A Chicago federal judge has declined to let Wells Fargo off
the hook of a junk fax class action lawsuit against the bank and one of its
member services credit card processer, saying, even if Wells Fargo had no
knowledge of the credit payment company’s decision to send a fax bearing its
name, the bank’s name on the fax and business connection to its partner means
it could share liability for the unauthorized fax.
On March 16, U.S. District Judge Thomas M. Durkin ruled in
favor of Chicago podiatrist Heather McCombs, refusing the request by Wells
Fargo and Cayan LLC, which does business as Capital Bankcard, to dismiss the
foot doctor’s lawsuit, or at least reject her attempt to certify the litigation
as a class action.
“The Court fails to see the absurdity in the proposition
that a sponsoring bank may be ‘on the hook’ if a third-party ISO/MSP solicits
merchant business on its behalf and fails to follow the law,” Judge Durkin
The case centers on a fax McCombs claimed her office
received “an unsolicited, four-page fax” from Capital Bankcard in November 2015,
advertising “merchant payment processing services” offered by Capital Bankcard.
The fax, which purportedly began with the statement, “We called your office
earlier regarding LOWERING your merchant rate considerably…”, identified Capital
Bankcard as “a Wells Fargo bank member.”
The fax also included a draft merchant payment services
contract, which included a clause that read: “In exchange for Capital Bankcard
and Wells Fargo Bank, N.A. (the Guaranteed Parties) acceptance of, as
applicable, the Agreement, the undersigned unconditionally and irrevocably
guarantees the full payment and performance of Client’s obligations under the
McCombs asserted in her complaint that she had never had a
relationship with Capital Bankcard at any point before receiving the fax.
McCombs filed her class action complaint with attorney Curtis
Warner, of Park Ridge, on Dec. 2, 2015, asserting the fax violated the federal
Telephone Consumer Protection Act. She asked the court to certify the case as a
class action, and award actual and statutory damages. Under the TCPA, defendants
could be made to pay $500-$1,500 per violation.
According to court documents, the defendants replied to the
lawsuit in December 2015 with a settlement offer, asking McCombs to drop her
lawsuit in exchange for $7,500. In January 2016, they followed that offer with
a check for $7,500.
Court documents indicate McCombs rejected the offer and
voided the check.
The defendants then asked the court to dismiss the case,
alleging the rejection of the settlement offer and voiding of the check had
mooted the case. Wells Fargo further specifically
asked that it should be dismissed from the case, arguing it had never sent the
fax, nor did it authorize Capital BankCard to send the fax.
“If mere references to a sponsor bank on the merchant
application attached to a fax were sufficient to allege a TCPA claim against
the bank, that would mean that every time a third party faxed a merchant
application, the sponsoring bank would potentially be on the hook for TCPA
liability merely for being identified as the processing bank associated with
the underlying transaction,” Wells Fargo argued. “That would be absurd.”
While McCombs’ case was pending, the U.S. Supreme Court decided
the case of Spokeo v. Robins, in which the nation’s high court determined
companies being sued for technical violations of laws, like the TCPA, can seek
to dismiss the action if they can demonstrate the plaintiffs didn’t suffer any “concrete”
harm from the technical violation of the law.
In the wake of that decision, Wells Fargo and Capital
BankCard also asked the court to dismiss the case on the grounds that receiving
a single fax didn’t mean McCombs or any other potential plaintiffs had suffered
Judge Durkin, however, rejected that argument, noting all
federal district courts in the U.S. Seventh Circuit, which includes the states
of Illinois, Indiana and Wisconsin, had to this point found the receipt of any
junk fax amounted to concrete injury under the TCPA, thwarting the impact of
the Spokeo ruling.
The judge also said he did not believe the mere offer of
settlement should eliminate McCombs’ ability to sue.
And the judge refused to let Wells Fargo leave the
litigation, saying the presence of Wells Fargo’s name on the fax, and their
inclusion in the draft contract, meant they could be held liable under the TCPA
for faxes sent by a third party, as the plaintiffs could reasonably argue the
fax was sent on behalf of Wells Fargo.
“Wells Fargo’s name does appear on the fax, the fax does
advertise services performed by Wells Fargo, and the fax contains a contract
for services to which Wells Fargo is a necessary party,” the judge wrote. “Moreover,
the fax plainly indicates a contractual relationship between Wells Fargo and
Capital Bankcard pursuant to which Capital Bankcard may solicit and service
merchant business processed by Wells Fargo as the sponsoring bank.”
The decision did not address the actual certification of the
class. But the judge said McCombs would be allowed to move to move forward with
the request to certify a class of additional plaintiffs who may have also
received similar faxes Capital Bankcard.
Capital Bankcard and Wells Fargo are defended by attorneys
with the Tannen Law Group P.C., of Chicago, and the firm of Orrick, Herrington
& Sutcliffe LLP, of Washington, D.C.