Third Party Liability in Unsolicited Fax Advertisements: Somehow, a Thing that Exists.

The Issue

Your beeper business has seen better days. Sure, it was doing great for a few years, but ever since Clinton left office, things haven’t quite been the same. You know it’s time for a big play to turn things around. I know it’s a bit flashy, but it’s time to start thinking about advertising. And not just any advertising. You need to bring out the big guns. Yeah, you know what I’m talking about.

Unsolicited mass faxes.

You’ve decided to send out fliers to every single fax machine within a 10-mile radius. But you don’t have the know-how for such techno-wizardry, so it’s time to bring in the reformed Phone Phreaks over at Sir FaxALot. You tell them the plan. You give them the money. They get to work.

Two weeks later, you get a knock on your door. It’s a process server. Turns out that sending out unsolicited advertising faxes is a violation of the Telephone Consumer Protection Act (TCPA) of 1991. It also turns out that the console jockeys down at Sir FaxALot misplaced a decimal point, and your ad went out to every single fax machine within a 100-mile radius.

So here’s the question: with whom does the liability lie? Is it all on you? Or is Sir FaxALot on the hook?

Surprisingly, the circuits are still split on this (somehow) pressing issue.

Background

The American consumer is protected by several different laws. Insofar as Americans are protected against abuses related to telecommunications, the TCPA has been a bedrock of consumer protection law for over three decades. Protections such as the Federal Do Not Call Registry, regulations against spammers, and the all-important ban on unsolicited advertising faxes can be traced to this act. Parties who violate the TCPA are subject to stiff penalties, which are keyed to the medium of the violation (e.g., telephone, SMS, fax, etc.) and each individual consumer affected by the infraction. In 2005, the TCPA was expanded and amended by the Junk Fax Prevention Act, the penalty for unsolicited advertising faxes is $500 per page per person.

Naturally, nobody wants to pay such a penalty should they get caught, so it becomes necessary to see which type of third party liability applies. Determining the extent to which each party is liable is where we find our split.

The Split

Here, we have the Sixth Circuit and the Seventh Circuit disagreeing over the extent to which third party liability for faxing violations applies.

Seventh Circuit

In Bridgeview Health Care Ctr. Ltd. v. Clark (2016), a small medical supply business instructed a third-party marketing firm to send roughly 100 faxed advertisements to local businesses within a 20-mile radius of Terre Haute, Indiana. Instead, the marketing firm sent 4,849 faxed advertisements across three states. In determining whether the medical supply business was liable for faxes sent out beyond the 20-mile radius, the Seventh Circuit applied three types of common law agency analysis: express actual authority, implied actual authority, or apparent authority.

First, express actual authority:

Because B2B expressly contradicted Clark’s actual instructions, this is clearly not express actual agency.

Second, implied actual authority:

While express actual authority is proven through words, implied actual authority is established through circumstantial evidence. Id. Nothing about fax marketing inherently calls for sending thousands of advertisements. And nothing about fax marketing inherently demands sending these ads to states where the advertiser does not do business. We thus find it impossible to conclude that implied actual authority exists here.

Third: apparent authority:

To create apparent authority, the principal must speak, write, or otherwise act toward a third party. His conduct must make the third party reasonably believe that he has consented to an action done on his behalf by someone purporting to act for him…In short, B2B made an independent decision to blast faxes across multiple state lines.

In short, the medical supply company could not be held liable for the violations of the TCPA committed by a third party.

The Sixth Circuit

In deciding Siding and Insulation Co. v. Alco Vending Inc., the Sixth Circuit split itself. First, the court held that a hybrid test to determine “on whose behalf” such faxes were sent would be more appropriate for faxes sent before 2006. Such a test involved balancing between common law agency principles (as outlined above) and certain policy considerations, such as “whether and to what extent each entity investigated the lawfulness of the fax broadcasts at issue.”

However, in dicta the court indicated that the standard post-2006 as established by the Federal Communications Commission’s (FCC’s) governing regulations applied a standard of strict liability. In other words, the small business that contracted out for the infringing advertising services would be on the hook for the full extent of the damages.

