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Vicarious Liability Ruling Troubling for Platform Providers

Fri, 05/17/2019 - 11:40

Wisconsin Federal Court Vicarious Liability Ruling Could Spell Trouble for Platform Providers

A Wisconsin court issued a ruling this month that could result in more TCPA lawsuits against automated calling and texting platform providers. In the court’s ruling on Cunningham v. Montes, the court held that under the TCPA, providers of autodialing services can be held liable under vicarious liability for unlawful calls made using their platform.

The lawsuit was filed by the infamous Craig Cunningham, the most prolific serial TCPA litigator in the United States. To date, he has filed over 150 lawsuits, of which 37 are currently pending.
See: 80 Lawsuits – A Serial Litigator’s Success Story.

Cunningham claims that from 2015 to 2018 he received robocalls from telemarketers using Michael Montes’ autodialing company, TollFreeZone.com. Cunningham kept meticulous records and made audio recordings of calls received during that time. He then filed a lawsuit against Mr. Montes and his business, claiming violations of the TCPA.

Montes asked the court for a summary judgement arguing the lack of vicarious liability. "There is no evidence any of the calls to [Cunningham] were placed through the website," he said, maintaining his position that Cunningham had no direct evidence linking any specific call to TollFreeZone.com.

Montes contend that he cannot be held liable under the TCPA because the statute’s robocall prohibition only applies to those who "make" calls. He argued that under the Communications Decency Act of 1996 he can't be held liable for the activities of third-party telemarketers who make autodialed calls using his services.

The court rejected Montes’ argument that there was little evidence to prove TollFreeZone.com’s service was used by his customers to unlawfully placed autodialed calls to Cunningham. In making this ruling, the court cited the 2015 FCC Omnibus stating that the responsibility under the TCPA lies with those who “make” or “initiate” prohibited calls, and that the TCPA can be violated either by "taking the steps necessary to physically place a telephone call," or by "being so involved in the placing of a specific telephone call as to be deemed to have initiated it."

To render a decision, the court examined all the facts surrounding the circumstances under which the calls were made. Cunningham was able to produce evidence that Montes personally helped set up and ran some of his clients marketing campaigns from start to finish, including writing scripts for prerecorded calls.

James D. Peterson, Chief United States District Judge of the United States District Court for the Western District of Wisconsin said, “it makes one thing clear: a provider of auto-dialing services cannot blithely sit back and blame his customers for any TCPA violations that result from their use of his service.”

Montes repeatedly testified that he believed the language in his Terms of Use Agreement advising customers to abide by all federal and state laws absolved him of any liability for his customers' actions. The court viewed this advisory as an admission that he was aware that his autodialing system could be used unlawfully.

Additionally, it was shown that Mr. Montes had been warned that his website was "being used unlawfully by its clients" to make unlawful calls. The fact that he did nothing to stop it could imply that he was a participant in making the calls himself.

The lesson learned here is that whether your business is the one making calls or texts, or a third party, the liability for unlawful calls and texts can extend to everyone who knows or should know that the rules are being violated. The words in your service contract will not protect your business and turning a blind eye to an illegal robocalling operation could land you in court.