Opinion
Civil Action 2:20-cv-00840-LPL
11-01-2021
KENNETH A. THOMAS MD, LLC., Plaintiff, v. ALLEGHENY MARKETING GROUP, INC., and STRYKER CORPORATION, Defendants.
W. Scott Hardy Judge
REPORT AND RECOMMENDATION ON DEFENDANT STRYKER'S MOTION TO DISMISS ECF No. 41
LISA PUPO LENIHAN UNITED STATES MAGISTRATE JUDGE
I. RECOMMENDATION
The Court concludes that, drawing all reasonable inferences in its favor, Plaintiff has failed to state any claim against additional Defendant Stryker under the Telephone Consumer Protection Act, 47 U.S.C. § 227, as a matter of law, and recommends that the pending Motion to Dismiss should therefore be granted. In addition, Plaintiff has failed to sufficiently plead this Court's personal jurisdiction over Stryker, and the Court would therefore be inclined to find it lacking. That determination is, however, unnecessary to a ruling on the motion.
II. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Kenneth A. Thomas MD, LLC (“Plaintiff”), a physician's Connecticut limited liability company, first brought this putative nationwide class action against Defendant Allegheny Marketing Group, Inc. (“AMG”), a global marketing research firm and Pennsylvania corporation. ECF No. 1 (June 5, 2020 Complaint). Plaintiff then amended its Complaint to add Stryker Corporation (“Stryker”), a Michigan medical technology corporation, as an additional Defendant. ECF No. 28 (January 13, 2021 First Amended Complaint). Plaintiff's action is brought under the Telephone Consumer Protection Act (the “TCPA”), 47 U.S.C. § 227, which makes it unlawful for any person to “use any telephone facsimile machine, computer or other device to send, to a telephone facsimile machine, an unsolicited advertisement . . . .” 47 U.S.C. § 227(b)(1)(C).
This action is one of many brought by Plaintiff and its counsel as putative class actions seeking damages for unsolicited faxes under the Telephone Consumer Protection Act. See ECF No. 42 at 7 n. 3.
Plaintiff was given leave to amend its Complaint based on its submission of:
(1) the ruling in Fischbein v. Olson Research Group, Inc., 959 F.3d 559, 564 (3d Cir. 2020) (holding that “[a]n offer of payment in exchange for participation in a market survey is a commercial transaction, so a fax highlighting the availability of that transaction is an advertisement under the TCPA"); and
(2) a definition of a liable "sender" under the TCPA as "the person or entity on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement." 47 C.F.R. Section 64.1200(f)(10).ECF No. 27. The ultimate failure of those authorities to ground a claim against Stryker is addressed herein.
Plaintiff alleges that on July 11, 2017, AMG sent an unsolicited fax inviting participants to a research study being conducted by AMG regarding surgical lighting and ceiling mounted equipment booms. The fax was on AMG letterhead, sent by AMG and addressed to “Surgeons”. It invited Plaintiff to participate in a 15-20 minute web-based survey at www.amgsurvey.com. The fax indicated that a qualifying and participating surgeon would receive a $30 Amazon.com eGift card in consideration for his/her time. The fax did not name Stryker or advertise Stryker's goods or services.
Plaintiff asserts that the fax was sent by AMG “on behalf of” Stryker, advertised the commercial availability and quality of “their” goods and services, was “commercial” and in violation of the provisions of the TCPA. Plaintiff claims actual damages, including the loss of use of fax machines during the time required to receive, review and route the unauthorized faxes, as well as increased labor expenses.
Plaintiff brings a putative class action pursuant to Federal Rules of Civil Procedure 23(b)(2) and 23(b)(3). The Class is intended to include all persons and entities in the United States who from four years prior to the filing of the initial complaint in this action through class certification, (1) received a facsimile regarding a research study, (2) on their fax machine, (3) sent from AMG on behalf of Stryker, and (4) for whom AMG claims to have obtained consent in the same manner AMG claims to have obtained consent from Plaintiff, or AMG does not claim to have obtained consent. Plaintiff requests an order certifying the Class, and duly appointing Plaintiff and its Counsel. an order declaring that Defendants' actions were in violation of the TCPA, as well as an order enjoining Defendants from future TCPA violations, and an award of statutory damages, pre-judgement interests and costs.
