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

District Court, S.D. West Virginia·Decided November 21, 2024·No. 3:15-cv-14887·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA

HUNTINGTON DIVISION

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

Plaintiff,

v. CIVIL ACTION NO. 3:15-14887

PDR NETWORK, LLC, PDR DISTRIBUTION, LLC, PDR EQUITY, LLC, and JOHN DOES 1-10,

Defendants.

MEMORANDUM OPINION AND ORDER

Pending before the Court is a Motion for Summary Judgment on behalf of Defendants PDR Network, LLC, and PDR Distribution, LLC, and PDR Equity, LLC (collectively referred to as “PDR Network”). ECF No. 126. Plaintiff Carlton & Harris Chiropractic, Inc. opposes the motion. Upon review of the parties’ arguments and submissions, the Court GRANTS the motion for the following reasons. I. BACKGROUND On September 6, 2023, the Fourth Circuit Court of Appeals issued its most recent decision in this case’s lengthy procedural history. In vacating and remanding this Court’s dismissal of the First Amended Complaint Class Action Complaint, the Fourth Circuit found that Plaintiff adequately alleged that an unsolicited fax from PDR Network “offering a free eBook with information about prescription drugs . . . had the necessary commercial character to make it an ‘unsolicited advertisement’ under the Telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C. § 227.1 Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 80 F.4th 466, 470 (4th 2023) (PDR VI). In its decision, the Fourth Circuit stated that the key issue “is whether a fax that touts the ‘quality’ of a ‘good[]’ that is offered for free, rather than at a price, can fall within” the

TCPA’s definition of an “unsolicited advertisement.” Id. The TCPA defines an “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 invitation or permission, in writing or otherwise.” 47 U.S.C. § 227(a)(5). As explained in prior opinions, the fax at issue was sent to Plaintiff, a chiropractic office, in 2013 by PDR Network, the publishers of the Physicians’ Desk Reference® (PDR). See, e.g., Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC (PDR I), 883 F.3d 459, 462 (4th Cir. 2018). 2 The PDR lists certain prescription drugs with the prescribing information, and pharmaceutical companies pay the PDR Network for their drugs to be included as a listing. Id. PDR Network then distributes the pharmaceutical companies’ listings to healthcare providers. Id.

The fax at issue was addressed to Plaintiff’s “‘Practice Manager’ and urged the recipient to ‘reserve’ a ‘FREE 2014 Physicians’ Desk Reference eBook.’” PDR VI, 80 F.4th at 470. The fax included an internet link, a customer service phone number, an email address, and instructions of how to opt out of fax notices. Id. at 470-71. It also provided information stating, “[t]he eBook contained the ‘[s]ame trusted, FDA-approved full prescribing information’ as the hard-copy

1Section 227(b)(1)(C) generally prohibits “unsolicited advertisement[s]” to be sent to fax machines. 47 U.S.C. § 227(b)(1)(C). 2Vacated and remanded on other grounds, Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC, 588 U.S. 1 (2019). 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. (citation omitted). In March 2021, Plaintiff filed its First Amended Class Action Complaint, alleging new theories of recovery. One theory is “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.” Id. at 472; see First Am. Class Action Compl. ¶20.3 Another theory is “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.’” Id.; see First Am. Class Action Compl. ¶19.4 Upon motion of PDR Network, this Court dismissed these claims by

3Paragraph 20 of the First Amended Class Action Complaint provides:

Defendants receive money from the pharmaceutical companies whose drugs are listed in the Physicians’ Desk Reference, and, on information and belief, the amount of money that Defendants receive from the drug companies whose products are featured in the 2014 PDR e-Book turns on how many copies of the 2014 PDR e-Book Defendants distribute, and so Defendants stand to profit when a provider accepts a free copy.

Id. 4Paragraph 19 of the First Amended Class Action Complaint states:

In addition to being an “advertisement” on its face, [the fax] is also a “pretext” to future advertising or part of an “overall marketing campaign” because it states that if a recipient does not “opt-out of delivery of clinically relevant information about healthcare products and services from PDR,” then the recipient will continue to receive faxes “about healthcare products and services from PDR via fax” in the future. On information and belief, those future faxes pertain to Defendants’ commercially available “health knowledge products and services,” their “behavior-based prescription management programs,” their “event-driven and clinically relevant healthcare messaging,” their “Physicians’ Desk Reference® suite of services,” their “interactive drug information Memorandum Opinion and Order entered on February 8, 2022. Carlton & Harris Chiropractic, LLC v. PDR Network, LLC, Civ. Act. No. 3:15-14887, 2022 WL 386097 (S.D. W. Va. Feb. 8, 2022). In deciding whether dismissal was proper, the Fourth Circuit held the term “advertisement”

under the TCPA “is limited to faxes that are ‘commercial in nature.’” Id. (quoting Sandusky Wellness Ctr., LLC v. Medco Health Sols., Inc., 788 F.3d 218, 224 (6th Cir. 2015)). The Fourth Circuit explained that an advertisement is more than something just transmitting information, it is transmitting “information with a ‘commercial nexus’ to the sender’s ‘business.’” Id. at 473 (quoting Physicians Healthsource, Inc. v. Boehringer Ingelheim Pharms., Inc., 847 F.3d 92, 96 (2d Cir. 2017)). The Fourth Circuit emphasized that “[a] prohibited ‘advertisement’” under the TCPA is one comprised of “a ‘commercial solicitation’ – ‘of, in, or relating to commerce,’ with ‘profit as the primary aim.’” Id. (quoting Sandusky, 788 F.3d at 225, 222-23 (internal quotation marks omitted in PDR VI)). In other words, a fax without a commercial component is not barred by the TCPA. Id. at 474 (citations omitted).

Applying this definition to the First Amended Class Action Complaint’s new theories of recovery, the Fourth Circuit found Plaintiff’s claim that PDR Network is paid a commission based upon how many eBooks are distributed, assuming its truth, sufficiently alleges a commercial component to survive a motion to dismiss. Id. at 475.

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