Corporate Law: Sending unsolicited faxes may violate federal law

Stephen F. Aton is a Springfield attorney practicing in the areas of corporate law and taxation, and estate planning.

Many businesses routinely receive unsolicited faxes seeking to sell various products and services.

Many of those sending such communications do not realize they may be violating federal law and could be liable for damages to the receiving party.

The Missouri Supreme Court has just held in Reynolds v. Diamond Foods & Poultry Inc., in a decision handed down late this summer, that Missouri law does not prohibit bringing such a suit in state court.

The Communications Act of 1933 was amended by the enactment of the federal Telephone Consumer Protection Act. The stated purpose of the law is to "protect the privacy interests of residential telephone subscribers by placing restrictions on unsolicited, automated telephone calls to the home, and to facilitate interstate commerce by restricting certain uses of facsimile machines and automated dialers."

In the Reynolds case, the plaintiff had received four unsolicited faxes at his barbecue restaurant.

The faxes were attempting to sell Diamond's food products to the owner of the restaurant. The owner did not appreciate the faxes and sued in state court under the federal law.

Diamond Foods contended that a person could not sue in state court on a federal law without enabling legislation from the Missouri legislature. The trial court agreed with Diamond Foods and dismissed the plaintiff's claim. On appeal, the Missouri Supreme Court overturned the trial court decision and remanded the case for rehearing.

The Supreme Court held that it was not necessary for the Missouri legislature to enact a law allowing residents to sue under the federal law.

In fact, the federal law states that "if otherwise permitted by the laws or rules of a court of a state," a person or entity may sue for a remedy in state court.

The high court held that since Missouri law does not prohibit filing an action under the Telephone Consumer Protection Act, such actions may indeed be filed in our state courts.

Damages for violating the act are the greater of: 1) any actual monetary loss from the receipt of the unsolicited faxes, which is likely to be nothing; or 2) $500 per violation, which in this case could be $2,000 for the four faxes.

Courts have discretion to award triple damages if the violation was willful or knowing. If the trial court on remand were to find the faxes were willful, the exposure for Diamond could reach $6,000.

Although the court does not discuss what would constitute "willful" violations, it is likely that informing the party sending the faxes of the illegal nature of the communications would suffice.

It would be desirable to document all such communications to the sending party and to retain all unsolicited faxes with the date stamp affixed by the receiving fax machine. Such faxes would then serve as exhibits to a lawsuit.