Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC

USCA4 Appeal: 22-1279 Doc: 40 Filed: 09/06/2023 Pg: 1 of 23

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 22-1279

CARLTON & HARRIS CHIROPRACTIC, INC., a West Virginia Corporation,
individually and as the representative of a class of similarly situated persons,

Plaintiff - Appellant,

v.

PDR NETWORK, LLC; PDR DISTRIBUTION, LLC; PDR EQUITY, LLC; JOHN
DOES,

Defendants - Appellees.

Appeal from the United States District Court for the District of West Virginia, at
Huntington. Robert C. Chambers, District Judge. (3:15-cv-14887)

Argued: March 9, 2023 Decided: September 6, 2023

Before DIAZ, Chief Judge, and THACKER and HARRIS, Circuit Judges.

Vacated and remanded by published opinion. Judge Harris wrote the majority opinion, in
which Chief Judge Diaz and Judge Thacker joined. Judge Thacker wrote a concurring
opinion.

ARGUED: Glenn Lorne Hara, ANDERSON & WANCA, Rolling Meadows, Illinois, for
Appellant. Kwaku A. Akowuah, SIDLEY AUSTIN LLP, Washington, D.C., for Appellee.
ON BRIEF: D. Christopher Hedges, CALDWELL LUCE DITRAPANO, Charleston,
West Virginia, for Appellant. Jeffrey N. Rosenthal, Philadelphia, Pennsylvania, Ana
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Tagvoryan, BLANK ROME LLP, Los Angeles, California; Carter G. Phillips, Alice A.
Wang, SIDLEY AUSTIN LLP, Washington, D.C., for Appellees.

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PAMELA HARRIS, Circuit Judge:

The plaintiff in this case, a chiropractic office, filed suit under the Telephone

Consumer Protection Act after it received an unsolicited fax offering a free eBook with

information about prescription drugs. The district court dismissed its complaint, holding

that the plaintiff had not alleged that the fax, which tendered a product for free rather than

for sale, was sufficiently commercial to bring it within the statutory prohibition on

“unsolicited advertisements.” We disagree. At this early stage of the litigation, we

conclude, the plaintiff has adequately alleged that the fax offer had the necessary

commercial character to make it an “unsolicited advertisement” under the Act.

Accordingly, we vacate the district court’s order and remand for further proceedings.

I.

For context, we begin with the statutory provisions that govern this case. As

amended by the Junk Fax Prevention Act of 2005, the Telephone Consumer Protection Act

of 1991 (“TCPA” or “Act”) generally prohibits the use of fax machines to send “unsolicited

advertisement[s].” 47 U.S.C. § 227(b)(1)(C). “Unsolicited advertisement” is defined by

the Act 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) (emphasis added). The

central issue here is whether a fax that touts the “quality” of a “good[]” that is offered for

free, rather than at a price, can fall within that definition.

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The unsolicited fax in question was received by Carlton & Harris Chiropractic, Inc.,

in its West Virginia office in 2013. It was sent by the defendants in this action, referred to

collectively as PDR Network. 1 As we explained in our first encounter with this case, PDR

Network publishes the Physicians’ Desk Reference, a compilation of medical prescribing

information for certain prescription drugs. Pharmaceutical companies pay PDR Network

to list their drugs in the Physicians’ Desk Reference. Carlton & Harris Chiropractic, Inc.,

v. PDR Network, LLC (PDR I), 883 F.3d 459, 462 (4th Cir. 2018).

PDR Network addressed its fax to Carlton & Harris’s “Practice Manager” and urged

the recipient to “reserve” a “FREE 2014 Physicians’ Desk Reference eBook.” J.A. 31. The

fax provided a link for that purpose, as well as a customer-service phone number and email

address. Below a picture of the eBook were bullet points calling attention to features

thought to appeal to the recipient: The eBook contained the “[s]ame trusted, FDA-

approved full prescribing information” as the hard-copy Physicians’ Desk Reference, but

“[n]ow in a new, convenient digital format,” and it had been “[d]eveloped to support your

changing digital workflow.” Id. At the bottom was a notice that the recipient could “opt-

out of delivery of clinically relevant information about healthcare products and services

from PDR via fax” by calling a listed phone number. Id.

1
The defendants are PDR Network, LLC; PDR Distribution, LLC; PDR Equity,
LLC; and John Does 1–10. For present purposes, they do not dispute that they are the
senders of the fax.