Looking Forward

This is going to be a brave new world for fax-based mass marketing. The split indicates that we may be headed for a showdown between common law agency analysis and strict liability. Depending on the jurisdiction one poor, outdated marketing decision could be a small business’s last.

Customary International Law: When does this binding federal law apply?

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What is it?

Customary international law, also known as public international law, is the body of law determined by the “general and consistent practice of states followed by them from a sense of legal obligation.” Restatement (Third) of the Foreign Relations Law of the United States S102(c)(2). In other words, international law need not arise exclusively from treaties and formal international agreements; it may also arise from an aggregate of states’ actions, states’ official statements, and international legal obligations arising from mutual concerns.

Why do I care?

Whereas treaties and other international agreements are not necessarily self-executing (in that they often require Congressional approval or specific statutes to become binding US law), customary international law is a binding, valid part of United States federal common law. See The Paquete Habana (S.Ct. 1900); Banco Nacional de Cuba v. Sabbatino (S.Ct. 1964). However, this body of law is for the most part completely inaccessible.

Bringing a cause of action based on customary international law is nearly impossible, and prevailing on such an action carries an even slimmer chance of success. Based a cursory review of Federal case law, one could easily come to the conclusion that the only scenarios under which customary international law can successfully be used to uphold individual rights are those that involve fish, kidnapped anglers, and the Spanish-American War. The Paquete Habana (S.Ct. 1900).

So why the lack of application?

There is no question that customary international law is a valid part of federal common law. Even the Rehnquist court, despite its ideological fault-lines, found consensus on the validity of customary international law as a part of federal common law in Sosa v. Alvarez-Machain (2004):

For two centuries we have affirmed that the domestic law of the United States recognizes the law of nations. It would take some explaining to say now that federal courts must avert their gaze entirely from any international norm intended to protect individuals.

Unfortunately one significant problem was – and continues to be – a rather important issue. How do we define what, exactly, customary international law dictates?

The Split

Modern Second Circuit vs. Ye Olde SCOTUS

Customary international law was first recognized as a part of federal common law in the landmark case of The Paquete Habana (S.Ct. 1900), and later upheld for the post-Erie world by Banco Nacional de Cuba v. Sabbatino (S.Ct. 1964). In the former case, two Spanish fishing boats were captured by the naval blockade surrounding Cuba during the Spanish-American war. The ships and their cargo were taken back to Florida where they were sold at auction as “spoils of war.” The Court, in ruling that such a seizure was a violation of customary international law relied upon the following treatise by Carlos Testa a captain in the Portuguese navy and a legal scholar of the time:

Nevertheless, in this, customary law establishes an exception of immunity in favor of coast fishing vessels. Fishing is so peaceful an industry, and is generally carried on by so poor and so hardworking a class of men, that it is likened, in the territorial waters of the enemy’s country, to the class of husbandmen who gather the fruits of the earth for their livelihood. The examples and practice generally followed establish this humane and beneficent exception as an international rule, and this rule may be considered as adopted by customary law and by all civilized nations.

However, in United States v. Yousef (2003) the Second Circuit rejected such reliance on the work of scholars for clarification of customary international law, declaring such statements as usurpation of legal power by non-state actors if relied upon as anything more than supplementary evidence that relevant customary international law existed.

This notion—that professors of international law enjoy a special competence to prescribe the nature of customary international law wholly unmoored from legitimating territorial or national responsibilities, the interests and practices of States, or (in countries such as ours) the processes of democratic consent—may not be unique, but it is certainly without merit.

Thus, according to the Second Circuit, clarifications of customary international law are invalid as bases of decision. And when Yousef appealed, the Supreme Court declined to grant certiorari.

Looking Forward

Where does this leave customary international law? Can we rely on the work of legal scholars to clarify customary international law as we do for domestic common law under the Restatements? Or is reliance of such clarifications a usurpation of power from national and international actors?

If the former, does this place us at the mercy of academics in deciding matters of international law and diplomacy? If the latter, does a rejection of clarification render this entire body of law unenforceable and functionally useless?

For further reading, see “International Law as Law in the United States”, Michigan Law Review Vol. 82, No. 5/6 (1984); Litigation of International Disputes in U.S. Courts, 2d § 9:2.