Siding & Insulation Co. v. Alco Vending, Inc.
| Decision Date | 09 May 2016 |
| Docket Number | No. 15–3551.,15–3551. |
| Citation | 822 F.3d 886 |
| Parties | SIDING AND INSULATION CO., Plaintiff–Appellant, v. ALCO VENDING, INC., Defendant–Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: Phillip A. Bock, Bock & Hatch, LLC, Chicago, Illinois, for Appellant. Albert M. Bower, Smith Amundsen, Chicago, Illinois, for Appellee. ON BRIEF: Phillip A. Bock, Bock & Hatch, LLC, Chicago, Illinois, David M. Oppenheim, Anderson + Wanca, Rolling Meadows, Illinois, for Appellant. Albert M. Bower, Eric L. Samore, Michael Resis, Smith Amundsen, Chicago, Illinois, for Appellee.
Before CLAY, GILMAN, and GRIFFIN, Circuit Judges.
RONALD LEE GILMAN
, Circuit Judge.
The Siding and Insulation Co. (Siding) is a closely held corporation that provides construction contracting services in northern Ohio. In November 2005, Siding received an unsolicited fax advertisement that promoted the services of another company, Alco Vending, Inc. (Alco). Siding had not previously consented to receive such advertisements. It subsequently sued Alco on the ground that sending the fax advertisement violated the Telephone Consumer Protection Act of 1991 (the TCPA).
Alco responded by pointing out that it was not the sender of the offending advertisement. Instead, an individual named Caroline Abraham, doing business as Business to Business Solutions (B2B), had transmitted the advertisement using B2B's own equipment. Alco acknowledged that it had paid B2B to provide advertising services by broadcasting faxes to consenting businesses, but not to nonconsenting ones like Siding. It therefore contended that Alco should not be held liable for any violation of the TCPA that might have occurred.
The district court granted summary judgment in Alco's favor. But because the court applied the wrong legal standard in doing so, we REVERSE the judgment of the district court and REMAND the case for further proceedings consistent with this opinion.
Siding's primary business consists of installing insulation, roofing, siding, windows, and doors. Alco is a company that installs and stocks vending machines for its customers. At the time of the events giving rise to this litigation, Alco's president and secretary was Richard Gajdos.
In the early- and mid–2000s, Alco received several advertisements from B2B. These advertisements proclaimed that B2B was a “fax broadcaster” that could provide advertising services for Alco by sending faxes to potential Alco customers. Sometime in October 2005, Gajdos decided to accept B2B's offer to provide such services.
This decision led to a series of communications between B2B, Alco, and a third company—a Romanian business identified as Macaw, S.R.L.—that worked with B2B. First, a Macaw salesperson working under the pseudonym Kevin Wilson sent Gajdos a form seeking information about the nature of Alco's business. Gajdos completed the form by providing Alco's contact information and three “selling points” that could be included in any advertisements that B2B subsequently prepared. Next, B2B drafted sample advertisements and sent them to Gajdos for his review. Each sample advertisement included a legend stating that the message was “the exclusive property of Macaw ..., which is solely responsible for its contents and destinations.”
Gajdos also had six to ten conversations with Wilson, during which the pair discussed topics such as the content of the potential advertisements, the intended recipients for those advertisements, and the way in which Alco would pay for B2B's services. According to Gajdos, Wilson explained that B2B would identify advertisement recipients by reference to a list of businesses that had previously consented to receive fax advertising from B2B. Gajdos never saw or reviewed this list, but he understood (1) that each business would be located near Alco's place of operations in northern Ohio, and (2) that B2B had a preexisting relationship with each business. Wilson also assured Gajdos that any advertising that B2B did for Alco would be “100 percent legal” because “[B2B] had a full and open relationship” with the potential fax recipients.
After these conversations, Alco arranged to pay for B2B's services by (1) sending B2B a photocopy of a check, and (2) authorizing B2B to use the information from the check to withdraw funds directly from Alco's checking account. B2B then broadcast several thousand faxes, each of which advertised Alco's business. The faxes were broadcast on November 2, 2005 and again on July 10, 2006, with B2B withdrawing $188 from Alco's checking account to pay for each day of broadcasting. Siding's expert witness later concluded that approximately 7,000 faxes were sent to a host of local businesses and other entities.
