Robert W. Mauthe, M.D. P.C. v. Optum, Inc.

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______________
No. 18-2894
______________
ROBERT W. MAUTHE, M.D., P.C.,
Individually and on behalf of all others similarly situated
v.
OPTUM INC., OPTUMINSIGHT, INC.
ROBERT W. MAUTHE, M.D., P.C.,
Appellant
______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 5-17-cv-01643)
Honorable Edward G. Smith, District Judge
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Argued March 8, 2019
BEFORE: AMBRO, RESTREPO, and GREENBERG,
Circuit Judges
(Filed: May 28, 2019)
______________
Phillip A. Bock (argued)
Daniel J. Cohen
Molly F. Stemper
David M. Oppenheim
James M. Smith
Bock Hatch Lewis & Oppenheim
134 North La Salle Street
Suite 1000
Chicago, IL 60602
Richard E. Shenkan
Shenkan Injury Lawyers
6550 Lakeshore Street
West Bloomfield, MI 48323
Attorneys for Appellant
Kathryn M. Ali
Jessica L. Ellsworth (argued)
Benjamin A. Field
Kaitlyn Golden
Adam K. Levin
Hogan Lovells US
555 Thirteenth Street, N.W.
Columbia Square
Washington, DC 20004
2
Stephen A. Loney, Jr.
Hogan Lovells US
1735 Market Street
23rd Floor
Philadelphia, PA 19103
Attorneys for Appellee
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OPINION
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GREENBERG, Circuit Judge
I. INTRODUCTION
This matter comes on before this Court on the appeal of
plaintiff Robert W. Mauthe M.D. P.C. challenging the District
Court’s grant of summary judgment against its complaint
brought under the Telephone Consumer Protection Act, 47
U.S.C. § 227 (“TCPA”). We consolidated this case for
argument with Mauthe v. Nat’l Imaging Assocs., Inc., No. 18-
2119, 2019 WL 1752591 (3d Cir. Apr. 17, 2019) (“NIA”), a
case that the same plaintiff filed against a different defendant
under the TCPA because the two cases raised similar issues.
Although the plaintiff in both cases is a professional
corporation, we will refer to the plaintiff as Robert W. Mauthe,
as though an individual, as we did in NIA. In this case, Mauthe
alleged that he received an unsolicited advertisement via fax
from defendants Optum, Inc. and OptumInsight, Inc., related
entities, in violation of the TCPA and included in his complaint
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a supplemental state law claim for common law conversion.
Defendants moved for summary judgment, and the Court
granted their motion on the TCPA claim and dismissed the state
law claim without prejudice, as it declined to exercise
jurisdiction over it. Robert Mauthe, M.D. PC v. Optum, Civ.
No. 17-1643, 2018 WL 360912 (E.D. Pa. July 27, 2018)
(“Optum”). For the reasons stated below, we will affirm the
order of the Court in both respects.
II. FACTUAL BACKGROUND
The facts of this case are essentially undisputed.
Defendants maintain a national database of healthcare providers,
containing providers’ contact information, demographics,
specialties, education, and related data. Defendants market, sell,
and license the database typically to health care, insurance and
pharmaceutical companies, who use it to update their provider
directories, identify potential providers to fill gaps in their
network of providers, and validate information when processing
insurance claims. Obviously, it is important that the information
contained in the database be accurate and Mauthe, who is a
healthcare provider, does not contend otherwise.
One of the ways defendants update and verify the
information in their database is to send unsolicited faxes to
healthcare providers listed in the database, requesting them to
respond and correct any outdated or inaccurate information. The
faxes inform the recipients that:
As part of ongoing data maintenance of our
Optum Provider Database product, Optum
regularly contacts healthcare practitioners to
verify demographic data regarding your office
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location(s). This outreach is independent of and
not related to your participation in any Optum
network. By taking a few minutes to verify your
practice information is current, your information
will be promptly updated in Optum Provider
Database.
This data is used by health care related
organizations to aid in claims payment, assist with
provider authentication and recruiting, augment
their own provider data, mitigate healthcare fraud
and publish accurate provider directories.
Optum, 2018 WL 3609012, at *2. The faxes also advise the
recipients that “[t]here is no cost to you to participate in this data
maintenance initiative. This is not an attempt to sell you
anything.” Id. The fax that defendants sent Mauthe included
these provisions.
III. STANDARD OF REVIEW
We exercise de novo review on this appeal. See Bradley
v. West Chester Univ. of Pa. State Sys. of Higher Educ., 880
F.3d 643, 650 (3d Cir. 2018). “Our review of the District
Court’s [summary judgment] decision is plenary, and we apply
the same standard as the District Court to determine whether
summary judgment was appropriate.” State Auto Prop. & Cas.
Ins. Co. v. Pro Design, P.C., 566 F.3d 86, 89 (3d Cir. 2009).
“[S]ummary judgment is properly granted ‘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.’” Sconiers v.
