2. Vicarious Liability - You’re You and I’m Me . . . or Maybe Not
Holly Borgmann
Head of Government Affairs
ADT
Michele Shuster
Partner
Mac Murray & Shuster
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3. The Industry’s Vicarious Liability Universe
Federal Trade Commission (FTC)
FTC Act
Telemarketing Sales Rule (TSR)
“Assisting and Facilitating”
Federal Communications Commission (FCC)
Telephone Consumer Protection Act (TCPA)
Federal Common Law Principles of Agency
States – Mirror FTC & FCC in varying degrees
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4. TCPA Vicarious Liability History
FCC’s 2013 Dish Network Declaratory Ruling
FCC’s 2015 Omnibus Ruling and Order
United States of America and the States of California, Illinois, North Carolina, and Ohio, Plaintiffs, v. Dish Network, L.L.C., Defendant
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2013 Declaratory Ruling
Primary liability extends to entity that physically places the call
Seller can be held vicariously liable for calls under a common law agency theory
Formal agency
Apparent agency
Ratification
Did not discuss how a seller can avoid vicarious liability
In many cases, actually muddied the water
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6. FCC Examples of Agency (burden shift)
Seller allows access to information and systems normally only accessible by seller, including
pricing
nature of product
customer information
direct entry of customer sales information into seller system
Use of seller’s name or trademark/service mark
Approved, wrote or reviewed script
Seller knew / should have known of violation and failed to stop it
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What is binding
FCC’s standard for primary and vicarious liability
Com. Pai criticized the ruling (now Chairman)
Not binding: guidance on application of agency principles
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8. 2015 Omnibus Ruling and Order
Addressed primary liability (apps, platform providers, etc.)
“Direct connection between [the business] and the making of a call” including
So involved in the placing of a call
Willfully enable or assists telemarketer
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9. Principals Are Responsible For Their Agents!
It’s Simple!
Principals Are Responsible For Their Agents!
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Hallmarks of Agency
Initial and ongoing control
Control over the 3rd party
Contractually
Nature of relationship
Provide interim instructions
Agent must agree to “right to control” and acts are within scope of control
Can impose “constraints”
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11. Actual vs. Apparent Authority
Ability to act on behalf of principal
Express or inferred
Acts necessary and incidental to express authority
Apparent
Party has legal power to transact with third party
Reasonable 3rd party would believe the agent has authority to act on behalf of principal based on acts/manifestations by principal
Principal must represent party as agent (can’t sit idly by)
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Ratification
No actual or apparent authority for specific act, but principal- agent relationship must exist
“Ratifies” or “adopts” agent’s acts.
Received the benefit of the act
Can only be through the voluntary act of the principal
Not bound by ratification w/o knowledge of material facts unless principal chose to ratify act and with knowledge of lack of awareness
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13. So they are an agent, now what?
Negating Agency
Acted outside of scope of authority
Didn’t ratify behavior by knowingly accepting benefit of agents actions.
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Cases – Common Themes
The parties’ categorization of the relationship is of little significance
The ability to control the manner and means of a 3rd party’s marketing
The ability to give interim instructions
Mere approval of campaign is not enough
Providing marketing materials and leads
Can extend to “middlemen”
Lead generator for many different sellers = less likely an agent
“Must comply with all laws” – violations outside of scope of authority
Must take action when have knowledge of bad acts
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15. PACE WASHINGTON SUMMIT | SEPTEMBER 17-19, 2017 | #17PACE
Jones v. Royal Admin. Services 2017 U.S. App. LEXIS (August 9, 2017 Decision)
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What’s next?
Legislation proposed last year to encourage enhanced compliance efforts
Put forward by Sen. Daines (R-MT)
Carrot versus stick approach
Affirmative defense
Not adopted, but not objected to either
Opportunity to seek FCC clarification?
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17. Contact Info
Holly Borgmann ADT
Michele Shuster
Mac Murray & Shuster
PACE WASHINGTON SUMMIT | SEPTEMBER 17-19, | #17PACE