Seventh Circuit Reaffirms Stance On Sender Liability In TCPA Fax Litigation

By Joseph C. Wylie II, Molly K. McGinley, Nora E. Becerra

The Seventh Circuit recently reaffirmed its holding in Bridgeview Health Care Ctr., Ltd. v. Clark, Nos. 14-3728 & 15-1793 (7th. Cir. 2016), which established that agency principles apply in determining whether a fax was sent “on behalf of” a sender under the TCPA.

On June 16, 2016, the court in Paldo Sign & Display Co. v. Wagener Equities, Inc., No. 15-1267, 2016 WL 3348738 (7th Cir.) held that TCPA fax regulations do not impose strict liability on entities whose products or services are being promoted by third parties.  In Paldo, a company sued Wagener Equities under the TCPA after receiving an unsolicited fax promoting Wagener’s services.  That same communication allegedly was faxed to over ten thousand recipients via a third party distributor, Marketing Research, also known as B2B, which exposed Wagener to potential damages exceeding five million dollars.  Paldo maintained that Wagener was liable for B2B’s transfer of the faxes despite never having approved the ads.

Prior to trial, the district court granted Paldo’s motion for partial summary judgment, finding as a matter of law that the fax sent was an “advertisement” as defined by the TCPA, that the fax was sent to 10,145 fax numbers, and that it was sent without the recipients’ consent. Therefore the only issue that remained for trial was whether Wagener was liable under the TCPA as the “sender” of the fax, even though it was actually transmitted by B2B.  At trial, the jury determined that Wagener was not the “sender” because it had not authorized B2B to send the faxes at issue.

In instructing the jury on the meaning of “sender,” the district court rejected a strict liability reading, and the jury found that since Wagener had never authorized the faxes, it was not in fact their “sender” under the TCPA. On appeal, Paldo argued that the court should have confined the definition of “sender” used in the jury instructions to the language of the regulation instead of importing a common law vicarious liability standard through the use of the word “authorized.”  Furthermore, Paldo noted that the court’s use of agency analysis conflicted with cases from other circuits, offering the court an opportunity to reverse its analysis in Clark.  The court stood by its previous decision and again rejected the imposition of strict liability on a company simply because its goods or services were advertised, reasoning that “this would lead to absurd and unintended results.”

As we noted previously, the Sixth Circuit has rejected the Seventh Circuit’s application of agency principles in the context of unsolicited faxes.  It remains to be seen what test other circuit courts will apply on this issue.

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