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Third party TCPA cases often hinge on vicarious liability

On Behalf of | Mar 3, 2021 | Marketing Law

The Telephone Consumer Protection Act (TCPA) can extend to hold a company liable for violations made by third-party or vendors. Outsourcing calls and texts to clients may seem like an efficient business practice, but a failure to do so wisely can open your business up to allegations of a TCPA violation. The basics were discussed in more detail using a recent case as an example in a previous post, available here.

These cases often hinge on the legal theory of vicarious liability. Vicarious liability essentially refers to a situation where the law will hold one party responsible for the unlawful actions of another. In these instances, it would often involve the courts holding the primary business owners responsible for the TCPA violations of the vendor used for purposes like marketing.

How does vicarious liability work in these cases?

Courts generally look to three types of relationships between the vendor and business owner to determine if the owner is also liable throughout the theory of vicarious liability. The court will first apply the theory of actual authority. In this relationship, the vendor is acting as the business instructed. The second, apparent authority, is triggered when the court deems that it can be reasonably inferred the vendor acted on the business’ authority and the third, ratification, essentially involves consent. The court may deem ratification is present if there was a history of the business rewarding or congratulating the vendor for its work.

How can businesses establish a successful claim against vicarious liability?

The best strategy will depend on the details of the case. However, courts have ruled in favor of business owners in previous cases when the business owner could establish that the vendor acted in clear disregard to their agreement. In one case, McDermet v. DirecTV, LLC, the court ruled in favor of the defendant, noting the business’ contract specifically prohibited the telemarketing completed by the vendor and further stating that the government failed to provide evidence that the business awarded the vendor for its actions. As such, the business was able to successfully file a motion for summary judgment and have the case dismissed.