According to Gajdos, B2B did not inform Alco about the number of faxes that B2B broadcast, the dates on which the faxes were sent, or the specific businesses to which the faxes were addressed. Gajdos also testified that Alco itself had no involvement in selecting the specific businesses to which B2B transmitted the faxes.
After each fax broadcast, Alco received a few scattered letters from attorneys who stated that their clients had received unauthorized faxes that advertised Alco's services. The letters threatened legal action against Alco on the ground that the transmission of the faxes violated the TCPA. In particular, the letters asserted that Alco had violated 47 U.S.C. § 227(b)(1)(C)
by sending the fax advertisements without first obtaining authorization from the fax recipients.
Alco did not handle these complaints itself; it instead referred the complaints to B2B. In turn, B2B contacted the complaining businesses and explained that, despite the claims that the faxes were unauthorized, someone associated with each recipient business must have previously agreed to receive the faxes. In addition, B2B provided two letters to Alco in which B2B maintained that the faxes that it had broadcast were lawful and duly authorized. One letter stated that B2B—rather than Alco—was “solely responsible for the contents and destinations of [the] faxes.” The other letter provided that B2B would reimburse Alco for the costs of any legal action or judgment against Alco arising as a result of the fax advertising campaign.
Such legal action materialized when Siding filed suit against Alco in May 2011 in the United States District Court for the Northern District of Ohio. Siding alleged in relevant part that Alco had violated the TCPA, 47 U.S.C. § 227(b)(1)(C)
, by sending unsolicited fax advertisements to Siding and others. The complaint purported to bring claims on behalf of Siding and a class of at least 39 other recipients of the faxes. Siding then moved for certification of a class consisting of “[a]ll persons who were successfully sent one or more faxes on November 2, 2005 or July 10, 2006, from Alco Vending.”
While Siding's motion for class certification was still pending, Alco moved for summary judgment. It first observed that B2B—not Alco—was the entity that had broadcast the faxes that allegedly violated the TCPA. Alco then contended that it was not liable for B2B's conduct under either (1) a theory of strict liability, or (2) a theory of vicarious liability. Specifically, Alco maintained that it had authorized B2B to broadcast faxes only to businesses that had previously consented to receive such faxes. Alco thus argued that B2B had exceeded the scope of its authority in a way that precluded any finding that Alco was liable for B2B's conduct.
Siding responded that the Federal Communications Commission's (FCC's) governing regulations established that Alco was either (1) strictly liable for the transmission of the faxes, or (2) liable because the faxes were sent “on behalf of” Alco. With respect to the former argument, Siding observed that the TCPA currently imposes liability on those entities whose “goods or services are advertised or promoted in [an] unsolicited advertisement.” See 47 C.F.R. § 64.1200(f)(10)
. Siding then noted that Alco does not dispute that the latter's services were in fact advertised in the relevant faxes, with the result that Alco should be held liable for any TCPA violations associated with those faxes.
Regarding its alternative argument, Siding noted that the TCPA also imposes liability on an entity when an unsolicited advertisement is sent “on behalf of” that entity. See id. (). Siding then asserted that B2B had in fact sent the faxes at issue on behalf of Alco, thereby rendering Alco liable for the alleged TCPA violations.
In January 2014, the district court referred Siding's motion for class certification and Alco's motion for summary judgment to a magistrate judge for preparation of a report and recommendation. The magistrate judge subsequently recommended that (1) Alco's motion for summary judgment be granted, and (2) Siding's motion for class certification be denied as moot. In doing so, the magistrate judge agreed with Alco that it could be held liable for TCPA violations only on the basis of vicarious liability under the federal common law of agency. The magistrate judge then concluded that the evidentiary record established that Alco had not authorized or ratified B2B's conduct, thereby absolving Alco of any vicarious liability for B2B's broadcast of the faxes.
Siding objected to the report and recommendation, but the district court overruled those objections in April 2015. The court thereafter entered summary judgment in Alco's favor. Siding has timely appealed
The parties dispute which legal standard should govern Siding's TCPA claim against Alco. Their dispute over statutory and regulatory interpretation raises a question of law, which we review de novo. RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., LLC, 754 F.3d 380, 384 (6th Cir.2014)
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