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 wrote.

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 foregoing agreements.”

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 concrete injury.

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. 

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