On March 5, 2021, Defendant Stryker filed and briefed its pending Motion to Dismiss, seeking dismissal on the basis of Plaintiff's failure to state a viable claim against Stryker as an additional Defendant in this action, and failure to allege a basis for this Court's exercise of personal jurisdiction. ECF No. 41 and 42. Plaintiff's Brief in Opposition, ECF No. 45, was followed by Stryker's Reply, ECF No. 51. The matter having been fully briefed, is ripe for disposition.
III. APPLICABLE STANDARD OF REVIEW
The United States Court of Appeals for the Third Circuit has summarized the standard to be applied in deciding motions to dismiss filed pursuant to Rule 12(b)(6):
Under the “notice pleading” standard embodied in Rule 8 of the Federal Rules of Civil Procedure, a plaintiff must come forward with “a short and plain statement of the claim showing that the pleader is entitled to relief.” As explicated in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), a claimant must state a “plausible” claim for relief, and “[a] claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Although “[f]actual allegations must be enough to raise a right to relief above the speculative level, ” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), a plaintiff “need only put forth allegations that raise a reasonable expectation that discovery will reveal evidence of the necessary element.” Fowler, 578 F.3d at 213 (quotation marks and citations omitted); see also Covington v. Int'l Ass'n of Approved Basketball Officials, 710 F.3d 114, 117-18 (3d Cir. 2013).Thompson v. Real Estate Mortg. Network, 748 F.3d 142, 147 (3d Cir. 2014). See also Plastic Surgery Ctr., P.A. v. Aetna Life Ins. Co., 967 F.3d 218, 229 (3d Cir. 2020) (“The court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the [nonmoving party]'s favor.”).
IV. ANALYSIS
A. Plaintiff Has Failed to State a Claim
Plaintiff alleges that: (1) AMG is a global market research firm that provides market research services for, among others, medical technology companies; (2) AMG sends unsolicited faxes to doctors and affiliates on behalf of its clients, which faxes advertise the surveys that AMG is conducting as part of its research services for its clients' commercial purposes. ECF No. 28 at 2. It further alleges that “The faxes sent by AMG on behalf of Stryker advertised the commercial availability and quality of their goods and services and were commercial in nature. Therefore, Defendants' faxes are advertisements under the TCPA.” Id. at 8 (emphasis added). Beyond its conclusory allegations and use of the plural pronoun, the closest Plaintiff's complaint comes to a specific supportive factual allegation against Stryker is that “on information and belief, Stryker sold or intended to sell [the medical products which were the subject of the web-based survey] to surgeons.” Id. at 3. The Complaint is therefor insufficient to state a viable claim (i.e., one raising a “reasonable inferenced that the defendant is liable for the misconduct alleged”) as a matter of law. Twombly, supra.
Plaintiff does not dispute that the fax does not mention Stryker, was not sent by Stryker, and - most importantly - does not advertise the commercial availability or quality of any property, goods, or services sold by Stryker. And, as Stryker points out, any allegation to the contrary would be belied by the fax itself, which controls. ECF No. 42 at 10 (citing Vorchheimer v. Philadelphian Owners Ass'n, 903 F.3d 100, 112 (3d Cir. 2018) (when a plaintiff's “own exhibits contradict [his] allegations in the complaint, the exhibits control”) (citations omitted). Rather, Plaintiff reiterates its conclusion that, as there was a contract between Defendants for market survey data/assessment, AMG's unsolicited faxes were sent “on Stryker's behalf”. But as Stryker notes, these allegations are insufficient to support a reasonable expectation of Plaintiff's ability to establish a claim. And the law - despite its evolution in Plaintiff's favor - in this Circuit and subsequent to the date of the complained-of 2017 fax - simply does not support Plaintiff's theory of Stryker's potential liability. Plaintiff cannot expand the TPCA and Third Circuit precedent even further to maintain a claim against Stryker.
