Gary ….attached is a very long and totally unedited Meno on why I believe that under the theory
of Apparent Authority and Estoppel that Meta could be held vicariously liable for civil fraud that
could support uncapped punitive damages .. I ask you to read what I have rambled and pasted
to see if you agree in the viability of the claim and give serious thought whether you would be
willing to join a legal team to pursue this claim.. Oliver Maner (Greg Hodges, Pat O’Conner,
James Gerard) have graciously prepared a pretty strong Complaint with Discovery ready for
filing… But the lawsuit (prepared gratuitously by junior associates) focuses on basic negligence
and contract theories where the recovery is limited to actual damages . (Sister Nancy lost $21k
plus a couple of key clients - )
But I think under the well developed but still developing Law of Agency – that we can show that
Facebook both by affirmative action :


allowing the hackers to take over personal and business accounts, and
actually initiate fraudulent credit card charges directly to Facebook
but more culpable by



effectively precluding contemporaneous customer support (including firing 21k people
that were the core of the customer support) thus giving fertile ground for the Scammer to
set up shop) and
most culpable of all – by allowing these Scammers to broadcast to the world -for years their (mis) representation as Facebook representatives without any apparent effort to
stop these search (and paid search !) results of false representations and
without giving any warning to their own Facebook customers –
is sufficient conduct (or non-conduct) to bring this claim of Apparent Authority to a jury… 1
I would not waste my time reading this …unless you could be interested in joining the legal
team.. I think we can find the Andy Scherffius, or Jeff Harris or Greg Hodges to push this hard
over the goal line and I know you are busy ..and this may be a time consuming long shot… but
you are one of the smartest people I know and a great critical thinker..and would love for you to
consider ..if you can make the time and can see the viability
B
Draft Memo to Partners at Oliver Maner
Greg and Bill.
I think we can get punitive damages against FB and would love to set up a meeting to discuss
the possibility. I am assuming this may be a $100mm case (but would settle for less) and
1
The most critical element for holding a Principal liable under the theory of Apparent Authority is for there to be
some conduct by the Principal that supports a reasonable belief of actual authority .. The preceding element that
the Third Party had a reasonable belief in their actual authority is an easy bar as is the third element of actual
harm
1
therefore possibly justifying asking you to plod through my ramblings and snippets to better
understand and challenge the hurdles, viability and potential.
If persons broadcast to the world that they are agents (aka “Meta Support Division” and
“Facebook Customer Support”) ) of Facebook…and this misrepresentation has been going
on for years2 and many people have been harmed greatly by these representations.. and FB
clearly has actual Notice3 these false representations are being made or at the very least
constructive Notice
Having never really practiced law for a living it has been easy to be selective. My criteria is
pretty simple…What is the wrong? What is the harm? I have great respect for our legal system
– despite its flaws – and where there has been an injustice then there is almost always a legal
remedy to pursue.
I took this case on first and foremost because the victim is my sister….and when I spoke to her
on Feb 27 , 2024 – I have never heard her so aggrieved and distraught….I wish that you could
have heard her voice to understand more fully her visceral pain. I have been with Nancy when
our mother died, then father and last year when her soul mate – our older sister died…but I had
never heard Nancy in an almost catatonic state. She is also going through a divorce and has
some serious financial problems so maybe it was just a last straw – but when she explained
over sobs how someone had hacked her business account and each of her business clients on
FB – taken all the personal and business information, removed her and her clients access to the
accounts, made and continued to make repeated credit card charges against each account and
how in her desperation to get FB support she ended up calling a fraudulent META support
person who intentionally scared her more and directed her to remove $21k and put it in a
“secure” account.. which as soon as she did she realized what she had done
It just did not seem right that she was unable to call or contact someone at FB to have helped
prevent the loss and mitigate the harm..and I told her that I would look for a legal way to get her
money back from Facebook
And I searched the internet I found many instances where people had suffered similar
sometimes catastrophic losses because FB was intentionally not providing a bare minimum of
customer support and it was clear to me that FB had failed in its responsibility to protect these
personal accounts, intentionally provided no method to call or contact FB while the fraud was
occurring and then failed for almost two months of continuous email requests to re-establish and
secure these accounts.
