Marketing is an essential activity for any small business. But it is important to make sure your efforts to promote the business do not land you in legal hot water. Many marketing activities are regulated by Florida and the federal government, and it is your duty to ensure you (and your employees) follow the law.
Palm Beach Golf-Center Boca, Inc. v. John G. Sarris, D.D.S., P.A.
Even a seemingly harmless act like sending a fax can lead to big legal headaches. One Florida dentist is learning that lesson now. The dentist hired a marketing manager to promote his practice. The marketing manager, in turn, paid an outside company $420 to send advertisements via fax machine to more than 7,000 businesses.
One of those potential customers was a golf equipment store in Palm Beach. They were not happy with the fax—so much so they file a federal class action against the dentist on behalf of everyone who received the unsolicited advertisements. A federal judge dismissed the lawsuit last year, but recently a three-judge panel of the U.S. 11th Circuit Court of Appeals in Atlanta said the case could proceed.
You might wonder how anyone could make a federal case out of a one-page fax. The answer lies in the Telephone Consumer Protection Act of 1991, a federal law which actually prohibits the sending of unsolicited commercial faxes. Anyone who receives such a fax may sue and recover $500 in damages from the sender.
As the 11th Circuit explained, the law is designed to prevent the “occupation of the recipient’s telephone line and fax machine.” This may sound quaint in the age of e-mail and the Internet, but the law remains valid. As long as the plaintiffs can prove the defendant send the unsolicited faxes, they are entitled to damages, even if the plaintiffs actually suffered no measurable loss to their own businesses.
The 11th Circuit also allowed the plaintiffs in this case to proceed with a separate claim based on “conversion,” a principle of Florida common law. Conversion occurs whenever someone wrongfully exercises control over the property of another. Here, the plaintiffs allege the defendant basically took possession of their fax machines—albeit for a minute or less—and “converted” their ink and toner to produce the unsolicited advertisement.
On this issue, the appeals court was divided. The majority said what happened here could constitute conversion. One judge disagreed. He argued that an unsolicited fax no more “converts” a recipient’s fax machine than an telemarketing call converts a phone line, or spam converts an Internet connection. Still, it should be noted the majority only said the plaintiffs could pursue a conversion claim against the dental practice—it did not rule on the merits of the argument.
Do Not Make a Costly Mistake
The lesson here is be careful how you market your business. It may seem like a bargain to send out 7,000 faxes for less than $500—but not if you end up with a $3.5 million bill for violating federal law. Marketing, like all aspects of your business, carry legal obligations. If you need the advice of an experienced South Florida business attorney on the laws regarding marketing, or any other subject, contact John S. Sarrett today.