By: Kristen Marshall
The FCC has issued a request for comments about the circumstances in which a person or entity is liable for telemarketing violations committed by third parties acting on the person’s or entity’s behalf. This article examines the issues involved in a third party calling “on behalf of” a person or entity.
It is more and more common to see Telephone Consumer Protection Act (TCPA) actions allege that businesses are strictly liable for violations of that law by vendors or other third parties they hire. An example of this is a plaintiff who argues that a restaurant is liable no matter what (i.e. “strict liability”) for the unsolicited faxes sent by a third party who may have lied to the restaurant about the faxes’ legality.
Under the TCPA, 47 U.S.C. § 227(b)(3), a person or entity may bring a private cause of action resulting from a violation of its provisions (i.e. automatic telephone dialing system, facsimile and prerecorded message prohibitions).
Some jurisdictions have held that the TCPA is a strict liability statute. For example, in CE Design Ltd. v. Prism Business Media, Inc., a case concerning the transmission of allegedly unsolicited facsimiles, an Illinois district court held that “the TCPA is a strict liability statute, but the court has discretion to award treble damages for a willful or knowing violation of 47 U.S.C. 227(b).” 2009 U.S. Dist. LEXIS 70712, *8-9 (N.D. Ill. 2009).
The Eleventh Circuit held, in another fax case, that “the TCPA is essentially a strict liability statute which imposes liability for erroneous unsolicited faxes.” Alea London Ltd. v. Am. Home Services, 638 F.3d 768, 776 (11th Cir. 2011), citing Penzer v. Transp. Ins. Co., 545 F.3d 1303, 1311 (11th Cir. 2008).
In another fax case, the Eighth Circuit stated that the TCPA “makes no exception for senders who mistakenly believe that recipients’ permission or invitation existed.” See Universal Underwriters Ins. Co. v. Lou Fusz Auto. Network, Inc., 401 F.3d 876, 882 (8th Cir. 2005).
The next question is whether this standard applies to a seller who hires a third party to place calls on its behalf.
On the one hand, businesses can argue that liability would not extend to a seller who hires a third party to call on its behalf because it is the third party who actually places the calls.
On the other hand, plaintiffs argue that a seller on whose behalf a telephone solicitation is made should be held strictly liable for any violation of the TCPA, regardless of who places the telephone calls. These plaintiffs rely on the private right of action language found in § 227(c)(5): providing for a private right of action for “a person who has received more than one telephone call within any 12-month period by or on behalf of the same entity. . . .” It is the “on behalf of” language that provides the basis for the extension of strict liability.
Under this argument, sellers would be held liable for violations of the TCPA committed by third parties on their behalf, regardless of whether the seller has approved or authorized the acts committed by the third parties. Thus, a seller could be held liable for the illegal acts of a third party it contracts with, even if the seller does everything in its power to comply with the law.
The Federal Communications Commission (FCC) has issued a request for comments on just this issue, asking under which circumstances a person or entity is liable for telemarketing violations committed by third parties acting on the person’s or entity’s behalf. See 26 FCC Rcd 5040 (Apr. 4, 2011).
In its request for comments, the FCC poses two questions:
1) Under the TCPA, does a call placed by an entity that markets the seller’s goods or services qualify as a call made on behalf of, and initiated by, the seller, even if the seller does not make the telephone call (i.e. physically place the call)?
2) What should determine whether a telemarketing call is made “on behalf of” a seller, thus triggering liability for the seller under the TCPA? Should federal common law agency principles apply? What, if any, other principles could be used to define “on behalf of” liability for a seller under the TCPA?
26 FCC Rcd 5040, at *8.
As of today, the FCC has not yet issued a finding in response to the comments which have been submitted, but its eventual conclusion will be important when this issue arises in the future.