Declining to grant the defendant's motion to dismiss, a federal court in New York held that an officer of a company accused of running afoul of the Telephone Consumer Protection Act could be personally liable for the violations.
Religious corporation Bais Yaakov of Spring Valley, New York, sued Graduation Source, LLC, and Jesse Alexander, the vice president of operations at the company. The plaintiff alleged that it received multiple unsolicited fax advertisements with a defective opt-out notice in violation of both the TCPA and New York state law.
The plaintiff further alleged that Alexander was personally responsible for designing and authorizing the distribution of the faxes at issue, and was "the guiding spirit and central figure behind these fax advertisements being sent in the manner in which they were sent."
Both defendants moved to dismiss the putative class action. The court granted the motion with respect to certain faxes, and said Alexander could be liable for the claims against him as an individual.
The defendants looked for support in the Federal Communications Commission order of October 2014 which recognized that some senders of fax ads with the recipient's prior express permission may have acted reasonably about whether the requirement for opt-out notices applied. The order also provided that senders could apply for a retroactive waiver of the FCC's opt-out requirement, which the defendants did.
The FCC granted the waiver, and despite mixed case law on the issue of the legality of the retroactive waivers, U.S. District Court Judge Nelson S. Roman held Graduation Source could not be liable for any solicited fax advertisements at issue.
"The Waiver does not, as Plaintiff contends, retroactively release Defendants from statutory liability," he wrote, dismissing concerns about separation of powers principles. "[O]n its face the TCPA only prohibits the sending of unsolicited faxes. It is the FCC's regulation interpreting the TCPA that extends the protections of the statute to solicited faxes. Thus, it is within the FCC's authority to determine when and how to apply this regulation, and to waive it for good cause."
However, Judge Roman was not persuaded by Alexander's argument that liability under both state law and the TCPA extends only to those who "initiate" or "send" unsolicited advertisements, respectively. Instead, the court adopted the plaintiff's position that liability in the TCPA context can be extended to individuals when they have direct, personal participation in or personally authorized the conduct found to have violated the statute.
The Second Circuit Court of Appeals has yet to weigh in on the issue, but the court cited support from decisions in Maryland, Ohio, and Texas applying the general tort rule that corporate officers or agents can be liable for torts performed in the name of an artificial body that they personally committed, inspired, or participated in.
"Defendants have not proffered any case law supporting their contention that the TCPA should be read so narrowly as to only include individuals who actually sent the unlawful advertisements—in other words the individual who used the fax machine to send the fax or who is identified on the fax as the sender," the court said. "Surely neither Congress nor the New York state legislature intended to restrict liability under the TCPA in such a way. Moreover, New York follows the same general tort rule regarding the personal liability of corporate officers that formed the basis of the district court decisions" relied upon by the court.
"Alexander may be held personally liable for violations of the TCPA if he 'had direct, personal participation in or personally authorized the conduct found to have violated the statute,' " Judge Roman wrote. "Plaintiff has alleged as much in the Complaint and its claim therefore survives Defendants' motion to dismiss."
To read the opinion in Bais Yaakov of Spring Valley v. Graduation Source, LLC, click here.
Why it matters: Corporate officers and agents in New York should certainly pay attention to the court's decision, which could leave them on the hook for personal liability in a TCPA dispute if a plaintiff can prove the individual had "direct, personal participation in or personally authorized the conduct found to have violated the statute."