But I was left with the challenge of how and who would help me file a lawsuit against a fortress
with unlimited resources to get back her $21k in direct financial loss plus hopefully some of the
consequential damages flowing from these wrongs 4
2
(See 2017 NPR Article)
One just has to look at the publications such as the 2017 NPR Article “Searching for ‘Facebook Customer Service
Can Lead to a Scam”
4
… (Not sure if you know anything about this AI Chatgbt – to me is as foreign as FB , Instagram , Twitter etc… but I
put the facts of the case in a letter and asked AI to summarize the potential causes of action …..very cool response
in less than minute, to wit
“Apparent authority in agency law refers to a situation where a third party reasonably believes that an agent has
the authority to act on behalf of the principal, even if the agent lacks actual authority.
3
2
So my default was to ask Greg Hodges for help.
Maybe there would be a bigger claim that would justify the otherwise pyrrhic effort it would take
to fight FB in the courts. The first thought was some sort of class action…but after research that
did not appear a viable option. Nonetheless – with integrity, commitment to principle and
enormous gratitude on my part - OM agreed – to help me bring a lawsuit against FB to recover
her loss.
Then a funny thing happened on the way to the forum – in my initial meeting with Bill he said
something about if there was some evidence of fraud committed by FB then there could be
punitive damages scaled relative to the size of FB as a punitive means to encourage this
massive ship to alter the way it conducts business.. But FB had not directly defrauded Nancy
and had not received her stolen funds and certainly had not sanctioned or ratified the actions of
these fake representatives..
But then I started looking more into the law of agency and it increasingly seems to me that the
liability for these fraudulent acts by the Scammers (which clearly satisfies each element of legal
fraud) could be assigned vicariously to FB as the principal because of the Apparent Authority of
the Scammers holding themselves out as FB support representatives on Google search and
virtually every other internet search platform
This belief arises from the principal's representations or conduct, which lead the third party to assume that the
agent is authorized. (our argument is that the FB is a huge company with untold assets and resources and one
would reasonably assume that FB would not allow non-representatives to hold themselves out as FB agents – and
that FB would neither stop this practice from occurring or at a minimum give adequate warning to its customers
..or really do the reasonably expected thing and provide the customer support that should be expected)
Here are the key points to understand about apparent authority: 1. **Principal's Representations**: Apparent
authority is created by the principal's representations to the third party, either through words or actions,
suggesting that the agent has authority. These representations can be direct or indirect. 2. **Third Party's Belief**:
The third party must reasonably believe that the agent has the authority to act on behalf of the principal based on
the principal's conduct. This belief must be reasonable and justified under the circumstances. 3. **No Actual
Authority Required**: Apparent authority exists even if the agent does not have actual authority to perform the
act. It relies solely on the appearance of authority created by the principal's conduct. 4. **Binding Effect**: If a
third party relies on the apparent authority of the agent, the principal may be bound by the agent's actions, as if
the agent had actual authority. The principal may be held liable for the obligations incurred by the agent.
5. **Examples of Apparent Authority**: Examples include a principal allowing an agent to act in a way that
suggests they have certain powers, such as consistently allowing an employee to negotiate contracts on the
principal’s behalf, leading third parties to assume the employee has the authority to do so.
6. **Revocation and Notification**: To prevent apparent authority, a principal must clearly communicate any
revocation of the agent's authority to third parties who may have relied on the previous representations.
Understanding apparent authority is important because it protects third parties who act in good faith based on the
principal's representations, ensuring that principals cannot evade liability simply because the agent lacked actual
authority.
(FB did nothing to dispel the impression that these people had authority)
3
A first test for liability based on Apparent Authority is that the Third Party victim has a reasonable
basis for believing this Apparent Authority is actual. That was an easy hurdle in this instance
because there was otherwise no customer support provided on the FB website and the phone
number for these Scammers appeared on Google both organically and on paid Google
ads…and when she called the Scammers were aboe to access her FB account (while she was
not) and identified the fraudulent credit card charges that already occurred and knew her
husband’s and children’s names, her address, dob , and all sorts of other information.. Plus
Nancy was in a highly distressed and vulnerable condition so it was relatively easy I guess for
them to take control and give her direction.