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Carlton & Harris filed a putative class action complaint against PDR Network

alleging a violation of § 227 of the TCPA. 2 The result was years of extensive and complex

proceedings through multiple courts. Those proceedings focused mostly on administrative

law questions regarding what we called the “2006 FCC Rule,” which implements the

TCPA and treats faxes that “promote goods or services even at no cost” as prohibited

“unsolicited advertisements.” Rules and Regulations Implementing the Tel. Consumer

Prot. Act of 1991; Junk Fax Prevention Act of 2005, 71 Fed. Reg. 25967, 25973 (May 3,

2006); see PDR I, 883 F.3d at 463. For those who are interested, the details may be found

in our two previous opinions in this case and the Supreme Court decision that issued

between them. See PDR I, 883 F.3d 459; PDR Network, LLC v. Carlton & Harris

Chiropractic, Inc., 139 S. Ct. 2051 (2019); Carlton & Harris Chiropractic, Inc. v. PDR

Network, LLC (PDR II), 982 F.3d 258 (4th Cir. 2020).

By the time we issued our second opinion, much of that brush had been cleared

away. Most important, there was no longer a question of Chevron deference: Because the

2006 FCC Rule is interpretive and not legislative, we explained, Chevron deference is

inappropriate. PDR II, 982 F.3d at 264. Instead, whether PDR Network’s fax qualified as

an “unsolicited advertisement” under § 227 turned, first, on the statutory language itself,

and then, if the statute was ambiguous, on whether the 2006 FCC Rule was sufficiently

2
The TCPA includes a private cause of action allowing the recipient of an
unsolicited fax advertisement to recover actual monetary losses or statutory damages of
$500 for each violation. 47 U.S.C. § 227(b)(3). Statutory damages may be tripled if a
court finds that a violation is “willful[] or knowing[].” Id.

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persuasive to merit so-called Skidmore deference. See id. (citing Gonzales v. Oregon, 546

U.S. 243, 256 (2006)). We remanded to the district court to consider that question in the

first instance. Id. at 260.

On remand, Carlton & Harris amended its complaint and PDR Network again

moved to dismiss. The district court granted the motion, holding that PDR Network’s fax

did not constitute an “advertisement” under the TCPA because it offered the eBook for free

and not for sale. Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC (PDR III),

Civ. No. 3:15-14887, 2022 WL 386097, at *7 (S.D. W.Va. Feb. 8, 2022).

The court’s analysis proceeded in two basic steps. First, for the district court, it was

clear from the TCPA’s definition of “unsolicited advertisement” – as relevant, “any

material advertising the commercial availability or quality of any property, goods, or

services” – that a fax could qualify only if it had a “commercial component” or “discernible

commercial purpose.” PDR III, 2022 WL 386097, at *3–5. And second, the district court

concluded, PDR Network’s fax lacked that “requisite commercial aspect” because it

promoted a product – the eBook – that was “not for sale.” Id. at *5. The court did not

doubt that the fax could be said to “speak[] to the quality of the free eBook,” describing its

“convenient digital format” and “trusted, FDA-approved” prescribing information. Id.; see

47 U.S.C. § 227(a)(5). But because the fax “sells nothing,” the court reasoned, it could not

qualify as an “advertisement,” PDR III, 2022 WL 386097, at *5 – and because a “plain

reading of the TCPA’s text” left no ambiguity on that point, there was no occasion to

consider the 2006 FCC Rule, id. at *3.

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The court recognized that the plaintiff’s amended complaint included new

allegations directed at the “required commercial connection under the TCPA” but found

them inadequate. Id. at *7. Carlton & Harris now alleged, for instance, that PDR Network

effectively earned a commission for each successful promotion of an eBook by way of fax,

because the amount paid by drug companies to have their products included in the

Physicians’ Desk Reference turned on the number of eBook versions distributed. But that

kind of “ancillary” financial benefit, the court held, was “too remote” to demonstrate the

necessary commercial nexus. Id. The plaintiff also alleged that the fax was a “pretext” or

prelude for future sales efforts, in that it notified recipients they would continue to receive

faxes “about healthcare products and services from PDR.” J.A. 17. The district court

rejected that theory, too, noting that the only reference to those products and services came

in the context of an opt-out notice. PDR III, 2022 WL 386097, at *7. The court ended

where it began: No “underlying and distant commercial purpose” would change the fact

that the fax “does not offer something for sale.” Id.

