Helping Hand Caregivers v. Darden Restaurants: Seventh Circuit Rejects Strict Liability for a Brand Featured in an Unauthorized Fax

The bottom line: in the Seventh Circuit, being the brand promoted in a fax is not enough. A plaintiff must show the sender had actual or apparent authority to send fax advertising for the defendant.

Background

Mid Wilshire Consulting, doing business as Social Wellness, arranged "Lunch 'n Learn" wellness presentations. Its contractor, Greg Jones, reached out to Darden Restaurants about a marketing alliance that would mention the Olive Garden catering. The discussions with Darden personnel concerned only email marketing. No contract was signed, and no money changed hands.

Social Wellness nonetheless faxed a flyer stating it was "teaming up with Olive Garden." According to the opinion, the flyer was designed by someone found on Craigslist, used a logo obtained through online searches, listed only Social Wellness contact information and went to numbers drawn from searches and a purchased list. Darden's contact never saw the flyer and Jones admitted that fax marketing was never discussed. After Helping Hand Caregivers sued, Darden sent a cease and desist letter and later won a default judgment for trademark infringement against Social Wellness and its owner.

Only Darden appeared in the TCPA case. The district court granted it summary judgment.

The decision

Judge Rovner wrote for the panel, which included Chief Judge Wood and Judge Hamilton.

1. The "sender" definition does not impose strict liability. Federal Communications Commission (FCC) regulations define the "sender" of a fax ad as the entity "on whose behalf" it is sent "or whose goods or services are advertised or promoted." Helping Hand argued the second clause makes any promoted company directly liable. The court reaffirmed its prior decisions in Bridgeview Health Care Center v. Clark and Paldo Sign & Display Co. v. Wagener Equities, which rejected that reading and noted that a competitor could otherwise bankrupt a rival by blasting faxes promoting it.
2. No real circuit split. The court read the Eleventh Circuit's Palm Beach Golf Center decision as also requiring that a fax be sent "on behalf of" the defendant. It noted the Sixth Circuit's later decision in Health One Medical Center v. Mohawk had rejected liability for drug makers whose products appeared in a wholesaler's faxes. "Nothing in the statute allows the imposition of liability on an entity wholly unaware of the use of its logo in a fax."
3. No evidence of authority. Helping Hand could prevail by showing express, implied or apparent authority. It showed only discussions about email. Because the medium is "precisely the issue that implicates TCPA liability," talks about email marketing did not authorize faxes.
4. No abuse of discretion on discovery. The district court stayed depositions of two other Darden witnesses until Helping Hand explained how it would proceed against the defendants who had been served but not appeared. Helping Hand never offered a plan, never sought default and never moved for class certification. A party that fails to diligently prosecute its case cannot demand more discovery when facing summary judgment.

Practical takeaways

1. Trademark owners should limit any marketing partnership in writing, including approved channels, and police unauthorized use of their marks.
2. Prompt cease and desist letters and enforcement can help show a fax was not authorized.
3. Plaintiffs should focus on proving particular authority to send fax advertising, not marketing generally.
4. Litigants must follow case management orders, especially when some defendants have not appeared.

Read the Seventh Circuit's opinion in Helping Hand Caregivers v. Darden Restaurants.