On June 3, 2015, in Sandusky Wellness Center, LLC v. Medco Health Solutions, Inc., the US Court of Appeals for the Sixth Circuit issued its first decision addressing the definition of advertisement as a matter of law under the Telephone Consumer Protection Act (TCPA) ( (6th Cir. June 3, 2015)). The court held that a fax does not qualify as an advertisement when the sender did not promote a product or service for sale or have a profit motive for sending the fax. The court's decision aligns with other court decisions that have addressed a similar question (see N.B. Indust., Inc. v. Wells Fargo & Co., 465 Fed. Appx. 640 (9th Cir. 2012)).

This dispute arose from two faxes that Medco Health Solutions sent to Sandusky Wellness Center in 2010. Medco, a pharmacy benefit provider that acts as an intermediary between health plan sponsors and prescription drug companies, provides services to health plan sponsors to help the plans offer more informed and less expensive prescription drug benefits to their members. As part of these services, Medco sends an updated list of medicines (a formulary) to healthcare providers like Sandusky.

The two faxes that Medco sent to Sandusky:

However, the faxes did not:

Sandusky sued Medco and alleged that it violated the TCPA, which prohibits parties from sending unsolicited advertisements to fax machines (47 U.S.C. § 227(b)(1)(C)). Medco moved for summary judgment and argued that the faxes were not advertisements as a matter of law because their primary purpose was informational rather than promotional. The US District Court for the Northern District of Ohio granted summary judgment to Medco.

The US Court of Appeals for the Sixth Circuit affirmed that district court's decision and held that Medco's faxes were not advertisements under the TCPA. This was the first time that this court of appeals addressed when a fax qualifies as an advertisement as a matter of law under the TCPA.

Under the TCPA, an advertisement is any material that advertises the commercial availability or quality of any property, goods or services (47 U.S.C. § 227(a)(5)). The court concluded that a fax is an advertisement (and subject to the TCPA) if both:

The court reviewed the evidence in this case and held that the faxes at issue were not advertisements because:

The court rejected Sandusky's arguments that:

Instead of viewing the faxes as advertisements, the court considered them to be purely informational and sent with a non-pecuniary interest. The court found that Medco sent the faxes merely to inform Sandusky what drugs its patients might prefer, based on Medco's formulary.

There can be a thin line between a purely informational fax and an advertisement. Faxes that are advertisements must comply with the TCPA's requirements, including the need to first obtain the recipient's consent before sending him a fax advertisement.

This decision clarifies what types of faxes are advertisements and are therefore subject to the TCPA. If a party sends a fax to promote a good or service for sale and with the intention of making a profit, it must comply with the TCPA. However, faxes that merely call products to the recipient's attention, but do not have a commercial motive (namely, soliciting business or making a profit) are not subject to the TCPA under the Sixth Circuit's holding.

To avoid liability, parties should carefully review this ruling, the TCPA and their own communications with third-parties to determine when and how they must comply with federal advertising laws.

For more information on federal laws regulating fax advertisements, see Practice Note, Direct Marketing: Fax.

For more general information on the TCPA and other federal telemarketing laws, see Article, Understanding Federal Telemarketing Regulations.