II.

We review de novo the district court’s grant of PDR Network’s motion to dismiss

under Federal Rule of Civil Procedure 12(b)(6). PDR I, 883 F.3d at 462. Importantly, at

this stage of the litigation, we “assum[e] as true the complaint’s factual allegations” and

we construe “all reasonable inferences” in favor of the plaintiff, Carlton & Harris. Id.

(internal quotation marks omitted).

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On appeal, PDR Network defends both steps in the district court’s reasoning,

arguing that a fax must be “commercial” to qualify as an “advertisement” under the TCPA

and that Carlton & Harris has not alleged the requisite commercial character. Carlton &

Harris, for its part, disputes both portions of the court’s reasoning, contending that a

prohibited “advertisement” may be entirely non-commercial and that, in any event, it has

adequately alleged that the fax it received was commercial in nature.

As explained below, we agree with the district court and PDR Network in a critical

respect: The TCPA’s general prohibition on unsolicited “advertisements” is best read to

cover only faxes of a commercial nature. But we also agree with Carlton & Harris that the

allegations in its amended complaint suffice to meet that standard at this early stage of the

litigation. We therefore vacate the district court’s order and remand for further

proceedings.

A.

1.

We begin with the statutory text. Again, the TCPA generally prohibits sending via

fax an “unsolicited advertisement.” 47 U.S.C. § 227(b)(1)(C). And, per the statute, the

“advertisement” part of “unsolicited advertisement” means “any material advertising the

commercial availability or quality of any property, goods, or services.” Id. § 227(a)(5).

We conclude that “advertisement,” as used and defined in the TCPA, is limited to faxes

that are “commercial in nature.” Sandusky Wellness Ctr., LLC v. Medco Health Sols., Inc.,

788 F.3d 218, 224 (6th Cir. 2015).

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Our conclusion flows mostly from the “everyday” understanding of the term

“advertise.” Id. at 222. “Advertise” customarily has a distinctly commercial flavor,

invoking a business solicitation, designed to “attract[] clients or customers” and in the

“hopes to make a profit, directly or indirectly.” Id. When “[e]veryday people” hear the

word “advertisement,” they think of “everyday ads,” like those they see on television, id.

– sometimes referred to, tellingly, as “commercials.” What is being transmitted is not just

information, but information with a “commercial nexus” to the sender’s “business.”

Physicians Healthsource, Inc. v. Boehringer Ingelheim Pharms., Inc., 847 F.3d 92, 96 (2d

Cir. 2017). The commercial “concept,” in other words, is “part of the common

understanding of what constitutes an ad.” Sandusky, 788 F.3d at 224.

We recognize, as Carlton & Harris argues, that “advertise” can be used differently,

in a way that does not “implicate a profit seeking motive” and instead means only to call

attention to something. PDR I, 883 F.3d at 472 (Thacker, J., dissenting). But the “context

in which [“advertise”] is used, and the broader context of the [TCPA] as a whole,” Yates

v. United States, 574 U.S. 528, 537 (2015), point to the commercial definition as the one

intended here. First, as the Sixth Circuit emphasized, the “word ‘commercial’ is in the

Act’s definition” itself. Sandusky, 788 F.3d at 224; see 47 U.S.C. § 227(a)(5) (“material

advertising the commercial availability or quality of any property, goods, or services”

(emphasis added)). “So ‘commercial’ must play a role – some role” in defining

advertisement, foreclosing a reading that would jettison the concept entirely. Sandusky,

788 F.3d at 224; see Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, Civ. No.

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3:15-14887, 2016 WL 5799301, at *4 (S.D.W. Va. Sept. 30, 2016). 3 Second, as the district

court has recognized from the start, Congress enacted the TCPA “to combat an explosive

growth in unsolicited facsimile advertising, or ‘junk fax’” – that is, “faxes with a

commercial nature.” PDR I, 883 F.3d at 468 (internal quotation marks omitted) (quoting,

in part, PDR Network, 2016 WL 5799301, at *4). Indeed, this form of “telemarketing”

was targeted in part because use of the recipient’s fax machine shifted “costs of

advertising” from the sender to the recipient, H.R. Rep. No. 102-317, at 10 (1991) – again

invoking the kind of commercial advertising in which a business absorbs costs in the hopes

of ultimate profit.

