On March 21, 2016, the Seventh Circuit issued its decision in Bridgeview Health Care Ctr., Ltd. v. Clark, Nos. 14-3728 & 15-1793, holding that agency rules apply to determine whether a fax is sent “on behalf of” a principal and affirming the district court’s decision that the defendant was liable only for those faxes he authorized.

As previously reported, the lead issue on appeal in this fax-based TCPA case involved whether a defendant is liable for all faxes sent by the fax broadcaster or another third party, or only for those faxes the fax broadcaster or third party was authorized by the defendant to send (in this case, only within a 20-mile radius of the defendant’s businesses).  The district court held that because the TCPA is not a strict liability statute, a totality of the circumstances approach “assessing a variety of factors surrounding a defendant’s role in providing direction to a third party” must be used to determine whether a defendant is liable as a “sender” of the fax for purposes of the TCPA. Bridgeview Health Care Ctr., Ltd. v. Clark, 09cv5601, 2015 U.S. Dist. LEXIS 45710, at *20-21 (N.D. Ill. Apr. 8, 2015).  After evaluating those factors, the district court found that the defendant was only liable for the faxes sent within geographic radius he authorized. Id. at *21-22.

On appeal, the Seventh Circuit first held that In re Joint Petition filed by Dish Network, LLC, 28 F.C.C.R. 6574 (2013) (“Dish Network”), which held that vicarious liability principles should be used to analyze call-based TCPA claims, was not applicable to fax-based TCPA claims.  Slip. Op. at 5.  It then rejected plaintiff’s argument that the TCPA was a strict liability statute, finding that “the trial court had correctly rejected strict liability by recognizing that it would lead to ‘absurd results,’” and held that “[i]n applying the regulatory definition of a fax sender . . . agency rules are properly applied to determine” whether the fax was sent “on behalf of” a defendant. Id.

After noting that plaintiff’s “complaint fails to plead agency liability at all” and a “plaintiff’s agency claim ordinarily must appear on the face of the complaint,” the Seventh Circuit found that none of the three types of agency—(i) express actual authority, (ii) implied actual authority, or (iii) apparent authority—applied. Id. at 5-6.  There was no express actual authority because the fax broadcaster “expressly contradicted [defendant’s] actual instructions;” no implied actual authority because “[n]othing about fax marketing inherently calls for sending thousands of advertisements [or] . . . sending [] ads to states where the advertiser does not do business;” and no apparent authority because defendant “did nothing to create an appearance [toward the fax recipients] that [the fax broadcaster] had authority to send faxes on behalf of” defendant or his business. Id. at 6-7.

In affirming the district court’s refusal to decertify the class after the named plaintiff’s claim evaporated based on its receipt of a fax outside of the authorized 20 mile radius, the Seventh Circuit took the opportunity to point out the that the TCPA is both outdated (“[f]ax paper and ink were once expensive, and this may be why Congress enacted the TCPA, but they are not costly today” (id. at 11)) and misguided (“Congress likely should have targeted the marketing firms, rather than their unsuspecting clients” (id.)).  It then took a shot at the TCPA plaintiffs’ bar, noting that the attorneys representing the plaintiff “currently have about 100 TCPA suits pending,” and that:

what motivates TCPA suits is not simply the fact that an unrequested ad arrived on a fax machine. Instead, there is evidence that the pervasive nature of junk-fax litigation is best explained this way:  it “has blossomed into a national cash cow for plaintiff’s attorneys specializing in TCPA disputes.”  We doubt that Congress intended the TCPA, which it crafted as a consumer-protection law, to become the means of targeting small businesses.  Yet in practice, the TCPA is nailing the little guy, while plaintiffs’ attorneys take a big cut.

Id. at 11 (internal citation omitted).  Despite these concerns, the Seventh Circuit nevertheless acknowledged that “we enforce the law as Congress enacted it.” Id.

By relying on traditional agency principles and doing away with the multi-factor test articulated by the district court, the Seventh Circuit’s decision in Bridgeview provides clarity to defendants on when they may be held liable as a “sender” for purposes of fax-based TCPA claims and presents additional opportunities to attack plaintiffs’ complaints at the pleading stages and beyond.  The opinion also indicates that the Seventh Circuit is growing weary of the glut of TCPA filings.