The second element for asserting liability under Apparent Authority is that there needs to be
some conduct by the Principal that leads to the reasonable belief that these people were actual
FB representatives.. FB did not sanction or ratify the actions of these agents – nor did FB
benefit financially as a result of this fraud.
But then I found an important US Supreme Ct case (ASME v Hydro 456 U.S. 556 (1982) that
made clear that liability based on Apparent Authority without ratification or financial benefit to the
Principal. And this same case also allowed a form of punitive damages against the Principal.
American Soc'y of Mech. Eng'rs v.
Hydrolevel, 456
U.S. 556 (1982)
Syllabus
Petitioner, a nonprofit membership corporation with over 90,000 members drawn
from all fields of mechanical engineering, promulgates codes for areas of
engineering and industry. Much of its work is done through volunteers from industry
and government. The codes, while only advisory, have a powerful economic
influence, many of them being incorporated by reference in federal regulations
and state and local laws. Respondent marketed a safety device for use in water
boilers and secured a customer that previously had purchased the competing
product of McDonnell & Miller, Inc. (M&M). One of M&M's officials, a vice-president
Uames), was vice-chairman of petitioner's subcommittee that drafted, revised, and
interpreted the segment of petitioner's code governing the safety device in question.
Subsequently, he and other M&M officials met with the subcommittee's chairman
(Hardin). As a result, M&M sent a letter to petitioner asking whether a safety device
with a feature such as one contained in respondent's device satisfied the pertinent
code requirements. The letter was referred to Hardin, as chairman of the
subcommittee, and ultimately an "unofficial response" was issued, prepared by
Hardin but mailed on petitioner's stationery over the signature of one of petitioner's
4
full-time employees. The response, in effect, declared respondent's product unsafe.
Thereafter, M&M's salesmen used the subcommittee's response to discourage
customers from buying respondent's product. Respondent subsequently sought a
correction from petitioner of the unofficial response; respondent continued to
suffer market resistance after the pertinent committee replied. After James' part in
the drafting of the original letter of inquiry became public, respondent filed suit in
Federal District Court against petitioner (and others who settled), alleging violation
of the Sherman Act. The trial court rejected respondent's request for jury
instructions that petitioner could be held liable for its agents' conduct if they acted
within the scope of their apparent authority. Instead, the jury was instructed that
petitioner could be held liable only if it had ratified its agents' actions or if the
agents had acted in pursuit of petitioner's interests. The jury nonetheless returned a
verdict for respondent. The Court of Appeals affirmed, concluding that petitioner
could be held liable if its agents had
Page 456 U. S. 557
acted within the scope of their apparent authority, and that thus the charge was
more favorable to petitioner than the law required.
Held: Petitioner is civilly liable under the antitrust laws for the antitrust
violations of its agents committed with apparent authority. Pp. 456 U. S. 565576.
(a) Under general rules of agency law, principals are liable when their agents
act with apparent authority and commit torts 5analogous to the antitrust violation
presented here. An agent who appears to have authority to make statements
for his principal gives to his statements the weight of the principal's reputation - in this case, the weight of petitioner's acknowledged expertise in boiler safety.
Pp. 456 U.S. 565-570.
So the issue boils down to whether FB must take affirmative steps of commission to show
conduct to support this reasonable belief in the Apparent Authority of the Scammers – or can the
requisite conduct (which I think does also exist affirmatively6) be no conduct at all as a basis of
liability. If there is an affirmative duty – then not doing anything breaches that duty. If a
5
One of the important favorable and distinctive characteristics of this case is that it is grounded in Tort which is a
departure from the normal body of case law regarding Apparent Authority which is based on Contract
6
For example what was the conduct of FB which allowed the Hackers to take over these FB Business accounts not
only giving them access to the personal and business records of the FB Customers but somehow allowed them to
make actual fraudulent credit card charges presumably in FB’s financial favor and then with this knowledge of false
financial charges (presumably by the Hackers ofr Scammers themselves , Nancy was certainly reasonable in
believing that access to this information gave more than a reasonable BASIS TO BELIEVE THESE Scammer had actual
authority as agents of FB
5
lifeguard stands by the pool and watches a person drown without making any effort to save her
– that is a breach of a duty. By the same token….if these Scammers are broadcasting to the
world that they are FB support representatives and these false representations have been going
on for years7. Then there becomes (in my opinion) an affirmative duty on the part of FB to
prevent these Scammers from holding themselves out as FB representatives and to warn its
customers about these fraudulent representatives. Failure by FB over the years to address this
obligation effectively estops FB from denying full liability as the apparent Principal.
