Motels v. A.V.M. Enters., Inc.

GORSS MOTELS INC. Plaintiff, v. A.V.M. ENTERPRISES, INC., et al. Defendants.

3:17-CV-01078 (KAD)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

MARCH 26, 2021

MEMORANDUM OF DECISION

RE: CROSS MOTIONS FOR SUMMARY JUDGMENT (ECF NOS. 90 & 92)

Kari A. Dooley, United States District Judge:

Plaintiff Gorss Motels Inc. ("GMI") brings this case under the Telephone Consumer Protection Act of 1991 ("TCPA"), as amended by the Junk Fax Prevention Act of 2005 ("JFPA"). 47 U.S.C. § 227. GMI alleges that Defendant A.V.M. Enterprises, Inc. ("A.V.M.") sent six unsolicited facsimile advertisements to GMI in violation of the TCPA. The Court previously denied GMI's motion for class certification. Pending before the Court are the parties' cross motions for summary judgment.

For the reasons set forth in this decision, A.V.M.'s motion is GRANTED and GMI's motion is DENIED.

FACTUAL BACKGROUND & PROCEDURAL HISTORY

GMI is the former corporate owner of a Super 8-branded motel and a franchisee of Wyndham Hotel Group ("Wyndham"). Steven Gorss is the former president of the company. To become, and then maintain status as, a Super 8-branded motel, GMI entered into a series of franchise agreements. After first becoming a Super-8 franchisee in 1988, GMI signed an extension to the company's original franchise agreement in 2009 and a renewed franchise agreement in 2014. Before entering into the 2014 Franchise Agreement with Wyndham, GMI was required to complete and sign a Franchise Application Form, which included the company's contact information and fax number, and to sign off on Franchise Disclosure Documents, which included information about franchise standards and the mechanism by which GMI could purchase certain goods.

The 2014 Franchise Agreement also included a Property Improvement Plan, or "PIP," that mandated certain updates to GMI's franchise. Specifically, the PIP required GMI to, among other things, make updates to the hotel's breakfast area, bed sets, draperies, and case goods. The PIP also stated that Wyndham would provide its vendors with GMI's contact information.

A.V.M. is a Wyndham-approved supplier of "soft" goods, which includes items such as bedding, drapes, personal paper products, small fixtures, small appliances, case goods, and other supplies. A.V.M. became part of Wyndham's supply chain as an approved supplier in 2009, after signing an agreement with Wyndham-affiliate Worldwide Sourcing Solutions, Inc. ("WSSI"). WSSI is the entity through which Wyndham operates the approved supplier program.¹ With certain exceptions, Wyndham did not require its franchisees to purchase their operational materials through approved suppliers, and A.V.M. was not an exclusive supplier. A handful of suppliers provided the same types of product as A.V.M.

Nevertheless, Wyndham negotiated with suppliers, including A.V.M., to support the purchasing efforts of Wyndham franchisees, and Wyndham collected a commission for sales made by approved suppliers through Wyndham's systems. Wyndham also worked with A.V.M. and its other approved suppliers to create advertisements for broadcasting to Wyndham franchisees via fax. Wyndham arranged to send the fax advertisements through a third-party company using arecipient list generated and provided by Wyndham. A.V.M. does not have GMI's fax number in A.V.M.'s system.

Between June 15, 2015, and May 16, 2016, GMI received six faxes advertising A.V.M.'s products. All six of these advertisements include descriptions and prices for goods implicated by the PIP. Five of these six faxes contain a reference to Wyndham.

GMI sold its interest in the Super-8 franchise location at issue on May 24, 2016, and GMI, as an incorporated entity, brought its lawsuit against A.V.M. as a class action on June 29, 2017. After a hearing, the Court (Bolden, J.) denied A.V.M.'s motion to dismiss on February 2, 2018.² The Court denied GMI's motion for class certification on September 10, 2019.

