Sixth Circuit Rejects Application of Agency Principles to Fax Broadcast Liability Under TCPA

By Joseph C. Wylie II, Molly K. McGinley, Nicole C. Mueller, Courtney E. Torres

In its May 9, 2016, ruling in Siding and Insulation Co. v. Alco Vending, Inc., the Sixth Circuit rejected the application of traditional agency principles to determine whether a company was liable for faxes sent “on its behalf.”  Instead, the Sixth Circuit held that the FCC’s 1995 Order, imposing liability on “the party on whose behalf a solicitation is made,” represented the FCC’s decision not to base TCPA liability for fax activity on a vicarious liability analysis.  In so holding, the Sixth Circuit joins the Eleventh Circuit in adopting this analysis, and rejects the vicarious-liability analysis recently adopted by the Seventh Circuit for fax activity.

In Alco Vending, Plaintiff brought a class action claim, alleging it received unsolicited faxes from Alco.  In defense, Alco claimed it was not the sender, because a third party, Business to Business Solutions (B2B), transmitted the advertisements for Alco after representing that it would send faxes only to consenting businesses.  Alco argued that to the extent that B2B sent faxes to non-consenting parties such transmission was outside the scope of Alco’s agreement with B2B.  The trial court granted Alco’s motion for summary judgment because it found Alco did not authorize B2B’s conduct, absolving Alco of any vicarious liability for B2B’s faxes.  In reversing the trial court’s decision, the Sixth Circuit found that prior to2006, the “party on whose behalf a solicitation is made bears ultimate responsibility for any [TCPA] violations.”  (The Court held that the FCC’s 2006 Order, which further expanded liability for fax activity to “the person or entity . . . whose goods or services are advertised or promoted in the unsolicited advertisement,” did not apply retroactively to faxes sent before that order was adopted.)  The Sixth Circuit remanded to the Northern District of Ohio for a determination as to whether Alco was liable under this standard, and instructed it to consider the following factors: the degree of control that Alco had over the preparation of the faxes, whether Alco approved the final content of the faxes, and the nature and terms of the contractual relationship between Alco and B2B.

In so ruling, the Sixth Circuit also reiterated its prior ruling in Imhoff Inv., LLC v. Alfoccino, Inc., in which the Court held that the 2006 Order imposes strict liability on the entity “whose goods or services are advertised or promoted.”  The Sixth Circuit also rejected the application of the FCC’s Dish Network decision to fax activity, and refused to adopt the Seventh Circuit’s adoption of an agency standard for fax liability.  In the FCC’s Dish Network decision, the court found that a party is not directly liable for a TCPA violation unless that party actually sends the fax itself, “but the party may be vicariously liable under federal common law principles of agency for the actions of a third party.”  The Sixth Circuit distinguished this reasoning because Dish Network related to Section 227(b)(1)(B) of the TCPA for telephone calls, not faxes.  The Court found the application of agency law unsupported, in contrast to the Seventh Circuit’s recent decision in Bridgeview Health Care Center, (previously discussed here) because the 1995 Order did not include any mention relating to agency law in relationship to fax broadcasters.  The Sixth Circuit therefore joins the Eleventh Circuit, through its decision in Palm Beach v. Sarris (previously discussed here) in rejecting the application of agency principles to fax activity and in applying different standards to fax and call activity.

Thus, under the TCPA, a party’s liability for the conduct of another may depend both on the type of activity at issue, and the circuit in which the action is pending.