7th Cir. Affirms Rejection of Imposition of Vicarious Liability on Principal in Blast-Fax Case; Trial Testimony Was that Scope of Agency Was Limited, and Liability Could Not Be Imposed Beyond Such Scope

In Bridgeview Health Care Center, Ltd. v. Clark, 2016 WL 1085233, at *2-3 (7th Cir. 2016), the Court of Appeals for the Seventh Circuit affirmed the District Court’s rejection of agency liability under the TCPA, where the authority to the agent was limited.

In determining what theory should govern Clark’s liability, the trial court correctly rejected strict liability by recognizing that it would lead to “absurd results.” Id. at *7. The court observed that “[t]he very notion of advertising one’s goods entails that one must do something to advertise them.” Id. The question in this particular case is thus whether the Affordable Hearing ads were faxed “on Defendant’s behalf.” Id. at *8. While the district court appeared hesitant to label this an agency theory, likely because of uncertainty created by Dish Network, the court effectively affirmed its previous agency finding: it wrote that Clark did not “direct” B2B to send faxes beyond the 20–mile radius and that there is “no sense in which the faxes sent beyond Terre Haute were sent on [Clark’s] behalf.” Id. We recognize this for what it is: an agency analysis.  In applying the regulatory definition of a fax sender, we hold that agency rules are properly applied to determine whether an action is done “on behalf” of a principal. See 47 C.F.R. § 64 .1200(f)(10). There are three types of agency: (1) express actual authority, (2) implied actual authority, (3) apparent authority. See Moriarty v. Glueckert Funeral Home, Ltd., 155 F.3d 859, 866 (7th Cir.1998). If Clark was acting as the principal to B2B’s agent, he would have made B2B his agent in one of these three ways, but it is clear that that none of them applies here.    First, Clark did not confer express actual authority on B2B. See id. For this type of agency to exist, Clark must have directly spoken or written to B2B, telling it to send nearly 5,000 fax ads across multiple states. The record establishes that Clark told B2B it should send 100 faxes within 20 miles of Terre Haute. Instead, B2B sent 4,849 faxes across three Midwestern states. Because B2B expressly contradicted Clark’s actual instructions, this is clearly not express actual agency.