Gorss Motels, Inc. v. Lands' End, Inc.

997 F.3d 470

GORSS MOTELS, INC., individually and on behalf of all others similarly situated, Plaintiff-Appellant,

v.LANDS’ END, INC., Defendant-Appellee.^*

Docket No. 20-589-cv

August Term, 2020

United States Court of Appeals, Second Circuit.

Argued: December 9, 2020

Decided: May 13, 2021

Glenn L. Hara, Anderson + Wanca, Rolling Meadows, IL, for Plaintiff-Appellant.

Daniel P. Tighe (Joshua N. Ruby, on the brief), Donnelly, Conroy & Gelhaar, LLP, Boston, MA, for Defendant-Appellee.

Before: Cabranes, Lynch, and Carney, Circuit Judges.

Gerard E. Lynch, Circuit Judge:

The Telephone Consumer Protection Act ("TCPA") prohibits the sending of unsolicited fax advertisements. This appeal requires us to determine the contours of the TCPA's affirmative defense for fax advertisements that are sent with the recipient's "prior express invitation or permission." 47 U.S.C. § 227(a)(5). Plaintiff-Appellant Gorss Motels, Inc., complains of three faxes it received in 2015 and 2016. At the time, Gorss was operating a franchised Super 8 Motel, a brand owned by non-party Wyndham Hotel Group, and the advertisements were for products approved by Wyndham for use in Wyndham-branded hotels and sold by Defendant-Appellee Lands’ End, Inc., a Wyndham-approved supplier.

Gorss filed a putative class action complaint against Lands’ End under the TCPA, on behalf of itself and other Wyndham-branded motels that received the faxes. The district court (Victor A. Bolden, J. ) granted Lands’ End's motion for summary judgment, concluding that the faxes Gorss received were not unsolicited advertisements that could give rise to TCPA liability because Gorss had given "prior express invitation or permission" to receive them.

On appeal, Gorss argues that the district court erred in granting summary judgment to Lands’ End and denying class certification, because it improperly concluded that Gorss had given consent to receive fax advertisements through its franchise agreements with Wyndham. In the alternative, Gorss argues that even if it did give permission to receive fax advertisements, that permission extended only to Wyndham, and not to Lands’ End. We disagree on both points.

We begin by addressing whether Gorss has standing, and conclude that it does. Proceeding to the merits, we further conclude that Gorss gave "prior express invitation or permission" to receive faxes from Wyndham and its affiliates offering products from Wyndham-approved suppliers such as Lands’ End for use in franchised motels. Finally, we reject Gorss's contention that its permission did not extend to the faxes at issue here. We conclude that Gorss agreed to receive precisely the type of fax – ones offering products for use in its motel sold by Wyndham-approved suppliers – that it complains of here. Accordingly, we affirm the judgment of the district court.

BACKGROUND

I. Statutory Framework

As relevant here, the TCPA makes it illegal "to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement," except in certain limited situations. 47 U.S.C. § 227(b)(1)(C). An "unsolicited advertisement" is defined as "any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission, in writing or otherwise." Id. § 227(a)(5). The statute contains a safe harbor provision, permitting the sending of unsolicited advertisements where (1) the "advertisement is from a sender with an established business relationship with the recipient"; (2) "the sender obtained the number of the telephone facsimile machine through ... the voluntary communication of such number, within the context of such established business relationship ... or ... a directory, advertisement, or site on the Internet to which the recipient voluntarily agreed to make available its facsimile number for public distribution"; and (3) the "advertisement contains a[n] [opt-out] notice" meeting specific requirements laid out in the statute. Id. § 227(b)(1)(C)(i)-(iii).

The TCPA establishes a private right of action through which consumers can "recover for actual monetary loss from such a violation, or ... receive $500 in damages for each" unsolicited fax. Id. § 227(b)(3)(B). Treble damages are authorized for willful or knowing violations. Id. § 227(b)(3). The Federal Communications Commission ("FCC") has authority to prescribe regulations to implement the TCPA. Id. § 227(b)(2).

II. Factual Background

In 1988, Gorss Motels, a Connecticut corporation owned by Steven Gorss, entered into a franchise agreement with Super 8 Motels, a brand owned by Wyndham Hotel Group, to operate a Super 8-branded motel in Cromwell, Connecticut. As part of the original franchise agreement, Gorss "agree[d] to purchase from [Wyndham], or from such other vendor as [Wyndham] may approve from time to time" certain supplies and materials for the motel. J.A. 307. In 2009, Gorss and Super 8 amended the 1988 franchise agreement to extend its term to 2014.