In reading prohibited “unsolicited advertisements” as reaching only faxes of a

commercial nature, we align ourselves with a broad consensus in the case law. To be sure,

there are differences in the precise formulations adopted by courts in defining “unsolicited

advertisement” under § 227. But on the threshold question of whether a fax

“advertisement” must have commercial character, there is wide agreement: A prohibited

“advertisement” is a “commercial solicitation” – “of, in, or relating to commerce,” with

3
The parties vigorously debate what exactly is modified by the word “commercial”
in § 227(a)(5)’s definition – which, again, reaches “material advertising the commercial
availability or quality of any property, goods, or services.” According to Carlton & Harris,
“commercial” modifies only “availability,” so that any fax “advertising” the “quality” of a
product would be covered. PDR Network, on the other hand, reads “commercial” as
modifying both “availability” and “quality,” so that the definition would be limited to faxes
“advertising” the “commercial availability” or “commercial quality” of a product. Like
Carlton & Harris, we have questions about what work the phrase “commercial quality”
would do on PDR Network’s reading. But we need not resolve this grammatical puzzle
here: Regardless of how the modifier “commercial” is applied, we read the word
“advertising” itself to embody a commercial component.

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“profit as the primary aim.” Sandusky, 788 F.3d at 225, 222–23 (internal quotation marks

omitted). There must be a “commercial component,” BPP v. CaremarkPCS Health, LLC,

53 F.4th 1109, 1112 (8th Cir. 2022), or a “commercial nexus” to the sender’s business –

“its property, products, or services,” Boehringer, 847 F.3d at 96. Put simply, “[t]he TCPA

does not bar the unsolicited sending of faxes that lack commercial components.” BPP, 53

F.4th at 1112; see also Florence Endocrine Clinic v. Arriva Med., LLC, 858 F.3d 1362,

1366 (11th Cir. 2017).

2.

In arguing for a broader reading of “unsolicited advertisement” – one that would

extend to any fax that promotes the “quality” of a free good or service, even in the absence

of a commercial nexus or profit motive – Carlton & Harris relies primarily on the 2006

FCC Rule. That Rule, as noted above, treats as “unsolicited advertisements” fax messages

“that promote goods or services even at no cost,” 71 Fed. Reg. at 25973, reasoning that

these “purportedly ‘free’” offers “often have commercial strings attached.” See PDR I,

883 F.3d at 467. According to Carlton & Harris, that is a persuasive interpretation of the

statutory language to which we should defer under Skidmore v. Swift & Co., 323 U.S. 134

(1944). For two reasons, we disagree.

First, the 2006 FCC Rule does not actually support the proposition advanced by

Carlton & Harris: that the term “unsolicited advertisement” in § 227 is properly read to

include purely non-commercial offers of free goods and services, like a fax sent by a charity

alerting potential beneficiaries of their eligibility for free assistance. And we know that

because the 2006 FCC Rule says as much. In declining to carve out an exemption for

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nonprofit organizations from the general ban on “unsolicited [fax] advertisements,” the

Rule clarifies that an exemption would be largely unnecessary, given that “messages that

are not commercial in nature – which many nonprofits send – do not constitute ‘unsolicited

advertisements’” in the first place. 2006 FCC Rule, 71 Fed. Reg. at 25972 (emphasis

added). It seems clear, in other words, that contrary to Carlton & Harris’s understanding,

the 2006 FCC Rule does not contemplate liability for a fax sent with “no objective other

than to give away free goods or services.” Boehringer, 847 F.3d at 102 (Leval, J.,

concurring) (referencing 2006 FCC Rule’s “discussion of how the statute treats

nonprofits”).

There is, of course, also the portion of the Rule on which Carlton & Harris relies,

which does indeed purport to prohibit all unsolicited “offers for free goods and services.”

2006 FCC Rule, 71 Fed. Reg. at 25973; PDR I, 883 F.3d at 467–68 (discussing 2006 FCC

Rule). But we do not understand that rule as resting on agency interpretation of the

statutory term “advertisement” that brings within its scope “messages that are not

commercial in nature” – in part because the agency expressly takes the opposite view

elsewhere in the same Rule, as noted above. See 71 Fed. Reg. at 25972. Instead, as we

explained in PDR I, the 2006 FCC Rule sets out a “prophylactic presumption” that all

“offers for free goods and services” will qualify as “advertisements” under § 227, obviating

the need for a case-by-case inquiry into their commercial nature. 883 F.3d at 467–68.