Seems to me that just as the owner of a Trademark is charged with the duty to police and
protect its marks, not placing responsibility on FB to make efforts to prevent and warn its
customrers of these schemes to defraud FB customers – especially given the fact that these
schemes are totally reliant on FB’s decision not to provide a bare minimum of customer support
– would shock any sense of responsibility. Justice and avoidance of hard to the public.
Seems that FB’s allowance of false agents to broadcast public misrepresentations under it’s
name in a pervasive and long term manner over a period of years without taking appropriate
steps to stop this misrepresentation should be estopped from denying liability based on these
persons Apparent Authority ..8
See also …the broadening of the Principal’s liability for person’s acting as agents with
apparent authority based Inherent Agency Power … Restatement 2d Law of Agency pp 238 6
Inherent agency power
Restatement (Second), in an innovation from the first Restatement, identified an
additional basis on which the legal consequences of an agent's action might be
attributed to the principal. Restatement (Second) characterised this basis as
“inherent agency power,”
7
See the 2017 NPR Article _____ where it cites specifically this same fraudulent scheme where Scammers
Instructor: Professor Richard M. Buxbaum (I think it might be wise to contact Prof Buxbaum to ask his help
writing a brief on this issue
8
Spring 2018
UC Berkeley School of Law
§ 2.05 Estoppel to Deny Existence of Agency Relationship
A person who has not made a manifestation that an actor has authority as an agent and who is not otherwise liable
as a party to a transaction purportedly done by the actor on that person's account is subject to liability to a third
party who justifiably is induced to make a detrimental change in position because the transaction is believed to
be on the person's account, if
(1)
the person intentionally or carelessly caused such belief, or
(2)
having notice of such belief and that it might induce others to change their positions, the person did not
take reasonable steps to notify them of the facts.
6
defining it as “the power of an agent which is derived not from authority,
apparent authority or estoppel, but solely from the agency relation and exists for
the protection of persons harmed by or dealing with a servant or other agent.”1
The situations in which inherent agency power applied distinctively fell into two
very different categories. First, and most
frequently, inherent agency power was “the power of a servant to subject his
employer to liability for faulty conduct in performing his master's business.”2 Second,
inherent agency power was the basis on which an agent might bind a principal in a
transaction for which the agent lacked actual authority when the agent's
but be aware that the restatement 3rd Restatement (Third) jettisons inherent agency power as a
basis on which to subject a principal to liability. Its ability to do so stems in part from a
recognition that the bridging function assigned to inherent agency power was too heroic to be
useful. Thus, the circumstances under which a principal is subject to vicarious liability for torts
committed by an employee
or other agent are articulated and justified on their own terms
But these curtailments on the theory of Inherent Agency Power….do not have the effect of
lessening the broad scope of Principal liability under Apparent Authority
I did see one English case – principally on point - where a completely bogus agent was
representing himself as an actual agent and the principal was held liable based on the Principle
being negligent in allowing the bogus agent to make these representations9
Points and Questions



9
However they got into the account.. the next Q is how they were able to initiate charges
against Nancy and her other client accounts thru credit cards tied to the respective
business accounts made where there were no ads
Or maybe the Hackers used the fraudulent CC for their ads
It seems incredible…that the Scammers (that Nancy called ) had access to Nancy’s
account (even though she had nwere affiliated or one and the same o access) and the
Scammers knew what fraudulent charges had been made ..( 3 - $100 chrges) as well as
Pacific carriers v BNP (2004) 218 CLR 451.