More specifically, the TCPA makes it “unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States . . . to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement[.]” 47 U.S.C. § 227(b)(1)(C). But the TCPA “does not prohibit all unsolicited faxes, just advertisements.” Mauthe, M.D., P.C. v. Optum Inc. (“Optum”), 925 F.3d 129, 134 (3d Cir. 2019); Mauthe v. Nat'l Imaging Assocs., Inc. (“NIA”), 767 Fed.Appx. 246, 249 (3d Cir. 2019) (same). The TCPA defines “advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services[.]” 47 U.S.C. § 227(a)(5).
In two faxed-survey cases decided in 2019, the Third Circuit concluded that “to be an ad, the fax must promote goods or services to be bought or sold, and it should have profit as an aim” and that “the fax must convey the impression . . . that a seller is trying to make a sale[.]” Optum, 925 F.3d at 133; NIA, 767 Fed.Appx. at 249. As to Stryker, at a minimum, the fax does none of these. Indeed, at that time, the Third Circuit's decisions were clear that claims under the TCPA which did not meet these solicited sales transaction criteria could not be maintained even against the direct sender of the fax (e.g., a commercial enterprise soliciting survey responses in its own market). See Optum, 925 F.3d at 134-35 (faxes sent to conduct market survey research for the purposes of improving [defendant's own] company operations that do not promote the sale of any products or services are not TCPA violations); NIA, 767 Fed.Appx. at 249 (affirming dismissal where fax requesting survey response “did not tell plaintiff that he could purchase healthcare management services from defendant sender or direct him to a website for the purposes of making a purchase”).
Nor does it:
(1) notify a potential buyer that he or she can purchase a product, goods, or services from the sending entity or perhaps another seller, or (2) induce or direct a willing buyer to seek further information through a phone number, an email address, a website or equivalent method for the purposes of making a purchase.Optum and NIA, supra.
See also Robert W. Mauthe, M.D., P.C. v. Millennium Health LLC, 2020 WL 2793954, at *12 (E.D. Pa. May 29, 2020) (“The appropriate inquiry under the TCPA is not whether there is some ancillary commercial benefit to [defendant], but whether the message is an advertisement which tends to propose a commercial transaction.”).
More recently, however, Federal courts have divided as to whether market research entities, such as AMG, may be found in violation of the TCPA as the sender of unsolicited faxes which offer compensation for participation in a research survey. Thus in 2020 the Third Circuit held in favor of a broader interpretation of the TCPA, reasoning that “[a]n offer of payment in exchange for participation in a market survey is a commercial transaction, so a fax highlighting the availability of that transaction is an advertisement under the TCPA.” Fischbein v. Olson Research Group, Inc., 959 F.3d 559, 564 (3d Cir. 2020)). To be clear, the Fishbein Court held that (1) offering compensation for participation in a market survey “converted the interaction into a commercial transaction”, and thus (2) a research group's fax soliciting participation/“advertising the availability” of that transaction is subject to the provisions of the TCPA. Id. at 564. Plaintiff's assertions to the contrary notwithstanding, this later decision simply does not ground a claim under the TCPA against Stryker under the facts alleged. There was no transaction whatsoever between Plaintiff and Stryker. See ECF No. 42 at 13. This Court concurs in the movant's well-presented conclusion that “[i]f a market research company . . . chooses to send unsolicited fax advertisements to improve its product, the TCPA does not extend liability to those who use or purchase that product.” Id. at 9.
