I’ve described it as the most unfair rule in the American legal system: corporate officers being held directly liable for the conduct of their companies that violates the TCPA.
In virtually every other setting, it seems, employees, officers and directors are not liable to third-parties for the acts they take on behalf of their employers—at least in good faith and within the scope of employment. But with the TCPA the rule of individual liability for “participation” with corporate violations of the TCPA has repeatedly been applied rigidly and automatically.
And its just gross.
Consider the recent case of Pearson v. Porch, Case No. 3:20-cv-697-JR, 2020 U.S. Dist. LEXIS 193929 (D. Or. Aug. 31, 2020). There three corporate officers- two co-founders (Brenton Marrelli and Darwin Widjaja) and the CEO (Matthew Ehrlichman) may be personally liable in a TCPA lawsuit against Porch seeking $54,610,000.00 stemming out of the alleged cold-calling of service professionals. While the calls at issue were allegedly made to business numbers for the purpose of connecting business owners with consumers interested in their services, the Court found that the calls might qualify as telemarketing or otherwise have been made without the appropriate level of consent. And despite the “close call” nature of these allegations, the three corporate officers are stuck in the case because they allegedly “authorized” or “participated” in the conduct.
Here’s the analysis:
Plaintiffs have alleged that it is the business model of GoSmith and Porch.com to sell leads to home improvement contractors, and plaintiffs have alleged that defendants Ehrlichman, Marrelli and Widjaja are involved in, have personal knowledge of, and authorized this business model. Thus, while there is no allegation that these defendants made a phone call or sent a text message, it is a reasonable inference for the Court [*18] to draw from the pleadings that these high-level defendants personally authorized the conduct alleged to have Violated the TCPA.
This is rough stuff. It remains to be seen whether the corporate defendants might still be extracted on jurisdictional grounds—the court granted a motion to dismiss for lack of personal jurisdiction but articulated a pretty low standard for an amendment resolving that issue—and whether summary judgment might yet free the Porch 3.
More to come.