Antitrust Law Daily Wrap Up, ADVERTISING—IllAppCt: Vicarious Liability Rules Apply to Telephone Consumer Protection Act Claims, (Jun 19, 2013)

By Jody Coultas, J.D.

A Telephone Consumer Protection Act (TCPA) class action was improperly certified because the circuit court failed to properly determine whether a facsimile sender was acting within its authority to send advertisements on behalf of an advertiser, according to an Illinois appellate court (Uesco Industries, Inc. v. Poolman of Wisconsin, Inc., June 17, 2013, Delort, M.).

Uesco Industries, Inc. alleged that Poolman of Wisconsin, Inc. violated the TCPA by sending unsolicited faxes multiple recipients without permission or invitation. Poolman argued that it did not send or authorize the sending of the fax advertisement, but did hire a third-party fax broadcaster, Business to Business Solutions (B2B), to send advertisements to small electric motor repair and service companies only.

A circuit court granted class certification of the TCPA claims, finding that the faxes were sent on behalf of Poolman and that the TCPA did not exempt Poolman from liability because B2B, mistakenly or otherwise, sent a fax to someone outside of the desired target group. The court did not expressly find an agency relationship existed between Poolman and B2B, and ruled that Poolman was liable for B2B’s action despite evidence that sending the faxes at issue exceeded the scope of its authority.

Section 227 of the TCPA makes it unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States to use send an unsolicited advertisement using a facsimile machine. Section 217 states than an act by an agent of a company acting within the scope of his employment shall be also deemed to be the act of the company.

The circuit court failed to use the proper legal standard for imposing vicarious liability under the TCPA, according to the court. Uesco argued that the TCPA and federal regulations created a form of vicarious liability making an entity liable when a third party sends unsolicited communications on its behalf in violation of the TCPA. Courts have relied on FCC regulations to conclude that a defendant cannot escape liability simply by hiring an independent contractor to transmit unsolicited facsimile advertisements on its behalf. However, courts need to take into account Section 217 and whether the agent was acting within the scope of its authority. The TCPA required the circuit court to determine whether B2B exceeded the scope of its authority by sending fax advertisements to companies other than those that repair and service small electric motors.

B2B exceeded the scope of its authority when it sent fax advertisements to persons or companies other than those that service and repair small electric motors, the court held as a matter of law. There was sufficient evidence that Poolman limited the advertising campaign to service and repair companies, and, therefore, limited B2B’s authority to send faxes on its behalf. The court did not determine whether Poolman was liable for the faxes sent on its behalf to persons or companies that service and repair small electric motors.

The circuit court abused its discretion by certifying the class because Uesco could not adequately represent the class, according to the court. Because Uesco was not an electric motor servicers, it was outside the scope of fax recipients authorized by Poolman for the advertising campaign.

The case is No. 1-11-2566.

Attorneys: Brian Wanca (Anderson & Wanca Law Office) for Uesco Industries, Inc. Mike Resis (Smith Amundsen LLC) for Poolman of Wisconsin, Inc.

Companies: Uesco Industries, Inc.; Poolman of Wisconsin, Inc.; Business to Business Solutions

Cases: Advertising IllinoisNews