STANDARD OF REVIEW

The standard under which courts review motions for summary judgment is well-established. "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" if it "might affect the outcome of the suit under the governing law," while a dispute about a material fact is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Significantly, the inquiry being conducted by the court when reviewing a motion for summary judgment focuses on "whether there is the need for a trial—whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250. As a result, the moving party satisfies his burden under Rule 56 "by showing . . . that there is an absence of evidence to supportthe nonmoving party's case" at trial. PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 105 (2d Cir. 2002) (per curiam) (internal quotation marks omitted).

Once the movant meets his burden, the nonmoving party "must set forth 'specific facts' demonstrating that there is 'a genuine issue for trial.'" Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009) (quoting Fed. R. Civ. P. 56(e)). "[T]he party opposing summary judgment may not merely rest on the allegations or denials of his pleading" to establish the existence of a disputed fact. Wright, 554 F.3d at 266; accord Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888 (1990). Bald assertions that are unsupported by evidence will not be enough to avoid entry of summary judgment. See Carey v. Crescenzi, 923 F.2d 18, 21 (2d Cir. 1991); Argus Inc. v. Eastman Kodak Co., 801 F.2d 38, 45 (2d Cir. 1986).

In determining whether there exists a genuine dispute as to a material fact, the Court is "required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012) (quoting Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003)). "In deciding a motion for summary judgment, the district court's function is not to weigh the evidence or resolve issues of fact; it is confined to deciding whether a rational juror could find in favor of the non-moving party." Lucente v. Int'l Bus. Machines Corp., 310 F.3d 243, 254 (2d Cir. 2002).

DISCUSSION

In its motion for summary judgment, GMI argues that A.V.M. violated the TCPA by sending six unsolicited fax advertisements. A.V.M., in its own motion for summary judgment, argues that the faxes in question were not unsolicited because GMI gave prior express invitation or permission for approved suppliers, including A.V.M., to send fax advertisements. A.V.M. also argues that GMI should be collaterally estopped from litigating the question of whether itconsented to receive fax advertisements under the 2014 Franchise Agreement and the 2014 Property Improvement Plan.

The History of "Unsolicited Advertisements" under the TCPA

Citing the need to facilitate interstate commerce, Congress passed the TCPA to protect the privacy interests of residential telephone subscribers and to facilitate interstate commerce by restricting certain uses of facsimile (fax) machines and automatic dialers. S. Rep. No. 102-78, at 1 (1991). "Junk fax" advertising was considered especially pernicious because it "shift[ed] some of the costs of advertising from the sender to the recipient" and "occupi[ed] the recipient's facsimile machine so that it [was] unavailable for legitimate business messages while processing and printing the junk fax." H.R. Rep. No. 102-317, at 10 (1991). The TCPA officially became law on December 20, 1991, and the Act made it illegal, among other things, "to use any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine." Pub. L. 102-243, § 3(a), 105 Stat. 2394, 2396 (1991) (emphasis added). Liability under the new law would therefore be determined, in part, by what constituted an unsolicited advertisement, and the definition of "unsolicited advertisement" subsequently propelled a back-and-forth between Congress and the Federal Communications Commission ("FCC") that extended for over a decade.

At the time it passed the TCPA, Congress defined "unsolicited advertisement" 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 permission or invitation." Pub. L. 102-243, § 3(a), 105 Stat. 2394, 2395 (1991). Congress also provided rulemaking authority to the FCC in the TCPA, and the FCC quickly exercised that authority to, among other things, create the "established business relationship" exception to the prohibition on unsolicitedadvertisements. See In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 7 FCC Rcd. 8751, 8779, ¶ 54 n.87 (October 16, 1992) (hereinafter the "1992 FCC Order"). The established business relationship exception considered fax advertisers who had a previous commercial connection with the recipient to have that recipient's prior express invitation or permission to receive fax advertisements. Id. As envisioned by the FCC in 1992, the exception sprung from the idea that a consumer with a prior relationship with a sender would be less bothered by advertising because "facsimile transmission from persons or entities who have an established business relationship with the recipient can be deemed to be invited or permitted by the recipient." Id. (citing 8770, ¶ 34 of the same) (emphasis added). The business relationship exception was "broad enough to encompass a wide range of business relationships," possibly "extend[ing] to the [sender's] affiliates and subsidiaries."...