United States, 896 F.3d 595, 597 n.3 (3d Cir. 2018) (quoting
5
Fed. R. Civ. P. 56(a)).1
IV. DISCUSSION
Under the TCPA, it is unlawful to send an unsolicited
advertisement by fax. NIA, 2019 WL 1752591, at *2. Mauthe
asks us to hold that the fax was an unsolicited advertisement
which the TCPA prohibited defendants from sending to him. In
NIA, we articulated the standard to determine when a fax has
been sent to a potential direct purchaser of a product or service
in violation of the TCPA, but we also opined that liability for a
TCPA violation is not necessarily limited to a situation in which
a fax is sent to potential direct purchasers of the sender’s
product or services. Id. at *3 n.3. Mauthe does not claim to be a
potential direct purchaser of defendants’ services and defendants
disclaim any intention to sell him anything. Indeed, their fax to
him recited as much, as it said that the fax was not an attempt to
sell him anything. After our examination of the fax we have
concluded that there is no basis on which defendants can be held
to have violated the TCPA on the basis of the fax if the meaning
of the advertisement is viewed in a conventional way.
Consequently, we consider a possible broader basis for liability
predicated on the fact that this case involves third parties beyond
defendants and Mauthe, i.e., the users of defendants’ database.
An example of a possible TCPA violation by the sending
of a fax to an entity other than a possible direct purchaser of the
sender’s product or services is a fax sent to a doctor encouraging
the doctor to prescribe a particular drug to the doctor’s patients
1
The District Court had jurisdiction under 28 U.S.C. § 1331 and
we have jurisdiction under 28 U.S.C. § 1291.
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who, rather than the doctor, are the likely purchasers of the
sender’s product. Id. We refer to liability in such situations as
“third-party based liability,”2 as the sender is not attempting to
sell the recipient anything. Id. But in NIA because potential
third-party based liability was not at issue, we did not address
the question of whether there could be a third-party based
liability by reason of the sending of a fax. That issue now is
squarely before us because defendants sent the fax to Mauthe in
order to update their database to be accessed by third parties
who were not the recipients of defendants’ faxes and the faxes
were not an attempt to sell Mauthe or the putative class
members anything.
Mauthe advances his third-party based liability argument
on a theory that, although he was not a purchaser of defendants’
products or services, defendants violated the TCPA because they
had a profit motive in sending him the fax so that the fax should
be regarded as an advertisement. Mauthe asserts that defendants
sought the information in the fax to enhance the accuracy of
their database and thus increase their profits. We agree with the
stated factual basis for his claim because defendants were using
the faxes to improve the accuracy of their database. However,
the TCPA only prohibits unsolicited advertisements, not any and
all faxes even if sent for a commercial purpose. It seems beyond
doubt that a fax does not become an advertisement merely
because the sender intended it to enhance the quality of its
products or services and thus its profits. After all, a commercial
entity takes almost all of its actions with a profit motivation.
2
We used the term “third-party based liability” even though the
parties do not do so in their briefs. They do, however, refer to
third parties in their briefs.
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But as we opined in NIA, “[a]dvertising is the action of drawing
the public’s attention to something to promote its sale. So to be
an ad, the fax must promote goods or services to be bought or
sold, and it should have profit as an aim.” NIA, 2019 WL
1752591, at *2 (internal quotations, quotation marks and
citations omitted).
We are satisfied that to establish third-party based
liability under the TCPA a plaintiff must show that the fax: (1)
sought to promote or enhance the quality or quantity of a
product or services being sold commercially; (2) was reasonably
calculated to increase the profits of the sender; and (3) directly
or indirectly encouraged the recipient to influence the
purchasing decisions of a third party. As we explained in NIA,
“the fax must convey the impression . . . that a seller is trying to
make a sale[.]” NIA, 2019 WL 1752591, at *2. It is not enough
that the sender sent a fax with a profit motive—in order to show
that the sender is trying to make a sale, there must be a nexus
between the fax and the purchasing decisions of an ultimate
purchaser whether the recipient of the fax or a third party. The
liability standard articulated in NIA, and the one we articulate
here in a third-party based liability situation, hinges on whether
the fax was somehow intended to influence a potential buyer’s
decision in making a purchase, irrespective of whether the
sender sent the fax to the potential buyer or to a third party and
must have been intended to or at least be capable of influencing
a buyer’s purchasing decision. If we adopted a less demanding
standard, we would risk extending too far the prohibitions that
the TCPA established. We believe that our construction of the
TCPA faithfully adheres to what the TCPA facially prohibits,
while broadly construing the TCPA to provide plaintiffs with an
alternative theory of liability even when the fax is not sent to
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potential direct purchasers of a defendant’s products or services.
We give an example that supports our conclusion and
demonstrates why we must be concerned with possible
overreaching of the application of the TCPA that we derive from
the analogous field of telemarketing, a practice that the TCPA
regulates. In dealing with telemarketing the TCPA prohibits
any telephone call to any residential telephone
line using an artificial or prerecorded voice to
deliver a message without the prior express
consent of the called party, unless the call is
initiated for emergency purposes [or is] exempted
by rule or order by the Commission under
paragraph (2)(B).
