Client of Blast Fax Solutions Provider Hit with $22 Million TCPA Judgment

By Joseph C. Wylie II, Molly K. McGinley, and Nicole C. Mueller

A new decision once again highlights the dangers that companies face if their independent contractors engage in conduct that violates the Telephone Consumer Protection Act, and highlights the need to monitor contractor compliance with the TCPA.  In City Select Auto Sales, Inc. v. David/Randall Assocs., Inc., a federal court in New Jersey recently found a roofing company, David/Randall Associates, liable for $22.4 million under the TCPA for the actions of its blast fax solutions provider, Business to Business Solutions (B2B).  The plaintiff had alleged that the roofer and its president were liable for the transmission of fax advertisements 44,832 times to 29,113 different fax numbers by its independent contractor, B2B, without obtaining the prior express invitation or permission of the recipients and without including an FCC-required opt-out notice.

In granting summary judgment against David/Randall, the court held that the roofer itself was a “sender” of the faxes under the TCPA and rejected its argument that it could not be held vicariously liable under the TCPA for conduct of its fax provider, B2B.  The court noted that FCC decisions allow a plaintiff to recover damages under a theory of direct liability from a defendant who itself transmitted no faxes, but where its independent contractor did.  The court found that consistent with the “binding definition” of “sender” in the FCC’s TCPA regulations, the transmitted faxes constituted “an unsolicited facsimile advertisement promoting the defendant’s goods or services.”  The court, however, denied summary judgment against the roofer’s president, finding that the record presented factual disputes concerning his personal involvement in the dissemination of the faxes.

This case once again shows the potentially severe damages that can be imposed under the FCC’s interpretation of who is a fax “sender” under the TCPA, and also highlights the different standards for vicarious liability for fax and call/text activity under the TCPA.  Under the definition of “sender” applicable to faxes, liability can be imposed even absent any direct involvement in sending the facsimile at issue, as well as in the absence of a principal-agent relationship, which as the FCC found in In Re DISH Network, LLC, may be required to support vicarious liability for call/text activity.

Although in this case an employee of David/Randall gave some direction to B2B as to the composition of distribution lists, the court did not rely on this direct involvement to conclude that David/Randall was liable.  Instead, the court simply concluded that because David/Randall hired B2B to develop and conduct a fax advertising campaign on its behalf, the roofer constituted a “sender” of the disputed faxes under the TCPA as a matter of law.