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Court: Manufacturer Must Defend 'Junk' Fax Lawsuit

According to a lawsuit, Atlas Heating and Sheet Metal Works faxed an unsolicited advertisement in 2005, which is punishable by a $500 fine per violation.

MADISON, Wis. (AP) — A Milwaukee heating and air conditioning company's insurance provider must defend the business against allegations it sent out an unsolicited "junk" fax in violation of federal law, a state appeals court ruled Tuesday.

The 1st District Court of Appeals' decision clears the way for a federal class action lawsuit to continue against Atlas Heating and Sheet Metal Works, Inc., and West Bend Mutual Insurance Co. The insurance carrier could find itself on the hook for $1.7 million in damages.

According to the appeals ruling and other court documents, Atlas faxed out a widespread advertisement in December 2005. Isaac Sawyer's business, A-1 Security Locksmiths, received one of 3,417 faxes, said Sawyer's attorney, David Oppenheim.

Sawyer alleged in federal court in Milwaukee that Atlas violated the Telephone Consumer Protection Act, a section of federal law that prohibits people from faxing unsolicited advertisements. Each violation is punishable by up to a $500 fine.

Sawyer also contended Atlas damaged his property by consuming paper and toner, caused general wear and tear on his fax machine and violated his privacy rights. The case has been on hold while state judges weigh whether West Bend Mutual must defend Atlas in court.

Milwaukee County Circuit Judge Timothy G. Dugan ruled last year the insurance company did indeed have such a duty.

West Bend Mutual appealed. The company argued Atlas' policy covers violations of individual privacy rights and Sawyer is listed in the lawsuit as doing business as A-1 Security Locksmiths, making the plaintiff a business, not a person. They also maintained the fax didn't amount to a publication and Atlas' policy doesn't apply since sending a fax is a deliberate act, raising questions about whether Atlas intentionally violated the law.

The appeals court voted 2-1 to uphold Dugan's decision.

Presiding Judge Patricia S. Curly wrote for the majority that Sawyer is a person, a term defined in many contexts as a business. The fax did amount to a publication that violated Sawyer's right to be left alone, a violation of federal law, she added.

As for Atlas' intentions, Curly said even if the company did knowingly violate Sawyer's rights his allegations allow for the possibility that the move was unintentional. That means West Bend Mutual's policy applies, she said.

Judge Ralph Adam Fine wrote in dissent that a single-page fax can hardly be construed as an invasion of privacy. The majority opinion essentially means every piece of junk mail could be construed as trespassing, creating a boon for class-action lawyers, he wrote.

West Bend Mutual attorney Jeff Leavell said the company is considering an appeal to the state Supreme Court.

"One of the linchpins of the court of appeals decision is the conclusion that this one-page, simple fax would be highly offensive to a reasonable person," he said. "I think most people would take single-page advertisements they don't want and quickly make a detour to the waste basket or recycling bin and wouldn't be highly offended by receiving it."

Oppenheim, Sawyer's attorney, praised the ruling. He called it a well-reasoned victory for Wisconsin businesses.

"A lot of the classic arguments insurers have made were dealt with and answered well," he said.

Atlas' attorney, John Slein, said the decision helps protect the company.

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