On September 10, 2014, Gorss entered into a new franchise agreement (the "2014 Franchise Agreement") to operate the franchise for an additional twenty years. The 2014 Franchise Agreement, as in the earlier agreement, contained provisions regarding approved vendors and suppliers for the motel. Specifically, it provided:

You will purchase or obtain certain items we designate as proprietary or that bear or depict the Marks, such as signage, only from suppliers we approve. You may purchase other items for the Facility from any competent source you select, so long as the items meet or exceed System Standards. ...We may offer optional assistance to you with purchasing items used at or in the Facility. Our affiliates may offer this service on our behalf. We may restrict the vendors authorized to sell proprietary or Mark-bearing items in order to control quality, provide for consistent service or obtain volume discounts. We will maintain and provide to you lists of suppliers approved to furnish Mark-bearing items, or whose products conform to System Standards.

J.A. 309-10, quoting the 2014 Franchise Agreement at §§ 3.10, 4.4.

In connection with the 2014 Franchise Agreement, Gorss also received a Franchise Disclosure Document. The disclosure explained that a Wyndham affiliate, Worldwide Sourcing Solutions, Inc. ("WSSI"), would be offering "goods and services" sold by approved suppliers to franchisees and that "Wyndham would be paid a commission based on" purchases that the franchisees made from approved suppliers. J.A. 310-11. The disclosure further explained the approved supplier program as follows:

To support the purchasing efforts of our franchisees we and/or WSSI negotiate purchasing terms, including price, volume discounts and commissions on a range of products and services. ... In connection with this program, we and/or WSSI identify certain suppliers of products and services who are then designated as "Approved Suppliers." Under the Approved Supplier program, franchisees may purchase products and services directly from these Approved Suppliers through our electronic e-procurement system or through more traditional means.

J.A. 312.

Finally, as part of the renewal application process and in the 2014 Franchise Agreement, Gorss provided its fax number to Wyndham. That was not the first time that Gorss gave Wyndham its fax number; Gorss "periodically provided [its] fax number to Wyndham as part of the franchisor/franchisee relationship," including in 2010, as part of the renewal process in 2014, and again in 2015. J.A. 319-21. Throughout Gorss's relationship with Wyndham, Gorss received thousands of pages of faxes advertising the products of Wyndham-approved suppliers sent to the number it had provided to Wyndham. Gorss did not indicate to Wyndham at any point that it wished to stop receiving these faxes.

On October 28, 2014, Defendant-Appellee Lands’ End entered into an agreement with WSSI. Lands’ End was designated an approved supplier and authorized to sell its products to Wyndham franchisees in exchange for a commission to Wyndham. After the agreement was executed, Wyndham recommended that Lands’ End use its fax broadcasting service to advertise to franchisees. Lands’ End sent Wyndham a draft fax advertisement offering branded uniform apparel, which Wyndham edited to include a disclaimer. Although the disclaimer included a sentence stating that recipients could "opt out from future faxes," by calling or emailing Wyndham at the email address or telephone number provided, it did not contain any additional opt-out information. J.A. 327-28. Wyndham asked its third-party vendor, Western Printing, to send the fax to franchisees. Western Printing, in turn, subcontracted the sending of the Fax to another third party, WestFax, Inc. The Lands’ End fax was sent to Gorss and other franchisees on January 12, 2015. Two additional Lands’ End fax advertisements were sent to franchisees in the same manner on June 15, 2015, and May 16, 2016, respectively. The June 2015 fax did not contain the opt-out language included in the first fax; the May 2016 fax did.

On August 4, 2016, Gorss sold the Cromwell motel building to new owners, terminating the franchise agreement. Since the sale, Gorss has filed class action complaints against more than twenty Wyndham-approved suppliers, based on fax advertisements it received while it was operating a Wyndham-franchised motel.

III. Procedural Background

On January 4, 2017, Gorss filed a class action complaint against Lands’ End in the District of Connecticut, based on the faxes advertising Lands’ End products that it received in 2015.¹ The complaint pleaded claims under the TCPA and Connecticut's junk fax statute, Conn. Gen. Stat. § 52-570c. On April 5, 2019, after discovery, Gorss moved to certify a class. On June 26, 2019, Lands’ End moved for summary judgment.

On January 16, 2020, the district court granted Lands’ End's ...