One of the hottest areas in class actions is litigation under the Telephone Consumer Protection Act (TCPA). And one of the most significant issues in TCPA litigation is the existence and scope of vicarious liability. The key question is to what extent are businesses liable for the actions of third-party marketers who, without the consent of the recipient, send text messages or place calls using autodialers or prerecorded voices or transmit faxes?
Some plaintiffs had argued that businesses are strictly liable for TCPA violations committed in their name by third-party marketers. Last year, the FCC rejected that approach in a declaratory ruling. As we explained in our report, the FCC instead concluded that plaintiffs instead must prove liability under "federal common law principles of agency."
But that declaratory ruling was decided in the context of telemarketing. Should the same rule apply to alleged TCPA violations involving unsolicited marketing faxes? Can plaintiffs revive their old arguments that businesses are strictly liable for faxes advertising their services sent by others? Or are businesses not liable for TCPA violations that they themselves don't commit?
The Eleventh Circuit recently considered this issue in Palm Beach Golf Center-Boca, Inc. v. John G. Sarris, D.D.S., P.A. In that case, a marketer had allegedly sent several thousand unsolicited faxes advertising the services of a dental practice. When a recipient of a fax sued the dental practice under the TCPA, the district court granted summary judgment in part because the plaintiff had failed to show that the dental practice was vicariously liable for the marketers actions.
The Eleventh Circuit reversed. The court explained that the FCC's prior declaratory ruling that the limited scope of vicarious liability for TCPA violations applied only to telemarketing calls. But rather than decide what the vicarious-liability standard should be for faxes, the court held—based on a letter brief (pdf) submitted by the FCC—that the recipient of the fax didn't need to prove vicarious liability at all. Instead, the court held that the dental practice could be viewed as the sender itself and therefore the recipient could attempt to show that the dental practice had directly violated the TCPA itself.
That result is hard to swallow. The dental practice, after all, hadn't actually sent any faxes itself. And although it had hired the marketer, the evidence presented to the district court apparently showed that the dental practice had no direct role in the fax campaign—it didn't decide to whom to send faxes or even approve the final language of the fax itself. And it certainly didn't press the button to send the faxes.
Nonetheless, the court held—based on the FCC's letter brief—that the recipient of the fax could proceed to trial on the theory that the dental practice had committed a direct violation of the TCPA. The TCPA makes it unlawful "to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement." Under a natural reading of this language, one would think that the dental practice itself neither "use[d]" a fax machine nor "sen[t]" a fax. But in the FCC's view, a business is the "send[er]" of a fax transmitted by a third party so long as the fax was either sent on the business's "behalf" or if the fax "advertise[s] or promote[s]" the business's "goods or service."
The FCC's position conflates direct and vicarious liability for alleged TCPA violations involving faxes. There are accordingly strong reasons to think that other courts should refuse to defer to the FCC's interpretation. That said, businesses whose marketing activities may include third-party fax campaigns should be aware of the potential that courts will, like the Eleventh Circuit in Palm Beach Golf Center, adopt the FCC's position and authorize claims for direct liability under the TCPA.
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