Because so-called “free” offers so frequently mask commercial purposes, that is, the

agency concluded that the benefits of clarity and ease of enforcement justified a somewhat

“overinclusive” prophylactic rule. Id. That may be a perfectly reasonable approach to

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implementing the TCPA – as we suggested in PDR I – but it is not an agency construction

of the term “advertisement” to which we would defer under Skidmore in answering the

statutory interpretation question before us.

And in any event, we agree with the district court that the statute is clear enough on

this point that there would be no room for deference to an alternative agency construction.

See PDR III, 2022 WL 386097, at *3. Again, we appreciate that the word “advertise,”

standing alone, may have a non-commercial meaning. But as the Supreme Court recently

clarified, we cannot label a statute “ambiguous” and defer to an agency interpretation

without first exhausting “all the traditional tools of construction,” considering the “text,

structure, history, and purpose” of a statutory provision. See Cela v. Garland, __ F.4th __,

__, No. 22-1322, 2023 WL 4831594, at *3 (4th Cir. July 28, 2023) (internal quotation

marks omitted) (quoting Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019)). And when we

deploy those tools here and consider the full statutory context, we can discern that the term

“unsolicited advertisement,” as used in the TCPA, does not include offers or solicitations

with no commercial component or purpose. See BPP, 53 F.4th at 1112–13 (giving no

deference to 2006 FCC Rule in part because statutory language is unambiguous as to

requirement of “commercial component[]”). 4

4
PDR Network also argues that we should construe the term “unsolicited
advertisement” as limited to commercial faxes to avoid First Amendment issues that
otherwise would arise. In enacting the TCPA, PDR Network contends, Congress was
mindful of the greater First Amendment protections that apply outside the context of
commercial speech, and thus cabined its ban on “junk faxes” to messages of a commercial
nature. As detailed above, we reach the same result through ordinary tools of statutory

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B.

Our conclusion that a TCPA-prohibited “unsolicited advertisement” must be of a

commercial nature would have been the end of the matter when this case was first filed: In

filing its initial complaint, Carlton & Harris relied entirely on the 2006 FCC Rule for a

non-commercial reading of “advertisement,” and for several rounds of litigation, the

plaintiff’s case rose or fell on whether a “commercial aim” is required. See PDR I, 883

F.3d at 463. But now Carlton & Harris has amended its complaint, and so we turn to its

alternative argument that it has adequately alleged the necessary commercial component.

1.

As we read the amended complaint and briefs, the plaintiff relies on two allegations

to show that PDR Network’s fax is commercial in nature. First is what we will call the

“commission allegation”: The fax promotes a product – the eBook – on which PDR

Network earns a commission. According to the amended complaint, PDR Network

“receive[s] money from the pharmaceutical companies whose drugs are listed in the

Physicians’ Desk Reference,” and “the amount of money” it receives “turns on how many

copies” of the eBook it can distribute to medical practitioners like Carlton & Harris. J.A.

18. In other words, PDR Network profits when its fax persuades a medical practitioner to

accept the proffered eBook. We appear to be the first court of appeals to consider a

construction, so have no occasion to consider application of the constitutional-avoidance
canon. See United States v. Simms, 914 F.3d 229, 251 (4th Cir. 2019).

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commission allegation like this, and at this early stage of the litigation, we conclude that it

is sufficient to establish the requisite commercial element.

Taken as true, as it must be, the plaintiff’s commission allegation describes what we

might colloquially call a product “pitch.” The fax undoubtedly promotes the “quality” of

the eBook, see 47 U.S.C. § 227(a)(5) (defining “unsolicited advertisement” as “any

material advertising the commercial availability or quality of any property, goods, or

services”), as the district court recognized, PDR III, 2022 WL 386097, at *5, extolling the

eBook’s virtues and its benefits for the recipient’s practice. It does so to persuade the

recipient to accept the offer of a free eBook. And critically, as with a classic sales pitch,

the promoter profits if the pitch lands and the offer is accepted. This is not the rare case in

which free products are distributed via fax “without hope of financial gain.” PDR I, 883

F.3d at 468. PDR Network’s business is distribution of the Physicians’ Desk Reference

and an associated “suite of services,” and its business runs, in part, on the money it earns

when a fax solicitation succeeds in placing a digital version of the Physicians’ Desk

Reference with a medical practitioner. J.A. 17. There is, in other words, a straightforward

“commercial nexus” between the fax in question and PDR Network’s “business.” See

Boehringer, 847 F.3d at 96.

