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City Select Auto Sales Inc. v. David Randall Associates, Inc.

United States Court of Appeals, Third Circuit

March 16, 2018

CAROLINE ABRAHAM, d/b/a Business to Business Solutions; JOEL ABRAHAM, d/b/a Business to Business Solutions

          Argued January 24, 2018

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (D.C. No. 1-11-cv-02658) District Judge: Honorable Jerome B. Simandle

          Daniel J. Cohen [ARGUED] Todd A. Lewis Bock Hatch Lewis & Oppenheim Alan C. Milstein Sherman Silverstein Kohl Rose & Podolsky Counsel for Appellant

          F. Emmett Fitzpatrick, III [ARGUED] Flamm Walton Counsel for Appellees

          Before: HARDIMAN, VANASKIE, and SHWARTZ, Circuit Judges.


          HARDIMAN, Circuit Judge.

         Plaintiff City Select Auto Sales, Inc. received unsolicited fax transmissions advertising the services of Defendant David Randall Associates, Inc. (David Randall). Claiming that those faxes were sent in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, City Select sued David Randall and its former president and co-owner, Raymond Miley, III. The case against Miley was tried to a jury and he was found not liable under the TCPA. After the United States District Court for the District of New Jersey entered judgment in favor of Miley and denied City Select's motion for a new trial, City Select filed this timely appeal.



         At all relevant times, David Randall was a Pennsylvania-based commercial roofing company. Miley was its president and, with his wife, owned 90 percent of the company. The company's office manager, April Clemmer, reported to Miley and her responsibilities included "[b]asic secretarial duties" and "work with the service department." App. 354.

         In March, April, and May 2006, David Randall hired Business to Business Solutions (Business Solutions) to fax unsolicited advertisements to thousands of fax numbers. The first transmissions were sent on March 29 after Clemmer, with Miley's handwritten approval, confirmed by fax the content of the ad, the quantity of faxes to be sent, and the areas to be targeted. David Randall received complaints in response to that initial foray into fax advertising, and Clemmer contacted Business Solutions to have several fax numbers removed from the list. On March 31, Business Solutions sent a second wave of faxes, which prompted several recipients to ask that their fax numbers be taken off the list. Two days later came a third burst of transmissions and on May 15, 2006, Business Solutions sent a fourth and final "blast" of 12, 000 faxes.



         City Select (on behalf of itself and a class of similarly-situated fax recipients) sued both David Randall and Miley in the United States District Court for the District of New Jersey. City Select's complaint alleged that the four fax campaigns had violated the TCPA's prohibition against unsolicited fax advertising. After discovery, the parties filed summary judgment motions. The Court denied David Randall's and Miley's motion for summary judgment. City Select Auto Sales, Inc. v. David Randall Assocs., Inc., 2014 WL 4755487, at *1, *4-10 (D.N.J. Sept. 24, 2014). It also denied City Select's motion for summary judgment against Miley. It granted City Select's motion against David Randall, however, and entered judgment against the company in the amount of $22, 405, 000. City Select Auto Sales, Inc. v. David/Randall Assocs., Inc., 96 F.Supp.3d 403, 416-22, 427-28 (D.N.J. 2015).[1]

         The case proceeded to trial on the question of Miley's personal liability under the TCPA. The evidence on that point was mixed. On direct examination, Clemmer testified that Miley first suggested fax advertising through Business Solutions and instructed her to contact the company to inquire about its services. Clemmer said she contacted Business Solutions on Miley's behalf, reported back to him, and needed his approval to engage such advertising services. She also testified that Miley reviewed proposed advertisements, authorized payment for the same, and generally acted as the "ultimate decision-maker" in approving the content, quantity, timing, and targeting of the transmissions. App. 361. On cross-examination, however, Clemmer admitted that she had no actual recollection of the fax campaigns or Miley's involvement in them and that her testimony was based on "[t]he way things worked." App. 444. She also stated that she was the only David Randall employee who communicated directly with Business Solutions, and that Miley, in the ordinary course, would not have seen or reviewed all of Clemmer's outgoing fax communications.

         The jury also heard Miley's response to an interrogatory, Miley's pretrial stipulations, and Miley's own testimony. In his interrogatory response, Miley conceded that David Randall was "aware that . . . Miley participated in decisions to send some facsimile transmissions." App. 644. Moreover, the jury was told that Miley stipulated that: (1) Miley was in charge of David Randall's marketing and advertising; (2) Miley instructed Clemmer to investigate Business Solutions's fax services; (3) Clemmer contacted Business Solutions on the company's and Miley's behalf and relayed the information she received to Miley; and (4) with Miley's help, Clemmer sent information to Business Solutions about the fax advertisements David Randall wished to send. Miley testified in person, however, that he did not: create the advertisement Business Solutions sent; discuss anything related to the campaigns with Clemmer; review any communications to or from Clemmer relating to the fax blitzes; communicate with Business Solutions; or authorize any of the conduct at issue in the case. Indeed, he stated that although he generally signed checks on behalf of David Randall, he "had no involvement in this at all, none, " App. 618; see also App 624 ("I've had no involvement, meaningful or not.").


         Based on the evidence presented at trial, the District Court produced a set of draft jury instructions. As originally proposed, draft Instruction 17 required the jury to find that Miley had a "high level" of personal involvement to hold him liable. App. 651. City Select objected to that language during the charge conference. It then consented to the District Court's suggestion to change "high" to "significant" and to include a reference to Instruction 18 after the term "significant." App. 652-53.

         City Select also objected to draft Instruction 18, which stated that to hold a corporate officer liable under the TCPA, "[t]he officer must have knowledge that he is directly participating in or authorizing the conduct in question." App. 654. City Select asserted that there was no authority for such a knowledge requirement. The District Court disagreed, explaining that "[t]he reason I believe the individual liability of a corporate officer requires that the person have knowledge, that what they're doing is authorizing fax advertising, is because of the enormous liability . . . that can trigger for the person." App. 655.

         The District Court then gave the jury the following instruction (Instruction 17) as to TCPA liability:

As I instructed you at the beginning of this trial, a TCPA claim for sending an unsolicited fax generally requires proof that: (1) the defendant utilized or caused to be utilized a telephone facsimile machine to send one or more faxes; (2) that the transmissions constituted advertisements; (3) that the defendant sent the transmissions without the recipient's consent and outside of any one of the statutory exemptions; (4)that the defendant qualifies as a "sender" for purposes of the TCPA, that is, the entity on whose behalf an unsolicited facsimile advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement, or a person acting on behalf of that entity; and, ...

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