Through prior posts (see here, here, and here), we have monitored the FCC’s somewhat perplexing distinction between calls and faxes in the context of analyzing direct and vicarious liability under the TCPA. Just two months ago, the FCC’s position, as originally set forth in a letter brief, was adopted by the Eleventh Circuit in Palm Beach Golf Center-Boca, Inc. v. Sarris, 781 F.3d 1245 (11th Cir. 2015) (“Sarris”). The Sarris court held that “a person whose services are advertised in an unsolicited fax transmission, and on whose behalf the fax is transmitted, may be held liable directly” under the TCPA. Id. at 1254. As we have previously reported, the FCC’s letter brief (and now Sarris) appear to be inconsistent with the FCC’s position in the voice call context, where it has ruled that a “seller” of goods or services is not directly liable for calls made by a “telemarketer” on its behalf, and instead the seller’s possible vicarious liability turns on the application of federal common law agency principles. See In re Joint Petition Filed by Dish Network, LLC, 28 F.C.C. Rcd. 6574 (2013) (“Dish Network”) (limiting direct liability to “telemarketers” that “initiate” calls and applying agency principles to determine vicarious liability of “sellers” for calls made on their behalf). Notwithstanding this apparent divide, district courts within the Eleventh Circuit have followed Sarris (granted, they must). See, e.g., Physicians Healthsource, Inc. v. Doctor Diabetic Supply, LLC, No. 12-22330-CIV, 2015 WL 1257983, at *1 (S.D. Fla. Mar. 18, 2015). The reach of Sarris has extended beyond the Eleventh Circuit, on two occasions thus far. The first was a decision from the District of Minnesota.See Bais Yaakov v. Varitronics, LLC, No. CIV. 14-5008 ADM/FLN, 2015 WL 1529279, at *5 (D. Minn. Apr. 3, 2015) (citing Sarris and noting “a plaintiff is not required to establish vicarious liability … when a third party sends the unsolicited fax advertisements”). More recently, the Northern District of Illinois applied the Sarris court’s broad definition of “sender” and denied a defendant’s motion to dismiss. See Helping Hand Caregivers, Ltd. v. Darden Restaurants, Inc., No. 14 CV 10127, 2015 WL 2330197 (N.D. Ill. May 14, 2015) (“Darden”).
In Darden, the plaintiff was alleged to have received an unsolicited fax promoting a free wellness presentation offered by Social Wellness (the business name of defendant Mid Wilshire Consulting, Inc.). The fax featured the logos of Social Wellness and Olive Garden restaurant (owned by defendant Darden Restaurants, Inc. (“Darden”)), and it stated: “Social Wellness is teaming up with Olive Garden to help jump start your employees towards a healthier lifestyle.” The fax offered a “complimentary catered lunch from Olive Garden,” including “fresh salad, warm breadsticks, and our soup of the day ….” The fax also instructed those who wished to sign up for the presentation to contact Social Wellness at the phone number or email provided, stating that “[a]ll scheduling must go through Social Wellness and not Olive Garden ….” (Emphasis added.)
The plaintiff claimed, both individually on behalf of a putative class, that the defendants had “collectively” violated the TCPA by, inter alia, “sending” a fax advertisement without obtaining the plaintiff’s “prior express invitation.” Darden moved to dismiss under Rule 12(b)(6), arguing among other things that the plaintiff had failed to sufficiently allege that Darden was a “sender” of the fax. The court disagreed, finding (1) the complaint alleged “several times” that “Defendants” sent the fax, which, the court found, “suffice[d] to let Darden know plaintiff claims it sent the fax”; (2) the complaint alleged that “it is not clear whether any entities or persons other than [named defendants] actively participated in the transmission of the [fax], or benefitted from the transmissions,” from which the court concluded that “[i]n other words, plaintiff alleges that Darden actively participated in, and benefitted from, the fax’s transmission”; and (3) the fax itself supported the inference that it was sent by or on behalf of Darden because it contained the Olive Garden logo, said “Social Wellness is teaming up with Olive Garden,” spoke of “our” soup of the day, and offered free food from Olive Garden. From this, the court concluded that plaintiff’s complaint plausibly alleged that Darden was a “sender.” On this point, the court observed that while “the Seventh Circuit has not yet addressed the issue,” the Eleventh Circuit inSarris had recently set forth a “broad meaning of ‘sender’” and held that those “whose services are advertised in an unsolicited fax transmission, and on whose behalf the fax is transmitted” may be held directly liable under the TCPA.
The Darden court’s deference to Sarris illustrates the problem inherent in the FCC’s distinction between faxes and calls. As Darden had argued, the fax was sent from Social Wellness’ number, suggesting that Social Wellness—not Darden—actually transmitted the fax. But the court did not find this fact particularly significant, in light of Sarris. Had the court analyzed Darden’s liability through the lens of Dish Network or otherwise discussed agency principles, however, it might have reached a different result. Indeed, any allegations suggesting an agency relationship between Darden and Social Wellness were conclusory, at best. Moreover, Darden maintained it had no relationship with Social Wellness, pointing to a cease-and-desist letter sent to the company regarding the use of Olive Garden’s name and logo, and also correspondence from the owner of Social Wellness to plaintiff’s counsel conceding that Darden “had nothing to do with the [fax]” and that “[i]t was totally on [Social Wellness] just trying to offer a free lecture ….” Yet, given the context of a Rule 12(b)(6) motion, the court did not consider this evidence. On balance, the court acknowledged the risk that Darden could have been the victim of a “frame up,” i.e., that Social Wellness theoretically might have intended the fax to appear as though it was sent on Darden’s behalf. But the court concluded that “the possibility of a frame up is not a reason to dismiss the case on the pleadings.”
While Darden may ultimately prevail, this decision highlights the difficulty that blast fax defendants will likely continue to face in the wake of Sarris. The specter of direct liability for a broad cast of “senders” arguably invites strike suits brought against entities whose products or services are advertised in a fax, regardless of whether such entities physically transmitted the fax or even knew it was going to be sent. Such entities—particularly those with deep pockets—face a significant risk in this context. By contrast, the requirement of an agency relationship (i.e., for “sellers” who employ “telemarketers” to make voice calls) provides greater protection from such tactics. This seemingly arbitrary distinction remains difficult to justify in light of the language of the statute and also as a policy matter.