Defendant-Business Not Vicariously Liable For Third-Party B2B’s Unsolicited Fax Advertisements In Putative TCPA Class Action

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In Palm Beach Gold Center-Boca, Inc. v. Sarris, No. 12-80178, 2013 U.S. Dist. LEXIS 155912 (S.D. Fla. Oct. 22, 2013), the United States District Court for the Southern District of Florida recently granted summary judgment in favor of a defendant in a putative class action on the grounds that the defendant could not be held vicariously liable for purported violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”).  Notably, Sarris is one of several interrelated putative TCPA class actions nationwide seeking to hold businesses liable for the conduct of third-party marketer Business to Business Solutions (“B2B”).

In Sarris, the defendant, John G. Sarris, D.D.S., hired an independent contractor to market the defendant’s dental practice.  The third-party subsequently engaged B2B to send 10,000 fax advertisements to telephone numbers within a specific zip code.  The plaintiff, Palm Beach Golf Center-Boca, Inc., purportedly received a fax from the defendant sent by B2B.  The plaintiff’s owner, however, did not remember ever seeing the fax, did not have any actual knowledge that the plaintiff received the fax, and could not identify any employee of the plaintiff that could verify that the fax was received.  Instead, the plaintiff’s counsel had obtained the plaintiff’s telephone number from B2B’s fax transmission records from another lawsuit that arose out of B2B’s fax transmissions, and the plaintiff’s counsel (ironically) sent a fax to the plaintiff informing it that it may have a claim against the defendant for violations of the TCPA.

The plaintiff subsequently filed a putative class action against Sarris for the transmission of unsolicited faxes in violation of the TCPA.  The defendant moved for summary judgment on the grounds that the plaintiff was unable to prove that the defendant could be vicariously liable for B2B’s actions under the TCPA.

Relying on the FCC’s recent opinion in In re Joint Petition filed by Dish Network, 28 FCC Rcd. 6574 (2013) (which technically dealt with the application of vicarious liability to sellers for telemarketing calls initiated by third-parties), the District Court held that the FCC’s application of vicarious liability also applied to a “sender” of unsolicited facsimile advertisements under § 227(b)(1)(C). 

In granting the defendant’s motion for summary judgment, the District Court noted that the plaintiff failed to plead vicarious liability in its complaint and instead alleged that the defendant had directly sent the faxes himself.  The District Court held that the plaintiff’s failure to plead vicarious liability, when it was now undisputed that the defendant did not directly send any of the faxes, necessitated that the plaintiff’s claim fail per se.  (The District Court also noted that the plaintiff’s failure to join B2B may have constituted a failure to join a necessary party to the action.) Notwithstanding the procedural defect, the District Court further held that the defendant was still entitled to summary judgment on the vicarious liability theories of agency, apparent authority, and ratification. 

The District Court held that there was no evidence that the defendant had approved the fax at issue, such that there was no evidence that controlled B2B’s actions, and therefore B2B could not be an “agent” of the defendant.  The plaintiff argued that there was a genuine issue of fact as it was B2B’s “custom and practice” of obtaining approval before sending out faxes.  However, the Court held the plaintiff’s claim of “custom and practice” could not create a genuine issue of fact in light of the uncontradicted testimony that the defendant had not approved the fax that was sent to the plaintiff, and therefore a claim of formal agency necessarily failed.

In rejecting the plaintiff’s theory of apparent authority, the District Court noted that apparent authority cannot exist when a third-party believes that the alleged actor is in-fact a principal.  Accordingly, because the plaintiff’s own complaint alleged that the defendant (the now-alleged principal) sent the fax directly and not B2B (the now-alleged agent), the plaintiff could not establish apparent authority.  Moreover, the District Court held that because the the plaintiff’s owner admitted that he did not know whether he received a fax (and instead was relying solely on B2B’s transmission records), it is impossible for the plaintiff to show that it ever “relied” on a representation of B2B. 

The District Court further held that the plaintiff could not prove vicarious liability under a theory of ratification, as the plaintiff could not present any evidence that the defendant was fully informed of the material acts surrounding B2B’s conduct, and that the defendant’s act of contacting B2B’s attorney after learning of the at-issue conduct could only demonstrate repudiation and not ratification. 

Finally, the District Court sua sponte raised the issue of whether the plaintiff had standing under Article III of the Constitution to assert a claim.  The court noted that in order to establish a violation of the TCPA, a plaintiff need only prove that a defendant “sent” a fax advertisement, and does not need to prove that the plaintiff received it.  However, the also noted under the TCPA’s language, only the “recipient” of a fax has suffered an injury.  In this respect, the court further held that the TCPA does not circumvent Article III’s requirement that a plaintiff demonstrate a “distinct and palpable injury” in order to have standing to assert a claim.  Because the plaintiff did not see, know about, or otherwise become aware of the alleged unsolicited fax advertisement until being contact by the plaintiff’s counsel, the court concluded that the plaintiff had suffered no injury in fact under the TCPA. 

Accordingly, the District Court entered summary judgment in favor of the defendant.

 

Topics:  Class Action, Dentists, Dish Network, Faxes, Independent Contractors, Standing, TCPA, Vicarious Liability

Published In: Civil Procedure Updates, Civil Remedies Updates, Communications & Media Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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