The United States Court of Appeals for the 11th Circuit recently ruled in Palm Beach Golf Center-Boca, Inc. v. Sarris that a company that contracted with a third party advertising firm to send fax advertisements could be directly liable under the Telephone Consumer Protection Act for faxes sent by the third-party firm on the company’s behalf. In so holding, the 11th Circuit adopted a framework advanced by the Federal Communications Commission that imposes broader liability for third-party faxing than for third-party calling made on a company’s behalf.
The text of the TCPA and FCC regulations contain different formulations for when liability attaches depending on whether the activity in question is a fax or a phone call (which includes, under FCC decisions, text messages). The TCPA makes it unlawful “to send” certain faxes and “to initiate” certain phone calls. From this seemingly insignificant variation in language, the FCC has advanced different formulations to determine who can be directly liable for the different activities regulated under the TCPA. For faxing, the FCC has defined a “sender” who may be liable as including “the person or entity on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement.” 47 C.F.R. § 64.1200(f)(10). In contrast, in its Dish Network declaratory ruling, the FCC concluded that only the party that initiates a call may generally be directly liable under the TCPA, rather than the seller or other party on whose behalf the call is initiated, though it clarified that a seller may be vicariously liable under “federal common law rules of agency” for calls initiated on its behalf.
In Palm Beach Golf Center, the plaintiff received a fax advertisement sent by a marketing company on behalf of the defendant. The defendant persuaded the trial court to grant it summary judgment in part on the basis that under Dish Network, the defendant was not directly liable for the conduct of a third party acting on its behalf. On appeal, the 11th Circuit asked the FCC to weigh in on whether Dish Network applied to faxes. The FCC took the position that Dish Network was not applicable to faxes and that a “sender” can be directly liable under the TCPA even when faxes are simply sent on its behalf. Applying Chevron deference, the 11th Circuit adopted the FCC’s reasoning and reinstituted the case against the defendant.
The distinction between faxes and calls under the TCPA can be dispositive. For example, in Thomas v. Taco Bell, a “seller” escaped liability for text messages sent by an advertiser working on its behalf under circumstances similar to those in Palm Beach Golf Center because of the lack of a traditional agency relationship with the advertiser. Should the logic of Palm Beach Golf Center be more widely adopted with respect to fax advertisements, third-party liability under the TCPA may turn on the medium an advertiser uses to communicate with consumers on behalf of its clients.