7


her address , husband and children’s names…and other personal information – makes it
seem probable that the Hackers and the Scammers
Did FB (inadvertently ) keep some of these fraudulent charges.. and so benefitted
o Does it have records of payments made
Does Google share some fault in publishing paid ads that had the Scammer’s phone
number identifying themselves as Meta Support


6.1.Addendum
..memo to bill and greg -- inaction is a sufficient basis for establishing Apparent Authority - see
cases on estoppel establishing an agency where the principle did nothing to let people knowe that
the "apparent agent" either no longer had or never had real authority -- the supreme court case
(ASME v Hydro) is a strong US Sup Ct case ( ) for our premise that the Scammers10 were acting
with Apparent Authority (have the law on App Authority as a ftnt)
ASME -summary (syllabus) Apparent Authority



The case is not totally sufficient authority because
1. The agent in question was an agent of the principle and the principle had conduct
that supported a third party’s reasonable assumption that the “agent” had apparent
authority
2. But in cases of Apparent Authority – the fact as to whether the person was an
agent who just exceeded his authority , or someone that used to be an agent or
had never been an agent – A person with Apparent Authority can make a
Principle liable (as if the Principle were doing the act himself) regardless of
whether the person is a real agent or an apparent agent PROVIDED -inter alia –
that the Principle did something – to make it reasonable for a third party to
reasonably believe that person has authority as an agent.
ASME – is important in establishing
1. That the Principle need not ratify the actions of the apparent agent
2. That the Principle does not need to have directly benefitted from the action of the
apparent agent
3. That punishment awards (like punitive damages)) may be permitted as part of the
Principle’s liability
4. The Principle’s liability is based as if the Principle had committed the act.
(Note there are other cases where inaction was sufficient to bestow apparent authority)
10
We use the word “Scammers” to identify the person that Nancy called – these are the ones she called posing
themselves as Meta employees that actually took her money. Distinguished from the word “Hackers” who were the
ones that actually got into her business FB account andtook her pers and biz information and prevented
her access and charged her account
8
2.05 Estoppel to Deny Existence of Agency Relationship
A person who has not made a manifestation that an actor has authority as an agent and
who is not otherwise liable as a party to a transaction purportedly done by the actor on
that person's account is subject to liability to a third party who justifiably is induced to
make a detrimental change in position because the transaction is believed to be on the
person's account, if
(1) the person intentionally or carelessly caused such belief, or
(2) having notice of such belief and that it might induce others to change their positions, the
person did not take reasonable steps to notify them of the facts.
(not sure of this source…
Definition of "agency by estoppel" Occurs when a principal's actions lead a third party to believe
that another person is his or her agent, despite no actual agency being set up. The law enforces
this perceived relationship if the third party is harmed by acting on this belief
agency by estoppel Definition, Meaning & Usage | Justia Legal Dicti…
dictionary.justia.com/agency-by-estoppel
dictionary.justia.com/agency-by-estoppel
5.20.24
Ashleigh and Kelvin .. I am very impressed with your Complaint and discovery and very
appreciative to you and Bill , Greg and the firm. Thank you
A professional act of kindness that I would love to see bear fruit. As a quasi-practicing attorney, I
am reticent to suggest changes… or suggest alternative legal theories - nonetheless:
The largest potential recovery would be to establish a basis for punitive damages and the
clearest act justifying a punitive award is the fraudulent conversion (theft) of Plaintiff’s money by
the individual or company falsely representing themselves as Meta Support.
The elements of fraud by the fraudulent Representatives are crystal clear. (1) a false
representation, (2) scienter that they were acting falsely, (3) the intention to induce one to act or
refrain from acting, (4) justifiable reliance by Plaintiff, and (5) damages.
But the problem is that this unidentified entity, not Facebook itself, took the money. Therefore,
the issue is how we can vicariously assign the fraudulent acts of those purporting to be Meta
employees …to Meta.
The prospect of using the agency law, as a basis of liability seems appealing and viable.