The district court saw it differently, holding that the fax did not qualify as a

commercial advertisement because it offered the eBook for free, rather than for sale to the

fax recipient. PDR III, 2022 WL 386097, at *5 (finding that “there is no requisite

commercial aspect” to the fax because it “sells nothing”). PDR Network takes much the

same position on appeal. And we recognize that some (though not all) of the formulations

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offered by courts in holding that TCPA “advertisements” must be “commercial” in nature

emphasize the promotion of “goods or services to be bought or sold.” See Sandusky, 788

F.3d at 222; PDR III, 2022 WL 386097, at *4 (citing cases).

As we have explained already, however, “requiring a fax to propose a specific

commercial transaction on its face takes too narrow a view of the concepts of commercial

activity and promotion.” PDR I, 883 F.3d at 468. We agree, as discussed above, that a fax

must be “commercial” to fall within the TCPA’s definition of “unsolicited advertisement.”

But nothing in the text of the TCPA or in general usage limits the “concept . . . [of]

commercial,” Sandusky, 788 F.3d at 224 (emphasis omitted), to direct sales. See, e.g., id.

at 222 (defining “commercial” as “of, in, or relating to commerce,” “from the point of view

of profit,” and “something that relates to buying and selling” (emphasis added) (internal

quotation marks omitted)). The plaintiff alleges that PDR Network is paid when it places

a free eBook via fax. That the payment comes from a drug company rather than the fax

recipient – that PDR Network is effectively selling space in its Physicians’ Desk Reference

rather than eBooks – does not, we think, strip the transaction of its “commercial” character.

See PDR I, 883 F.3d at 468 (requiring that fax on its face propose specific commercial

transaction “ignores the reality of many modern business models”).

To be clear, it is not PDR Network’s alleged profit motive alone that gives its faxes

the requisite commercial character under the TCPA. A purely informational fax – one that

does not tout the “quality of any property, goods, or services,” 47 U.S.C. § 227(a)(5) –

would not qualify as an “unsolicited advertisement” even if the sender hoped to profit

“through branding, goodwill, or other indirect effects.” BPP, 53 F.4th at 1113. The FCC

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has endorsed that reading, clarifying that faxes “that contain only information, such as

industry news articles, legislative updates, or employee benefit information” are not

prohibited by the TCPA, 2006 FCC Rule, 71 Fed. Reg. at 25973, and courts have relied on

it in rejecting allegations that informational faxes might produce “financial[] benefit” for

their senders “several locks down the stream of commerce,” see Sandusky, 788 F.3d at 225.

But here, at least as alleged, we have not just profit, but also a pitch: PDR Network’s fax

touts the virtues and “quality” of the eBook, and if that pitch is successful, PDR Network

profits by way of commission. It is that combination, we conclude, that makes the fax in

question sufficiently commercial to qualify as an “advertisement” under the TCPA. We

suggested as much in PDR I, see 883 F.3d at 468, and our view has not changed.

So understood, our holding does not conflict with the cases cited by PDR Network,

in which courts have dismissed complaints that allege only a more attenuated or, in the

words of the district court, “ancillary” relationship between a fax and potential profit to the

sender. See PDR III, 2022 WL 386097, at *7. In Sandusky, for instance, the court

considered faxes sent by a pharmacy benefit manager to a chiropractic company, listing

medications available in the health plans of the practice’s patients. 788 F.3d at 220. Those

faxes were not “commercial in nature,” the court concluded, because they were purely

informational and did not offer the recipient a product or service. Id. at 223 (citing 2006

FCC Rule); see PDR I, 883 F.3d at 469 n.5 (distinguishing Sandusky and other cases that

“involve informational faxes rather than offers of free goods or services”). And the

prospect that the sender might nevertheless profit through some “extraneous and

speculative” effect on its business was not enough to convert the informational faxes into

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“advertisements.” Sandusky, 788 F.3d at 225; see also BPP, 53 F.4th at 1113 (rejecting

similar argument). Likewise, a fax asking healthcare recipients to verify demographic data

– but not describing a product or asking recipients to buy anything – is not a prohibited

TCPA “advertisement,” even if the sender uses the data it solicits to populate databases

that it then sells to clients. Robert W. Mauthe, M.D., P.C. v. Optum Inc., 925 F.3d 129,

132–33 (3d Cir. 2019).