The Circuit concluded that (1) a marketing entity is offering to buy (2) the services of a survey participant (3) through which it may obtain a profit via its ultimate provision of the resultant market analysis to its client. Id. (marketing “firms are not offering compensation out of the goodness of their hearts-they do so for a commercial purpose, to increase the response rate of their surveys, i.e. they can buy more of what they desire”). Cf. Id. at 562 (“It is [the] offer of payment to the recipients that transforms the solicitation of responses to market surveys into advertisements.”)
Dismissal of this action as to Stryker does not require that this Court address the important of Defendant AMG's assertion that “[i]n July 2017, at the time of the sending of the fax in question, the relevant case law and existing precedent of the United States Court of Appeals for the Third Circuit concluded that faxes like the fax in question herein were not unsolicited advertisements.” ECF No. 25 at 3 (citing Optum, 925 F.3d 129 (3d Cir. 2019)) (plaintiff “must ‘show that the sender is trying to make a sale' by demonstrating a nexus between the fax and the purchasing decisions of an ultimate purchaser . . .”); id. at n. 3 (noting that it was not until almost three years after the contested fax that the Third Circuit held that “solicitations for participation in the surveys in exchange for cash were within the TCPA”).
In requesting leave to amend, Plaintiff also pointed this Court to the regulatory provisions of 47 CFR § 64.1200(f)(10) to assert that Stryker is also a “sender” because it is an entity “on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement.” ECF No. 21 at 3. As the regulatory history and case law evidence, however, this provision was implemented to incorporate the liability of “fax-broadcasters”, i.e., companies hired to “transmit[] messages to telephone facsimile machines . . . for a fee”. To bring faxes from these broadcaster-senders (who are transmitting a hiring entity's commercial solicitation/”advertisement”) within the TCPA, the FCC expanded the term “sender” to include “the person or entity on [(1)] whose behalf a facsimile unsolicited advertisement is sent or [(2)] whose goods or services are advertised or promoted in the unsolicited advertisement.” 47 C.F.R. 64.1200(f)(10). See ECF No. 42 at 21-22 (providing case citations demonstrating that the regulatory intent is to place liability on the entity whose product/service is being promoted even if the fax is transmitted “on [its] behalf” by another). Plaintiff's contention, premised on the regulatory provision, that Stryker is liable because AMG “sent a fax on Stryker's behalf” within the meaning of § 64.1200(f)(10) is therefore patently insufficient to state a viable claim under the facts alleged. Cf. Id. at 17 n. 5 (citing cases in which “courts have imposed vicarious liability . . . when companies hire fax broadcasters to advertise their products or services”). Cf. also City Select Auto Sales, Inc. v. David Randall Assocs., Inc., 2014 WL 4755487, at **1-2 (D.N.J. Sep. 24, 2014) (roofing company hired an advertising business to market its “roofing services through [a] fax broadcasting program.”).
ECF No. 42 at 17 (“Plaintiff does not (and cannot) allege Stryker hired AMG Research to fax Stryker's advertisement or marketing materials or to otherwise advertise Stryker's goods and services. The fax does not mention Stryker, Stryker's products, Stryker's services, Stryker's website, or provide a means to contact Stryker. Rather, the fax questionably embodies only AMG Research's offer to complete its research study for a $30 honorarium.”) (citations omitted). See also ECF No. 51 at 5 (“Nor does Plaintiff suggest Stryker controlled or directed the creation, approval, preparation, or transmission of AMG's faxes, or that Stryker was even aware AMG sent faxes offering $30 gift cards.”); id. at 2 n. 1 (noting that the Interrogatories reflect that “Stryker was not involved in sending faxes, Stryker did not prepare or approve their content, and there was ‘no opportunity or nexus for any participant to purchase any products or services' from Stryker.”) (citing ECF 22-1 at Nos. 5, 6, 7).
To the extent Plaintiff relies on City Select in support of its claim against Stryker, the Court notes that the opinion is inapposite. The City Select Court observed that there was “no dispute that the fax transmissions advertised Defendants' commercial roofing services.” City Select, 2014 WL 4755487 at *7; id. at *5 (“Indeed, the disputed facsimiles solely concern David Randall's roofing services, and nowhere advertise the goods, services, or products of any other individual or entity.”).
