Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Mich.: Fax advertisement recipient lacked standing to assert TCPA claim based on fax he had never seen, (May 12, 2014)

By Jody Coultas, J.D.

A restaurant that hired a third party to send fax advertisements on its behalf was entitled to summary judgment of Telephone Consumer Protection Act (TCPA) claims filed by an advertising recipient, the federal district court in Detroit ruled (Avio, Inc. v. Alfoccino, Inc., May 9, 2014, Rosen, G.). The restaurant was not vicariously liable for the third party’s TCPA violations.

The restaurants hired Business-to-Business Solutions (B2B) to send facsimile advertisements to recipients in Southeast Michigan. B2B obtained a list of fax numbers from a company called InfoUSA. B2B represented that this list was composed of individuals who were willing to accept fax advertisements, but did not actually seek or obtain permission before faxing the advertisements.

The recipient never produced an original fax from the restaurant, and had no memory of receiving such a fax. Rather, the recipient offered an analysis of a B2B hard drive showing the number of faxes sent to support the TCPA claim.

Article III standing. The recipient lacked Article III standing to assert the TCPA claims, according to the court. To have standing, the recipient had to show an injury in fact fairly traceable to the restaurant that was likely to be redressed by a favorable decision. The recipient’s injury was based on the review of B2B’s hard drive, rather than on personal knowledge of a fax. Although the TCPA provided a cause of action against a person who sends a fax advertisement, Congress never expressed an intent to circumvent Article III. It would be extremely difficult for a party that does not see, know about, or otherwise become aware of an unsolicited fax advertisement to show how the right to privacy could be invaded by the fax advertisement such that the party was injured in fact. The court’s holding differed from other cases involving B2B, which held that the TCPA does not specifically require proof of receipt.

Vicarious liability. B2B acted outside the scope of its authority, according to the court. The Federal Communications Commission has construed the TCPA to include coverage of persons who sends a fax and the person “on whose behalf” a fax was sent. The recipient argued that the TCPA is a strict liability statute, and that even if vicarious liability applied, a question of fact existed as to B2B’s authority. A third-party may be liable under the TCPA for acts of another under the broad agency principles of formal agency, apparent authority, and ratification. Although the restaurant authorized B2B to send facsimiles on their behalf, it did so based upon B2B’s representation that it only sent faxes to recipients who consented to receiving unsolicited faxes. The recipient failed to present any evidence that would warrant a dispute of material fact as to general agency principles, apparent authority, or ratification. Therefore, the court declined to hold that the restaurant was vicariously liable for B2B’s TCPA violations.

The court noted that it was disingenuous for the recipient to suggest that the court’s holding left the recipient without recourse because the recipient chose to use B2B as a vehicle to attach TCPA liability to the restaurant rather than seeking to hold B2B directly liable.

The case is No. 2:10-cv-10221.

Attorneys: Brian J. Wanca (Anderson & Wanca) for Imhoff Investment, LLC and Avio, Inc. Jason R. Mathers (Harvey Kruse) for Alfoccino, Inc. and D. Taliercio Investments, Inc.

Companies: Business-to-Business Solutions; InfoUSA

Cases: Advertising ConsumerProtection Privacy MichiganNews