We recognize, again, that in distinguishing faxes like these from commercial

“advertisements,” courts sometimes emphasize that they do not propose a sale to the

recipient. See, e.g., Sandusky, 788 F.3d at 222. But what those cases turn on is the absence

of any offer of a product or service, free or otherwise, together with the principle that this

gap cannot be filled by the possibility that the sender “might gain an ancillary, remote, and

hypothetical economic benefit later on.” Id. at 225. Here, by contrast, there is an offer –

indeed, an upfront promotion – of a product, and it is coupled with a direct mechanism by

which the sender will profit if the offer is accepted, in the form of the plaintiff’s

commission allegation. That makes this case different, taking it outside the ambit of

decisions like Sandusky.

Instead, this case more resembles Boehringer, in which the court considered a fax

sent to a medical practice by a pharmaceutical company, offering a free and “informative”

dinner meeting discussing certain physical ailments related to the company’s products. 847

F.3d at 93–94. That fax, like the one at issue here, offered no product for sale to its

recipient. But that did not by itself, the court explained, mean that the fax lacked the

necessary “commercial nexus.” Id. at 95–96; see Sandusky, 788 F.3d at 225 (agreeing that

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“a fax need not be an explicit sale offer” to qualify as an “advertisement”). The plaintiff

had alleged that the defendant would profit from its free offer indirectly, by promoting its

products at the free dinner, which would in turn be enough to make the fax a commercial

“advertisement.” Boehringer, 847 F.3d at 95. Here, too, we have the same critical pairing

of promotion with profit. To be sure, this transaction involves three parties, not two; PDR

Network profits by way of commission payments by drug companies, not fax recipients.

But we see no reason why the “commercial” nature of PDR Network’s pitch for its eBooks

should turn on the number of parties involved in its business model.

Finally, we emphasize that this litigation remains in its early stages. It is still the

case today, as we first observed in PDR I, that Carlton & Harris has yet to take any

discovery, which means that little is known about the “details of PDR Network’s business

model” or even the contents of its eBook. See 883 F.3d at 468; see also Boehringer, 847

F.3d at 95–96 (noting difficulties faced by plaintiffs, pre-discovery, in knowing whether

free fax offer has requisite “commercial purpose”). Carlton & Harris’s commission

allegation may be plausible, see PDR I, 883 F.3d at 468, but that does not mean it will be

borne out by discovery. Instead, discovery may show that there are no commission

payments, nor anything else to support a finding that PDR Network’s free offer is

commercial in nature. Indeed, that is what happened in both Sandusky and BPP, which

affirmed district court grants of summary judgment to TCPA defendants after discovery

had been completed. Sandusky, 788 F.3d at 225 (“[N]o record evidence reliably shows

that there would be . . . a financial benefit from these faxes[.]”); BPP, 53 F.4th at 1113

(finding no record evidence to support “supposed business rationale” under which

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apparently informational fax would in fact have been designed to solicit business). But for

present purposes, we accept as true Carlton & Harris’s commission allegation and find it

adequate, at this preliminary stage, to state a claim that the fax offer of a free eBook is a

commercial “advertisement” subject to the TCPA.

2.

We reach a different result with respect to the plaintiff’s second new allegation: that

PDR Network’s fax is a “pretext” to future advertising. As framed in Carlton & Harris’s

amended complaint, this allegation turns entirely on the opt-out notice at the bottom of the

fax: “To opt-out of delivery of clinically relevant information about healthcare products

and services from PDR via fax, call [listed phone number].” J.A. 31. According to the

plaintiff, because the fax refers to the prospect of future transmissions “about healthcare

products and services from PDR,” and those products and services are commercially

available for sale, the offer of a free eBook is a “pretext” for future commercial advertising.

J.A. 17.

This “pretext” allegation invokes a term of art used by the FCC and TCPA case law.

