted class status. A confidential settlement reached in May requires defendants Fax.com and Cell Direct to pay a combined $23,000 in legal fees and stop sending unsolicited faxes hawking phone, cell phone, and satellite phone products and calling plans to New Jersey machines. Defense lawyers, not surprisingly, call the law a plaintiffs lawyers’ gold mine. “Congress did not envision class actions being utilized for these types of cases,” says defense lawyer Jeffrey Greenbaum, of Newark, N.J.’s Sills Cummis Epstein & Gross. The TCPA was meant to provide a quick and simple nuisance-type remedy for individuals, rather than “a club” that could drive a company out of business. “Unfortunately, the way the law is drafted, it does give people the impetus to make this into a little cottage industry,” says defense lawyer Michael Quiat, of Uscher, Quiat, Uscher & Russo, who earlier this year persuaded Judge Bruce Gaeta of Bergen County, N.J., to dismiss a TCPA suit as time-barred. “It ends up being a way to extract money from modestly sized businesses based on things they aren’t really responsible for.” FEDERAL LAW, STATE COURT The TCPA created an odd hybrid — a private right of action in state court based on federal law. That led to litigation over whether jurisdiction was exclusive in state courts or whether private claims could also be brought in federal court. The U.S. Court of Appeals for the 3rd Circuit held, in Erienet v. Velocity Net, 156 F.3d 513 (1998), that state courts are the sole forums for private TCPA suits. Defendants have repeatedly failed in attempts to overturn the TCPA on First Amendment grounds. Two federal courts of appeals have upheld the law — Missouri v. Blast Fax Inc., 323 F.3d 649 (8th Cir. 2003), and Destination Ventures v. FCC, 46 F.3d 54 (9th Cir. 1995). Blau himself was a party to a First Amendment challenge filed in New Jersey’s federal court earlier this year. After Blau sued real estate paralegal Renee Simon for sending junk faxes offering her services to his office, her husband, West Orange, N.J., solo Theodore Simon, sued Blau, seeking a declaration that the TCPA violates the First, Fifth, 11th, and 14th amendments and an injunction against its enforcement in New Jersey. The federal suit, Simon v. Blau, 04-Civ.-1542, was dismissed on July 22, after Blau and Simon settled the state court action. Looming changes in TCPA law threaten to alter the landscape and possibly render the suits less attractive. The Federal Communications Commission for years interpreted the TCPA as making exception for established business relationships, reasoning that fax recipients who transacted business with the sender in the prior 18 months could be deemed to have consented. Blau points out two problems with that reading: First, an established business relationship exception for junk faxes was dropped from an earlier version of the TCPA. Second, even if the existence of a business relationship implies consent, the TCPA refers to express permission. Last year, the FCC announced rule changes that would have eliminated the established business relationship exception but delayed the changes until Jan. 1, 2005, at the request of legislators in the face of strong business opposition. The Junk Fax Prevention Act of 2004, which would codify the business relationship exception, passed the House of Representatives by a voice vote on June 20 and is now in the Senate. It has no time limit, but authorizes the FCC to adopt rules limiting the duration of the exception to five to seven years after the last transaction. Mary P. Gallagher is a reporter at the American Lawyer Media newspaper New Jersey Law Journal , where this article first appeared.

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