Nor can Stryker be held liable for AMG's alleged violation of the TCPA on any other ground. As the movant notes, even were the Court to conclude that the subject fax was an advertisement of Stryker's products or services, which the Court expressly does not, common-law agency rules would apply to whether it might be held responsible for AMG's transmission. Conclusory allegations do not suffice, and Plaintiff does not plead any fact plausibly suggesting that AMG served as Stryker's agent. See supra; see also ECF No. 42 at 19 n. 12 (discussing differing agency-factor tests adopted by Circuits as to liability of entity whose products/services were advertised); id. (noting FCC's adoption of general common law agency principles of vicarious liability, previously adopted by Seventh Circuit in TCPA cases) (citing In re Ankin Gump Strauss Hauer & Feld LLP, 2020 WL 5747205, at *3-4 (FCC Decl. R. Sep. 21, 2020)); ECF No. 51 at 5 (noting that theory of agency requires more than passive permission, and Plaintiff fails to plead facts suggesting either control or direction of AMG's relevant activities by Stryker).
ECF No. 42 at 24:
“Agency is the fiduciary relationship that arises when one person (a ‘principal') manifests assent to another person (an ‘agent') that the agent shall act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents so to act.” Restatement (Third) of Agency § 1.01 (2006); Castle Cheese, Inc. v. MS Produce, Inc., 2008 WL 4372856, at *8 (W.D. Pa. Sept. 19, 2008) (The “principal's right to control the actions of the agent is a hallmark of an agency relationship.”).
Plaintiff can no more overcome the obstacles to a claim against Stryker by introducing the term “Stryker's research study” into its Brief in Opposition, ECF No. 45, than by its earlier use of the pronoun “their” in reference to the products/services putatively being advertised in the AMG survey. ECF No. 45; ECF No. 28. Finally, this Court, like Stryker, is “aware of no authority that expands TCPA liability to companies that do not themselves conduct market research by fax, but instead merely purchase such research from a company that does.” ECF 42 at 19.
B. Plaintiff States No. Claim, and For the Same Reasons, the Court is Inclined to Conclude that It Lacks Specific Personal Jurisdiction Over Stryker
As the Court concludes that Plaintiff has failed to state a claim against Stryker, who should therefore be dismissed as an additional Defendant in this action, the Court need only note that it would be inclined to conclude that it lacks personal jurisdiction over Stryker for the same reasons. Neither that determination nor an evidentiary hearing to further consider personal jurisdiction is, however, necessary to the recommendation that Stryker be dismissed from this action.
Plaintiff does not allege that the Court lacks general jurisdiction, which would require that Stryker's operations in Pennsylvania be “so substantial and of such a nature as to render the corporation at home in th[e] State” and subject to suit therein. Daimler AG v. Bauman, 571 U.S. 117, 118 (2014) (citing Int'l Shoe Co. v. Wash., 326 U.S. 310, 318 (1945)).
Plaintiff does contest that this Court has specific personal jurisdiction. In short, however, for the same reasons that Plaintiff has failed to state a claim against Stryker with regard to the violation of the TCPA by a market research survey fax - the fax allegedly sent by (and inviting a commercial transaction with) Pennsylvania corporation Defendant AMG and received by Connecticut LLC Plaintiff - Plaintiff has not alleged the minimum contracts with Pennsylvania sufficient to an exercise of specific personal jurisdiction over Stryker.