In its most basic form, a prohibited “pretext” would be a fax advertisement that calls itself

something else – say, a survey – but in fact promotes a product or service for sale. See

2006 FCC Rule, 71 Fed. Reg. at 25973. What Carlton & Harris is alleging – a “‘pretext’

to future advertising,” J.A. 17 (emphasis added) – is somewhat more sophisticated: A fax

that offers a good or service that is free but will be used, once accepted, to promote goods

or services at a cost. The prototypical case law example is the fax at issue in Boehringer,

which allegedly invited doctors to a free dinner seminar at which they would be solicited

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for sales by the drug company that sent the fax. That offer of a free seminar, the court

concluded, was a “pretext” or prelude for a sales promotion, giving it the “commercial

nexus” necessary to qualify as a TCPA “advertisement.” 847 F.3d at 96; see also id. at 98

(Leval, J., concurring); 2006 FCC Rule, 71 Fed. Reg. at 25973 (discussing similar genre

of “‘free’ seminars [that] serve as a pretext to advertise commercial products and

services”). Offers of free goods, too, can serve as a pretext for a subsequent solicitation.

See 2006 FCC Rule, 71 Fed. Reg. at 25973 (describing fax that offers free publication that

in turn includes product promotions). Either way, the basic idea is the same: Acceptance

of a free good or service is leveraged into an opportunity for a sales pitch, giving the free

fax offer a “commercial pretext.” Boehringer, 847 F.3d at 95.

We have no reason to doubt the legal viability of this pretext theory. It has been

endorsed by other courts, see, e.g., Boehringer, 857 F.3d at 97; Sandusky, 788 F.3d at 225;

but see Mauthe, 925 F.3d at 135 (leaving question open), and regularly applied by the FCC,

see, e.g., Presidential Who’s Who DBA Presidential Who’s Who, Inc., 25 FCC Rcd. 13759

(2010) (concluding that fax offering recipients free listing in directory was an “unsolicited

advertisement” because free listing was then leveraged for subsequent sales pitch for

directory). But in any event, we agree with the district court that even under that theory,

the pretext allegation in this case, centered on the fax’s opt-out notice, falls short of

“creat[ing] the required underlying commercial nexus.” PDR III, 2022 WL 386097, at *7.

The problem for the plaintiff is that the factual allegation in its amended complaint

does not match the legal theory it is relying on. Carlton & Harris does not allege that

accepting the eBook would open the door to future advertising – that the eBook itself, for

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instance, contains promotions for PDR Network products, cf. 2006 FCC Rule, 71 Fed. Reg.

at 25973, or that it would otherwise serve as a prelude to subsequent solicitations. Instead,

Carlton & Harris alleges something like the opposite: that regardless of whether it accepts

the free eBook offer and even if it does nothing at all, it will receive future promotional

faxes, per the quoted opt-out notice. J.A. 17. But the point of the pretext theory, again, is

that the free offer takes on a commercial character because its acceptance will lead to a

subsequent sales pitch, see Boehringer, 847 F.3d at 95–96, and here, on the plaintiff’s own

account, the free eBook offer has nothing to do with the future sales promotions referred

to in the opt-out clause. However annoying the hypothesized future faxes may be, that is,

they cannot convert a prior and unrelated free offer into something “commercial” under the

pretext theory.

III.

For the reasons given above, the district court’s order is vacated and the case

remanded for proceedings consistent with this opinion.

VACATED AND REMANDED

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THACKER, Circuit Judge, concurring:

I concur in the thorough majority opinion given that the “burden at the pleading

stage” is “minimal.” Carlton & Harris Chiropractic, Inc., v. PDR Network, LLC (“PDR

I”), 883 F.3d at 474 (Thacker, J., dissenting). Moreover, as I recognized in my 2018

dissenting opinion, “[b]ecause the TCPA is a remedial statute, it ‘should be liberally

construed and . . . interpreted . . . in a manner tending to discourage attempted evasions by

wrongdoers.’” PDR I, 883 F.3d at 474 (Thacker, J., dissenting) (quoting Scarborough v.

Atl. Coast Line R. Co., 178 F.2d 253, 258 (4th Cir. 1949); Gager v. Dell Fin. Servs., LLC,

727 F.3d 265, 271 (3d Cir. 2013) (“The TCPA is a remedial statute that was passed to

protect consumers . . .”)). However, I write separately to express my view that this lawsuit

pushes the outer limits of that “minimal” burden and liberal construction.

I agree that because of the low pleading bar, this case remains alive, but in my view,

the prognosis is not good.

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