When It’s All About the Dicta

City Select Auto Sales, Inc. v. David Randall Associates, Inc., ___ F.3d ___ (3d Cir. 2018).  This Telephone Consumer Protection Act (“TCPA”) case, involving unwanted faxes, was tried to a jury as to the individual defendant, the former president and co-owner of the corporate defendant.  The jury returned a defense verdict.  Plaintiff appealed, complaining of the jury instructions regarding personal liability under the TCPA.  Applying plenary review of the jury instructions, the Third Circuit found no problem with them, and affirmed the result below.  Judge Hardiman wrote the panel’s opinion, in which Judge Vanaskie joined.  Judge Shwartz authored a concurring opinion.

There was nothing special in the ruling about the jury instructions that warranted publication of the court’s disposition of this case.  Rather, the interesting aspect of this case was an issue that split the panel:  whether the TCPA “impose[s] personal liability on officers who act on the corporation’s behalf rather than their own.”  The answer was purely dicta in the context of this particular case, since the verdict in favor of the individual defendant was upheld against plaintiff’s challenge to the jury instructions, and there was no cross-appeal.  Nonetheless, the panel had requested supplemental briefing on this question, and much of Judge Hardiman’s opinion, and all of Judge Shwartz’s concurrence, were devoted to the personal liability issue.

Judges Hardiman and Vanaskie expressed skepticism that there was individual liability.  They observed that to the extent the individual “planned and executed a fax campaign, he did so in his corporate capacity rather than his personal one.”  It did not appear to the majority that Congress intended personal liability in these circumstances.  This was so especially because the TCPA does not expressly impose such liability, unlike other federal statutes where “Congress expressly authoriz[ed] personal-participation liability or something quite like it.”

The fact that personal participation liability was available against corporate officers at common law might no longer be dispositive under federal statutory law after Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994).  Though that case addressed aiding and abetting liability rather than personal participation liability, the majority saw “little reason” why it would not apply in this context.

Nonetheless, the majority did not rest its ruling on its view of the personal liability issue.  As Judge Hardiman recognized, that question had not been litigated below or fully briefed or argued on appeal.  Thus, the majority went on to review the jury instructions and to affirm on the basis that they were not improper.

Judge Shwartz’s concurrence differed with her colleagues on the personal liability issue, which she rightly noted was dicta.  She believed that “a corporate officer indeed may be held personally liable under the TCPA for sending unsolicited fax advertisements for the officer’s corporation.”  The silence of the TCPA, as well as that of the Federal Communications Commission, on that issue led Judge Shwartz to review the “backdrop” of the TCPA.  That statute, she noted, “codifies common law torts such as invasion of privacy, nuisance, and trespass to chattels.”  Thus, the common law’s imposition of personal liability was, contrary to the majority’s view, applicable to the TCPA.  Judge Shwartz also found aiding and abetting liability distinct from personal participation liability, again unlike the majority.

The two opinions in this case have laid out two alternative paths regarding this very provocative issue.  Some future case that squarely presents the issue of personal participation liability under the TCPA will have very good road maps to guide the judges there.

 

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