November 6, 2019

Since passage of the Telephone Consumer Protection Act (“TCPA”), courts and businesses have grappled with whether – and to what extent – TCPA liability extends to corporate officers.  While the corporate veil often protects corporate officers from personal liability in other contexts, the wording of the TCPA (“It shall be unlawful for any person within the United States . . . to make any call . . . using any automatic telephone dialing system . . .”) has been interpreted such that corporate officers can, in certain limited circumstances, be subject to TCPA liability.  However, several recent court decisions have suggested that courts are beginning to re-examine the merits of subjecting corporate officers to personal liability under the TCPA.

What kind of conduct exposes corporate officers to TCPA liability?

TCPA Liability for Direct, Personal Participation 

Dating back to 2001, courts have weighed-in on the extent to which a corporate officer may be held accountable for TCPA violations.  In these cases, as stated in Texas v. American Blastfax, the broad consensus had been that “an officer may be personally liable under the TCPA if he had direct, personal participation in or personally authorized the conduct found to have violated the statute and was not merely tangentially involved.”

However, that which constitutes “direct, personal participation” is fact-specific and varies by jurisdiction.   Some jurisdictions interpret this participation broadly, holding corporate officers liable where they “set company policies and oversaw day-to-day operations and were clearly involved in the business practices that violated the TCPA.”  Others require specific conduct, such as writing the offending fax, approving the content, or authorizing otherwise violative conduct.  The Eighth Circuit has even adopted the narrow view that a corporate officer must literally “initiate the call” or “take the steps necessary to physically place the telephone call” in order for personal liability to attach. 

Recent Cases Challenging Personal TCPA Liability for Corporate Officers 

Recent court decisions suggest that the pendulum may be swinging in the opposite direction.  For example, in a January 2018 case, City Select Auto Sales v. David Randall Assocs., Inc., the Third Circuit stated that it did not believe that “common-law personal-participation liability is available against corporate officers under the TCPA.” The City Select court found that such liability was not written into the statute and does not comport with the legislative intent of the statute. The following year, the US District Court for the Eastern District of Pennsylvania followed the Third Circuit’s guidance.  In KHS Corp. v. Singer Financial Corp., the court stated, “[f]ollowing the Third Circuit’s lead . . . I find a corporate officer is not liable under the TCPA under common law personal liability principles.”  In fact, even though the corporate officer in KHS Corp. personally directed and participated in the sending of unsolicited faxed advertisements, the court did not find him personally liable under the TCPA. 

What this Means for Corporate Officers 

Generally, corporate officers remain vulnerable to personal TCPA liability if they are directly involved in the subject TCPA violative conduct.  However, should this Third Circuit trend continue in other courts around the country, it has the potential to reduce the overall amount of TCPA litigation which targets corporate officers and principals. Such a change should reduce the leverage that the plaintiffs’ bar can exert against companies when filing TCPA lawsuits.  Absent widespread adoption of the Third Circuit’s approach, however, a corporate officer’s personal exposure will continue to hinge on the personal-participation analysis used by courts for more than eighteen years.

Notwithstanding recent trends, given the risk of significant personal liability under the TCPA, business owners and corporate officers should work closely with experienced marketing law counsel prior to launching any telemarketing campaign.

If you are interested in learning more about this topic or require assistance in connection with TCPA compliance for your business, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

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The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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