A federal court judge in New Jersey recently held that a defendant could be directly liable under the Telephone Consumer Protection Act for fax ads that it did not send. As a result, David/Randall Associates was ordered to pay more than $22 million for violations of the statute.

City Select Auto Sales brought suit after receiving a faxed ad from DRA. The court certified a class of plaintiffs that each received one or more unsolicited faxes stating “ROOF LEAKS??? REPAIRS AVAILABLE Just give us a call and let our professional service technicians make the repairs!” and “CALL: David/Randall Associates, Inc. TODAY.”

DRA filed a motion for summary judgment, arguing that it could not be held liable because the faxes were sent by a third-party marketing company, Business 2 Business Solutions, on its behalf. Last September the court denied the motion.

The plaintiff then filed its own motion for summary judgment, which U.S. District Court Judge Jerome B. Simandle granted. Having determined liability, the court then ordered the defendant to pay $500 each for the 44,810 faxes at issue, for a total of $22,405,000.

DRA contested both liability and the damages, although the court found none of the arguments availing.

Judge Simandle concluded that the subject faxes constituted advertisements under the TCPA, and the defendant conceded that it did not obtain the prior express consent required by the statute before the faxes were sent. DRA did take the position that “at least 183” of the class members either had a preexisting business relationship with the company or publicized their fax numbers for public distribution.

The court quickly rejected this position, noting that even if a genuine issue of consent was raised, the record contained no dispute that “the advertisements failed to contain a statutorily-compliant opt-out notice.”

The court also said the defendant constituted a “sender” under the TCPA even though it did not push the button on the fax machine.

Relying on an amicus brief submitted by the Federal Communications Commission in an Eleventh Circuit Court of Appeals case, Palm Beach Gold Center v. Sarris, Judge Simandle said the agency “emphasized that the junk-fax provisions of the TCPA clearly allow[] a plaintiff to recover damages [under a theory of direct liability] from a defendant who [transmitted] no facsimile to the plaintiff, but whose independent contractor did, provided that the transmitted fax constitutes an unsolicited facsimile advertisement promoting the defendant’s goods or services in accordance with the binding regulatory definition of ‘seller.’”

He added that “[D]efendants cannot exculpate themselves from ‘liability simply by hiring an independent contractor’ for the purposes of transmitting ‘unsolicited facsimiles on their behalf,’” Judge Simandle wrote. “Rather, ‘a person whose services are advertised in an unsolicited fax transmission, and on whose behalf the fax is transmitted, may be held [strictly] liable under the TCPA’s ban on the sending of faxes,’ despite not physically transmitting the fax.”

The Eleventh Circuit adopted the Commission’s position in the case, as have other courts since then, the court added.

Turning to the damages award, the court found that a hard drive provided by B2B and the expert testimony of the plaintiff’s forensic expert established that B2B successfully sent DRA’s advertisements 44,832 times to 29,113 unique targets.

Judge Simandle rejected all of the defendant’s efforts regarding the admissibility of the hard drive and the expert testimony and noted that DRA did not proffer any evidence of its own to question the expert’s evaluation or the integrity of the hard drive data.

“This court, therefore, finds that the Plaintiff has proved Defendants liable for statutory damages in the amount of $22,405,000,” the court concluded.

To read the opinion in City Select Auto Sales, Inc. v. David/Randall Associates, Inc., click here.

Why it matters: In addition to providing yet another eye-popping damage award in a TCPA suit, the New Jersey opinion serves as a warning that courts may adopt the FCC’s reasoning from the Sarris case in lieu of its position in In re Joint Petition Filed By Dish Network, where the Commission limited direct liability for telemarketing calls only to the party that “initiated” the call (with vicarious liability a possibility for the seller upon whose behalf calls are made).