Specific jurisdiction is present when the claim is related to and arises out of a defendant's “minimum contacts” with the forum such that it should reasonably anticipate being haled into court there. IMO Industries, 155 F.3d at 259; see also Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001). The Court concurs with Stryker's further analysis in this regard:
The Third Circuit has adopted a three-part test to determine whether specific jurisdiction exists. First, “the defendant must have ‘purposefully directed [its] activities' at the forum.” O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 317 (3d Cir. 2007) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). Second, “the litigation must ‘arise out of or relate to' at least one of those activities.” Id. (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). Third, “if the prior two requirements are met, a court may consider whether the exercise of jurisdiction otherwise ‘comport[s] with fair play and substantial justice.'” Id. (quoting Burger King Corp., 471 U.S. at 476). Ultimately, “what is necessary is a deliberate targeting of the forum, ” Shuker v. Smith & Nephew, 885 F.3d 760, 781 (3d Cir. 2018) (quoting O'Connor, 496 F.3d at 317), that results in the alleged injury giving rise to the litigation. See Burger King Corp., 471 U.S. at 472; see also Walden, 571 U.S. at 284 (Plaintiff's claims “must arise out of contacts that the ‘defendant himself' creates with the forum State.”). Here, Plaintiff is a Connecticut limited liability company . . . that allegedly received a one-page fax advertisement in Connecticut ..... [T]he fax was sent by AMG Research, an independent Pennsylvania corporation . . . .ECF No. 42 at 22. Such unilateral activity on the part of AMG Research alleged to have caused the Plaintiff's injury does not give rise to specific personal jurisdiction over Stryker. See O'Connor, 496 F.3d at 317 (“[T]he unilateral activity of those who claim some relationship with a nonresident defendant is insufficient.”) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). ECF No. 42 at 23. To be clear, Plaintiff has failed to plead a reasonable basis for a causal relationship between its putative injury by AMG's unsolicited fax and Stryker's market research contract with AMG (as by the advertisement of Stryker's products/services in that fax or sufficient factual allegations of agency). The injury cannot therefore be deemed to “arise from” or “result” from that contract, nor can Stryker's contact with the State be said to have been “with regard to the substance of [Plaintiff's] cause of action” (i.e., with regard to AMG's allegedly unlawful fax).
Plaintiff proposes in its Brief in Opposition that Stryker is subject to specific jurisdiction because its agent, AMG, resides in Pennsylvania. See ECF 45. But not only does Plaintiff fail to plead agency, see discussion supra, “the mere fact of agency is insufficient.” In re Diisocyanates Antitrust Litig., 2020 WL 1140245, at *6 (W.D. Pa. Mar. 9, 2020). Plaintiff has not, as with his claim of agency as a basis for his TCPA claim, “established a degree of control”, i.e., here, one that warrants the exercise of personal jurisdiction.” Id. Absent a viable TCPA claim against Stryker (as on, e.g., regulatory or common law agency grounds), that Stryker contracted with AMG to provide market research services simply does not suffice to create specific personal jurisdiction over Stryker as to the action sub judice. See ECF No. 51 at 7.
As indicated above, Stryker's amenability to specific personal jurisdiction in an action for, e.g., breach of contract as between itself and AMG, does not determine its amenability to personal jurisdiction in Plaintiff's present action before the Court.
V. CONCLUSION/RECOMMENDATION
The Court concludes that, drawing all reasonable inferences in its favor, Plaintiff has failed to state any claim against Defendant Stryker for the reasons aforesaid. In addition, Plaintiff has failed to sufficiently allege this Court's personal jurisdiction over Stryker and the Court would be inclined to find it lacking. That determination - or an evidentiary hearing thereon - is, however, unnecessary to a ruling on the motion. The Court respectfully recommends that Defendant Stryker's Motion to Dismiss, ECF No. 41, be granted on the basis of Plaintiffs failure to state a claim as a matter of law.
In accordance with the Federal Magistrate Judge's Act, 28 U.S.C. § 636(b)(1)(B) and (C), and Rule 72.D.2 of the Local Rules of Court, the parties are allowed fourteen (14) days from the date of service of this Report and Recommendation to file written objections thereto. Any party opposing such objections shall have fourteen (14) days from the date of service of objections to respond thereto. Failure to file timely objections will constitute a waiver of any appellate rights. 14