9
1. First of all, since it was the company or persons falsely purporting to be Meta Customer
Support representatives, and not Facebook itself, that stole the money from Plaintiff,
establishing this agency relationship between the two would overcome the causal
connection between FB’s negligent act (not providing customer support) and the
damages (loss of money)
2. Even more appealing, if agency can be established, based on the purported FB
representatives’ Apparent Authority, then there would be a irrefutable evidence of fraud
and therefore a clear basis f or punitive damages .
Agency Law
Apparent Authority is the power of an agent to act on behalf of a principal, even though
not expressly or impliedly granted. This power arises only if a third party reasonably infers, from
the principal's conduct, that the principal granted such power to the agent. The idea of
apparent authority protects third parties who would otherwise incur losses if the agent's
signature did not bind the principal after reasonable observers thought that it would. Typically, if
an agent has apparent authority, the agent's principal will be held liable for the actions of the
agent which are within the scope of the apparent authority.
The doctrine of apparent authority comes up often in agency law. In American Soc'y of
Mech. Eng'rs v. Hydrolevel, 456 U.S. 566 (1982), the Supreme Court upheld apparent
authority as a legitimate doctrine under agency law, holding, "Under general rules of
agency law, principals are liable when their agents act with apparent authority . An
agent who appears to have authority to make statements for his principal gives to his
statements the weight of the principal's reputation” -- in this case, the weight of
petitioner's acknowledged expertise in boiler safety.
So the legal issue: -- What gives rise to an agent’s Apparent Authority ?
Black letter law provides these elements
1. The principal’s words or actions lead others to believe the agent has authority;
2. A third-party reasonably relies on the principal’s words, or actions, and
3. The third party is injured
The injury element is easy. The more difficult argument is identifying the words or actions of the
Principal that would lead others to believe the false agents have authority and how did Nancy
reasonably rely on those words or actions to her detriment ?
I think this issue is not what action or words by the Principal …but rather what Inaction by the
Principal gave the false representatives the apparent authority
Think of the extreme as an analogy to underscore that principle , to wit:
10
Someone is broadcasting all over TV , Radio, Internet and dropping millions of leaflets from the
sky falsely purporting to be Facebook’s Customer Support Division
1. At some point in time…if FB does not take any action to stop this false representation
and, even more so, if FB does not even go to the trouble of warning its users, especially
its business users (higher duty owed as licensees) …. Then such Inaction on the part
of FB then would lead others to believe these false agents are legitimate ; and
2. Given Nancy’s long time business relationship with FB – a company that has
demonstrated universal strength, reach, best of breed technology, and resources,. Its
reasonable based on these dealings with FB to believe that FB would not allow false
support reps to publish themselves as FB Support without stopping that from happening
or at least giving notice to FB business users not to rely on those fake people
When can a Principal be held liable for the acts of a person holding themselves out as
an authorized agent of the Principal ?
It seems the logical answer is that this liability occurs if :
1. The Principal knew or should have known that this was occurring11 ; and
2. the Principal did not take reasonable steps to stop this false claim from being conveyed or did
not take reasonable steps to warn the FB business user that the people holding themselves out
as FB Support were false ; and
3 The Principal had the resources to stop the false persons or to warn its customers ....but did
not take reasonable steps 12
11
See the attached Google Search results as of 5.19.24 for FB Customer Support which displays several fraudulent
numbers including the one that Nancy contacted on 2.27.24 And See the NPR article attached describing exactly
that these false FB support sites are set up because FB fails to provide customer support
https://www.npr.org/sections/alltechconsidered/2017/01/31/511824829/-facebook-customer-service-is-a-scamliterally see attached
12
Certainly! Here are a couple of recent legal cases related to apparent authority:
New Jersey
New Jersey
New Jersey Supreme Court Decision: In a case from New Jersey, the Supreme Court held that a third party who
shared a storage trailer with the defendant had apparent authority to authorize a search of the trailer. However,
this authority did not extend to a bag belonging solely to the defendant. The court ruled that the third party’s
authority did not cover the defendant’s personal property located within the bag1.
