It often happens in TCPA litigation that a Defendant will cry poor– claiming to be judgment proof or otherwise incapable of settling a case on a classwide basis–as if that were some sort of defense to a TCPA suit.
While may times these are simply the cold hard facts, as Anthony Paronich told us long ago that doesn’t mean a Plaintiff is likely to dismiss their case. Many times it simply leads to a change in tactics: personally naming the officers and employees that made the challenged communication.
For instance, in Sattler, 2021 U.S. Dist. LEXIS 132083 (SDNY July 15, 2021) a Court granted a Plaintiff’s request to add employees that sent allegedly illegal faxes after the company’s lawyer apparently claimed the Defendant was judgment proof.
In a letter filed with the court in June the Plaintiff stated the following:
[Defendant’s] counsel has repeatedly told [Plaintiff’s] counsel that [Defendant] is insolvent and that it may stop defending the litigation and allow a judgment to be entered against what [Defendant’s] counsel represents would be an empty corporate shell.
While Defendant undoubtedly shared this information with Plaintiff in the hopes that the case would go away, the opposite happened. Plaintiff doubled down and decided to add corporate officers and employees as a direct result:
So that this litigation does not become a meaningless academic exercise, [Plaintiff] is requesting this Court’s permission to seek leave to amend her Complaint to add as defendants the individual corporate officers, employees, and agents of [Defendant] who directly participated in or personally authorized the conduct that violated the TPCA. It is appropriate to add these individuals as defendants because the only way in which a corporation can act is through the people who make decisions and act on its behalf.
The Defendant opposed arguing that it is inappropriate to hold such officers and directors and employees liable for the acts of the corporate entity. Defendant also argued that the proposed individual defendants are broke anyway so there is no reason to add them.
The Court disagreed and allowed Plaintiff to make his proposed amendment concluding that the claims against the unnamed employees would not be futile since personal liability is permitted under the TCPA. (Most unfair rule in the entire American legal system BTW.)
Moreover, the court yawned at the notion that the new individual defendants (i.e. employees of Defendant) might have no money–the Court reasoned that the mere fact that a defendant is judgment proof is not a basis to deny the amendment.
As Sattler shows, courts continue to liberally permit suits against individual officers and employees of defendants that allegedly violated the TCPA–terrible though that is.
But even more critically–Sattler highlights why TCPA defendants should not expect to evade liability by pointing to a lack of funds. TCPA defendants should recognize that by pointing to empty corporate bank accounts they may actually be pointing the Plaintiff to their own personal assets. TCPA defendants lacking the resources to satisfy potential judgments should carefully weigh tactics with their counsel and give consideration to concealing (rather than sharing) their financial condition–which is NEVER relevant in TCPA litigation pre-judgment anyway.
Leading with “the company is broke” may result in corporate officers and employees sharing in its fate following personal liability for its actions.
This is serious stuff folks. Always consult counsel before engaging in any form of outreach with consumers–and never assume that you can safely violate the TCPA merely because the company you work for is small or underfunded. No way.
© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 197