Merger Danger: New TCPA Decision Explores Successor Liability In the Wild West of TCPAWorld
The laws around corporate structure in TCPAWorld are a bit of a mess.
In the first place, personal liability is available in most instances–even where a corporate officer director or employee is taking steps on behalf of their employer. Not good.
But even in the realm of successor liability claims can haunt an existing enterprise well into its next life.
In Walker v Highmark, 2022 WL 1912922, 2:20-CV-01975-CCW (W.D. Pa 06/03/2022) for instance, a court found the Plaintiff could sue the now-owner of a call center that made illegal calls because the Defendant’s subsequent purchase of the call center constituted a “merger.”
In Walker the Plaintiff allegedly received calls that violated the TCPA. There was no question that the Defendant itself did not make the calls and that the calls were made by a call center before the Defendant acquired it.
The Defendant argued it had no liability in this instance, but the Court disagreed. Citing Pennsylvania corporate law, the court holds that successor jurisdiction “can be present in the following situations: (1) merger or de facto merger; (2) express or implied assumption of liabilities, including by a ratification of the predecessor’s activities; or (3) acquisition of assets or reorganization undertaken to fraudulently avoid jurisdiction.”
Since the Defendant essentially admitted that it had “merged” the call center operations into its new corporate structure the Court had little trouble allowing the case to proceed.
Walker stands in marked contrast to cases like Zean where an acquiring defendant was not found to be liable for the sins of the predecessor.
As with so much else in TCPAWorld, successor liability is a tricky issue. Folks looking to acquire call centers or direct-to-consumer marketers (or even platform technology) need to do ample due diligence to avoid being stuck with potentially MASSIVE risk incurred before the deal even took place.
Be careful friends.