Antitrust Law Daily Wrap Up, PRIVACY—N. D. Ill.: Vicarious liability for unsolicited fax ads required exploration of agency relationship, (Sep 4, 2013)

By Edward L. Puzzo, J.D.

Vicarious liability of a seller under the Telephone Consumer Protection Act (TCPA) for the actions of a third party fax advertising business required an examination of the existence and scope of an agency relationship and was not appropriate for resolution at summary judgment, the federal district court in Chicago has ruled (Savanna Group, Inc. v. Trynex, Inc., September 3, 2013, St. Eve, A.).

Savanna Group and a class of fax recipients brought an action against Trynex under Section 227(b) of the TCPA, which provides a private right of action when recipients without an existing business relationship with the sender receive unsolicited advertisements by fax.

A Trynex employee had hired Business-to-Business Solutions (B2B), a fax advertising business, to send faxes advertising Trynex’s equipment warranty program. B2B issued the fax ads to over 12,000 recipients it had obtained from a database. Savanna argued that, under the FCC regulations implementing the TCPA, entities “on whose behalf” faxes are sent are liable. Trynex argued that, under the general agency vicarious liability principles set forth in the Dish Network ruling, Trynex lacked an agency relationship with B2B and thus was not liable under TCPA.

Vicarious liability. The court stated that the determination of whether Trynex had vicarious liability for the actions of the third party fax advertising business should be made under the FCC’s May 19, 2013 Dish Network declaratory ruling. Under that ruling, a seller can be held vicariously liable under federal common law principles of agency, but not for unlawful telecommunications made “simply to aid or benefit the seller.” The Dish Network ruling, stated the court, identified factors indicative of apparent authority, such as the ability of the third party to enter into the seller’s customer system, its authority to use the seller’s trade name, and whether the seller reviewed or approved the third party’s sales materials.

Under that Dish Network standard for determining vicarious liability, the existence and scope of an agency relationship between Trynex and B2B turn on numerous disputed issues of fact, which were inappropriate for resolution at summary judgment. Thus, Trynex’s motion to dismiss was denied.

The case is No. 10 C 7995.

Attorneys: Phillip A. Bock (Bock & Hatch, LLC) for The Savanna Group, Inc. Laura Milnichuk (Litchfield Cavo, LLP) for Trynex, Inc.

Companies: The Savanna Group, Inc.; Trynex, Inc.

Cases: Advertising Privacy IllinoisNews