Three lenders recently avoided liability under the federal Telephone Consumer Protection Act, despite the fact that a marketing firm hired on their behalf violated the Act. The plaintiffs couldn’t produce evidence that the lenders knew about the violations. Close call.
The facts of the case are a little complicated. Three lenders entered a contract with a company called Leadpile LLP. The deal provided the lenders would buy sales leads from Leadpile. Leadpile bought the leads from a company called Click Media LLC. And Click Media contracted with a marketing company called AC Referral Systems LLC. AC actually sent text messages to leads and redirected responders to the lenders' websites.
AC sent 100,000 text messages to leads. Included in that 100,000 was Flemming Kristensen. Kristensen had not consented to receiving the text messages. Click Media's contract with AC required that all recipients had consented to receiving text message advertisements, but presumably AC was so busy sending texts it didn’t check that detail out.
The TCPA prohibits sending unsolicited text messages. So, not surprisingly, Kristensen brought class action claims against Click Media, Leadpile and the lenders for TCPA violations, claiming each entity was vicariously liable for AC’s text messages. All of the defendants moved for summary judgment. In so doing, the court rejected each of Kristensen’s three legal claims.
Kristensen argued the defendants each “ratified” AC's text messages. In her view, the defendants accepted the benefits of AC’s efforts and should bear the burden. But the court said a party can ratify only if it has knowledge of material facts about the underlying act. Unfortunately for Kristensen, she didn’t produce any evidence that the defendants knew AC was sending unsolicited text messages. In short, no knowledge, no ratification.
Kristensen also argued AC had “apparent authority” to send the text messages on the other parties’ behalf. The doctrine of apparent authority makes a principal liable for the agent’s acts if the principal in some way appears to authorize the agent’s acts. But a court can’t find apparent authority based on the acts of the agent alone. So the mere fact that AC sent the texts wasn’t enough to establish apparent authority. That required some act by the defendants. And again, Kristensen offered no evidence on that point.
Kristensen borrowed her last argument from a copyright theory known as “control and benefit.” That concept says if a party benefits from infringing conduct, but takes no steps to stop the conduct, it is liable. Here, Kristensen failed to establish any of the defendants had the ability to “control” AC’s activities. And once again, the court ruled against her.
Kristensen’s case is a good lesson for anyone contemplating a lawsuit. No matter the underlying facts, it is the evidence that controls. And if any part of the picture is missing, it’s a good bet the case won’t survive.