Nevada Court of Appeals Decision: In another case, the Nevada Court of Appeals considered the concept of
apparent authority. The State argued that even if a person (Robert) did not have actual authority to consent to a
search of another person’s bedroom, he had apparent authority to authorize the search. However, the court
11
examined whether the deputies had sufficient facts available to justify the search based on the doctrine of
apparent authority2.
Remember that apparent authority typically requires the circumstances on which the assumption of authority is
based to be induced by the principal, not by the representative3. If you need further details or have any other legal
questions, feel free to ask!
Related to: recent legal cases apparent authority
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1
criminallegalnews.org
2
law.justia.com
3
lexology.com
4
law.cornell.edu
5
media.gettyimages.com
+1 more
Chat gpt VERY FAVORABLE RESULTS
User
Are there legal cases where a principal is held vicariously liable for the acts of a person claiming to be the
agent because the principal was negligent in allowing this false agent to misrepresent a relationship with
the principal and was estopped from avoiding liability by knowing the person was making false
assertions of affiliation but the principal did nothing to stop this misrepresentation
ChatGPT
Yes, there are legal cases where a principal can be held vicariously liable for the acts of a person who
falsely claims to be the agent of the principal due to the principal's negligence in allowing the
misrepresentation. This legal principle is rooted in the doctrines of apparent authority and estoppel.
12
Key Concepts:
Apparent Authority: Apparent authority arises when a third party is led to believe, through the
principal's actions or inactions, that an individual is acting as an agent of the principal. If the principal
creates the appearance of authority in the supposed agent, they may be estopped from denying the
agency relationship.
Estoppel: Estoppel prevents a principal from denying liability if they negligently allowed or failed to
correct the false impression that an individual was their agent, especially if the third party relied on this
misrepresentation to their detriment.
Case Examples:
Watts v. Columbia Artists Management Inc. (1991): In this case, a concert promoter was found to have
apparent authority to bind Columbia Artists Management (CAM) to a contract because CAM's actions
and lack of communication suggested to the plaintiff that the promoter had such authority. CAM was
held liable because it did not adequately clarify the promoter's lack of authority.
Credit Alliance Corp. v. Arthur Andersen & Co. (1985): Although not directly about agency, this case
illustrates the principle of reliance on representations. Here, Arthur Andersen was held liable for
negligent misrepresentation because it failed to correct false information that a third party relied upon.
This principle can be extended to cases of apparent authority where a principal's failure to clarify a false
agent's authority leads to liability.
Sennott v. Rodman & Renshaw (1980): A brokerage firm was held liable for the fraudulent actions of an
individual who was allowed to use the firm's offices and resources, creating the impression that he was a
legitimate agent of the firm. The firm was estopped from denying the agency relationship because it had
negligently allowed the false agent to appear legitimate.
Legal Analysis:
In such cases, courts typically look at:
13
The conduct of the principal in allowing the false agent to act.
Whether the principal knew or should have known about the false representations.
Whether the third party reasonably relied on the false representations.
Whether the principal took any steps to correct the false impression.
If a principal's negligence in supervising or controlling the use of its name or resources leads a third party
to believe in the authority of a false agent, the principal may be estopped from denying the agency and
held liable for the actions of the false agent.
Conclusion:
Principals must be diligent in monitoring and controlling who represents themselves as their agents.
Failure to do so can result in being held vicariously liable for the actions of false agents due to the
doctrines of apparent authority and estoppel.
User
Are there legal cases where a principal is held vicariously liable for the acts of a person claiming to be the agent
because the principal was negligent in allowing this false agent to misrepresent a relationship with the principal
and was estopped from avoiding liability by knowing the person was making false assertions of affiliation but the
principal did nothing to stop this misrepresentation
ChatGPT
Yes, there are legal cases where a principal can be held vicariously liable for the acts of a person who falsely claims
to be the agent of the principal due to the principal's negligence in allowing the misrepresentation. This legal
principle is rooted in the doctrines of apparent authority and estoppel.
Key Concepts:
Apparent Authority: Apparent authority arises when a third party is led to believe, through the principal's actions
or inactions, that an individual is acting as an agent of the principal. If the principal creates the appearance of
authority in the supposed agent, they may be estopped from denying the agency relationship.