47 U.S.C. § 227(b)(1)(B). Under the rules promulgated by the
Federal Communications Commission, calls are exempt from
the statutory prohibition “if not made for a commercial purpose”
or, as germane here, if they do “not include or introduce an
advertisement or constitute telemarketing.” 47 C.F.R. §
64.1200(a)(3). The FCC has also opined that “calls conducting
research, market surveys, political polling or similar activities
[that] do not involve solicitation as defined by our rules” are
exempt from the statutory prohibition on artificially prescribed
calls. In the Matter of Rules and Regulations Implementing the
TCPA, 1992 WL 690928, at *15, 7 FCC Rcd. 8752, 8774 ¶ 41
(Oct. 16, 2012). Consequently, a marketing firm making calls to
conduct pure market research, and a pollster conducting a
political poll by telephone, do not violate TCPA’s telemarketing
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prohibition.3
Commercial entities conducting research sometimes do
so by sending faxes. Under Mauthe’s theory, these firms would
violate TCPA’s prohibition on the sending of an unsolicited fax
advertisement because they would send their faxes for the
purposes of improving their operations and thus their profits.
But such faxes would not promote the sale of any products or
services, or seek to influence the purchasing decisions of a
potential buyer. We will not adopt a construction that broadly
would limit commercial activities to the extent Mauthe invites.
See NIA, 2019 WL 1752591, at *2-3. The requirement for
establishing TCPA liability that we set forth is that there be a
nexus between the sending of the fax and the sender’s product
or services and the buyer’s decision to purchase the product or
services accomplishes the TCPA objective without infringing on
other commercial activities.4
3
We note that there is a petition for expedited declaratory ruling
on whether market research surveys are fax advertisements as
defined by the TCPA pending before the FCC. See Lyngaas v.
J. Reckner Assocs., Inc., No. 2:17-cv-12867, 2019 WL 166227,
at *1-2 (E.D. Mich. Jan. 10, 2019).
4
In fact, under Mauthe’s theory an employer with a letterhead
listing its address, telephone number and products and services
would violate the TCPA if it sent a fax on its letterhead to
inquire about the qualifications of a job applicant from the
applicant’s former employer because employee selection is
certainly related to making a profit.
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Turning to the facts of this case, Mauthe’s claim does not
survive our standard for third-party based liability or any other
theory of liability under the TCPA. Though defendants intended
their faxes to obtain information enhancing the quality of their
services, and thus reasonably calculated their faxes to increase
their profits by keeping their database updated, the faxes did not
attempt to influence the purchasing decisions of any potential
buyer, whether a recipient of a fax or a third party. Moreover,
the fax sent to Mauthe did not encourage him to influence the
purchasing decisions or those of a third party. Though we
appreciate the annoyance and/or harassment Mauthe felt
receiving unsolicited faxes, we are constrained in reaching our
decision by what the TCPA actually prohibits—it does not
prohibit all unsolicited faxes, just advertisements. We will not
distort the meaning of “advertisement” to accommodate
Mauthe’s case. Therefore, we will uphold the District Court’s
conclusion that defendants’ fax was not an “advertisement”
under the TCPA.
The District Court also held that the fax was not a pretext
to more commercial solicitation. Optum, 2018 WL 3609012, at
*7. As we stated in NIA, we have not endorsed and do not now
do so the pretext theory of liability under the TCPA, a matter
that is still open. 2019 WL 1752591, at *3. However, for the
same reasons that we set forth in NIA in rejecting a pretext
claim even if such a claim is potentially viable, Mauthe’s pretext
claim fails because there was no evidence that defendants
“intended to send Mauthe any future faxes, let alone any more
advertisements.” Id. at *3 n.4. We recognize that defendants
may send Mauthe another fax to verify his information, but that
fax will no more be an advertisement than the fax here if it is of
similar content. Moreover, there is no evidence that the fax that
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defendants already sent was a pretext so that it later could send
an additional fax. Thus, we also will uphold the District Court’s
ruling that defendants’ fax was not a pretext to further
commercial solicitation.
Inasmuch as we hold that the District Court did not err in
granting summary judgment in favor of defendants on Mauthe’s
TCPA claim, the only federal claim in the case, we also hold
that the Court did not err in declining to exercise supplemental
jurisdiction over Mauthe’s state law claim. In this regard a court
does not err if it declines to exercise supplemental jurisdiction
over state claims after it dismisses a federal claim on which its
jurisdiction is based in the absence of extraordinary
circumstances. Bright v. Westmoreland Cty., 380 F.3d 729, 751
(3d Cir. 2004). There are no extraordinary circumstances here.
V. CONCLUSION
For the foregoing reasons we will affirm the order of
July 27, 2018.
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