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Italia Foods, Inc v. Marinov Enterprises

November 16, 2007

ITALIA FOODS, INC, PLAINTIFF,
v.
MARINOV ENTERPRISES, INC., DEFENDANT.



The opinion of the court was delivered by: Wayne R. Andersen District Judge

MEMORANDUM OPINION AND ORDER

This matter comes before the court on defendant's motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, the motion is denied.

BACKGROUND

Plaintiff Italia Foods, Inc. ("Italia") brought a three-count complaint as a class action suit against defendant Marinov Enterprises, Inc. ("Marinov") in the Circuit Court of Lake County, Illinois alleging violations of the Telephone and Consumer Protection Act of 1991 ("TCPA"), 47 U.S.C. § 227 (Count I), the tort of conversion (Count II), and the Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/2 (Count III). Both parties are Illinois corporations. Defendant removed the action to federal court as a federal question, and the plaintiff subsequently voluntarily dismissed Counts II and III.

The complaint alleges that the defendant faxed 25 unsolicited advertisements to the plaintiff's fax machine and at least 39 others in violation of the TCPA. Marinov moved to dismiss the complaint asserting that the TCPA is unconstitutional because: 1) the restrictions on commercial speech violate the First Amendment; 2) the excessive fines violate the Fifth and Eighth Amendments; and 3) the requirement that a state enforce a federal law violates the Tenth Amendment. The United States filed a motion to intervene, which was granted, and has submitted a brief in opposition to this motion.

STANDARD OF REVIEW

Rule 12(b)(6) allows a motion to dismiss for failure to state a claim upon which relief can be granted. The court must accept all well-pleaded allegations in the complaint as true, and draw all reasonable inferences in a light favorable to the plaintiff. Jackson v. E.J. Brach Corp., 176 F.3d 971, 978 (7th Cir. 1999). This motion tests the legal sufficiency of a pleading, not its factual accuracy. Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 675 (7th Cir. 2001). To survive a 12(b)(6) motion, the complaint need only contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). A complaint must describe the claim with sufficient detail as to give the defendants "fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Further, the "allegations must plausibly suggest that the defendant has a right to relief, raising that possibility above a 'speculative level.'" EEOC v. Concentra Health Servs., 496 F.3d 773, 776 (7th Cir. 2007) (citing Bell Atlantic, 127 S.Ct. at 1965).

DISCUSSION

The TCPA prohibits using any fax machine, computer, or other device to send unsolicited advertisements to another fax machine unless the material meets an exception such as having an "established business relationship" with the sender. 47 U.S.C. §227(b)(1)(C). The TCPA does not apply to non-commercial unsolicited faxes. A recipient of unsolicited fax advertisement has a private right of action and may recover actual damages or $500 for each violation, whichever is greater. 47 U.S.C. §227(b)(3)(B). The court may award up to $1500 per violation if the defendant acted "willfully or knowingly." 47 U.S.C. §227(b)(3)(C). We will consider each of Marinov's constitutional challenges to the TCPA in turn.

I. First Amendment -- Commercial Speech

The defendant argues that the TCPA violates the First Amendment on freedom of speech grounds. Before we begin our analysis, we note that many federal and state courts have heard this particular constitutional challenge, including this one, and found the TCPA's restriction of commercial speech to be a permissible one. See Phillips Randolph Enters., LLC v. Rice Fields, No. 06 C 4968, 2007 WL 129052 (N.D. Ill. Jan 11, 2007); Missouri ex rel. Nixon v. Am. Blast Fax, Inc., 323 F.3d 649 (8th Cir. 2003); Destination Ventures v. FCC, 46 F.3d 54, 57 (9th Cir. 1995); Minnesota v. Sunbelt Communs. & Mktg., 282 F. Supp. 2d 976 (D. Minn. 2002);Witting Corp. v. MSI Mktg., Inc., No 02 CH 6332(Cook County, Ill. Apr. 3, 2003); CE Design, Ltd. V. Peripheral Solutions, Inc., No. 04 L 564 (Lake County, Ill. Mar. 8, 2005); Rudgayzer & Gratt v. Enine, Inc, 779 N.Y.S.2d 882 (N.Y. App. Term 2004).

The Supreme Court has developed a four-part test to determine whether the restrictions placed upon commercial speech pass constitutional muster. Cent. Hudson Gas & Elec. Corp v. Pub. Serv. Comm'n, 447 U.S. 557, 566 (1980). First, we must ask whether the commercial speech concerns unlawful activity or is misleading. Thompson v. Western States Med. Ctr., 535 U.S. 357, 367 (2002); Cent. Hudson, 447 U.S. at 566. If so, then the commercial speech is not protected by the First Amendment. Second, if the commercial speech is protected, the governmental interest asserted must be substantial. Thompson, 535 U.S. at 367 (citing Cent. Hudson, 447 U.S. at 566). Third, the regulation must directly advance the governmental interest. Thompson, 535 U.S. at 367 (citing Cent. Hudson, 447 U.S. at 566). Finally, that regulation must not be "more extensive than is necessary to serve that interest." Thompson, 535 U.S. at 367 (citing Cent. Hudson, 447 U.S. at 566).

a. Substantial Government Interest

In this case, the commercial speech at issue is not alleged to be misleading or concerning unlawful activity. Thus, we turn to the second prong of the Central Hudson analysis and ask whether the governmental interest asserted is substantial. In 1991, Congress noted that more than 30 billion pages of information were being faxed each year and that unsolicited advertisements, or "junk fax," had underwent an "explosive growth" in the past decade. H.R. Rep. No. 102-317, at 10 (1991). Unwanted faxes shift both the costs of advertising to the receiver and render the recipient's fax machine "unavailable for legitimate business messages while processing and printing the junk fax." Id. Other courts have held more recent evidentiary hearings on this issue and found that "unsolicited fax advertisements can shift to the recipient more than one hundred dollars per year in direct costs" and that "the costs and amount of interference resulting from unrestrained fax advertising continue to be significant." Missouri ex rel. Nixon v. Am. Blast Fax, Inc., 323 F.3d 649, 655 (8th Cir. 2003); see alsoDestination Ventures, Ltd. v. FCC, 46 F.3d 54, 57 (9th Cir.1995). Even if the costs associated with printing faxes have been reduced in the past decade, as the defendant argues, the Supreme Court has long recognized that the taking of "property" is not excused even if the ...


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