Estoppel: Estoppel prevents a principal from denying liability if they negligently allowed or failed to correct the
false impression that an individual was their agent, especially if the third party relied on this misrepresentation to
their detriment.
Case Examples:
Watts v. Columbia Artists Management Inc. (1991): In this case, a concert promoter was found to have apparent
authority to bind Columbia Artists Management (CAM) to a contract because CAM's actions and lack of
communication suggested to the plaintiff that the promoter had such authority. CAM was held liable because it did
not adequately clarify the promoter's lack of authority.
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Credit Alliance Corp. v. Arthur Andersen & Co. (1985): Although not directly about agency, this case illustrates the
principle of reliance on representations. Here, Arthur Andersen was held liable for negligent misrepresentation
because it failed to correct false information that a third party relied upon. This principle can be extended to cases
of apparent authority where a principal's failure to clarify a false agent's authority leads to liability.
Sennott v. Rodman & Renshaw (1980): A brokerage firm was held liable for the fraudulent actions of an individual
who was allowed to use the firm's offices and resources, creating the impression that he was a legitimate agent of
the firm. The firm was estopped from denying the agency relationship because it had negligently allowed the false
agent to appear legitimate.
Legal Analysis:
In such cases, courts typically look at:
The conduct of the principal in allowing the false agent to act.
Whether the principal knew or should have known about the false representations.
Whether the third party reasonably relied on the false representations.
Whether the principal took any steps to correct the false impression.
If a principal's negligence in supervising or controlling the use of its name or resources leads a third party to believe
in the authority of a false agent, the principal may be estopped from denying the agency and held liable for the
actions of the false agent.
Conclusion:
Principals must be diligent in monitoring and controlling who represents themselves as their agents. Failure to do
so can result in being held vicariously liable for the actions of false agents due to the doctrines of apparent
authority and estoppel.
GEORGIA
DO YOU HAVE ANY AUTHORITY UNDER GEORGIA LAW THAT SUPPORTS THIS THEORY OF APPARENT AUTHORITY BY
ESTOPPEL
ChatGPT
Yes, there are Georgia cases that support the theory of apparent authority by estoppel, where a principal can be
held liable for the acts of someone who falsely claims to be their agent if the principal's actions or inactions led to a
third party's reasonable belief in the agency relationship.
Key Georgia Cases:
Hinely v. Barrow, 169 Ga. App. 529 (1984):
Summary: This case involved a dispute over a real estate transaction. The court held that a principal could be
bound by the acts of an apparent agent if the principal's conduct created the appearance of authority in the agent,
and a third party reasonably relied on that appearance.
Significance: This case illustrates the application of apparent authority and how a principal can be estopped from
denying an agency relationship if their actions or inactions contributed to the third party's belief in the agent's
authority.
Ragsdale v. Southern Bell Tel. & Tel. Co., 162 Ga. App. 777 (1982):
Summary: In this case, the court found that a principal could be held liable for the fraudulent acts of an apparent
agent when the principal's conduct suggested that the agent had authority to act on their behalf. The court
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emphasized that the principal’s negligence in failing to clarify the agent’s lack of authority contributed to the third
party's reliance.
Significance: This case highlights the importance of a principal’s responsibility to prevent misrepresentations of
agency and the consequences of failing to do so.
Graham v. HHC St. Simons, Inc., 322 Ga. App. 693 (2013):
Summary: The court ruled that a hospital could be vicariously liable for the negligence of an independent
contractor physician because the hospital's conduct (e.g., the manner in which it presented the physician to the
public) led the patient to reasonably believe the physician was an agent of the hospital.
Significance: This case reinforces the principle that a principal can be held liable under the doctrine of apparent
authority if their actions or omissions create a reasonable belief in the third party that an agency relationship
exists.
Legal Principles:
Apparent Authority: This arises when a principal’s conduct leads a third party to reasonably believe that another
person is authorized to act on the principal's behalf.
Estoppel: If a principal's actions or failures to act cause a third party to rely on the misrepresentation of authority,
the principal may be estopped from denying the agency relationship.
Conclusion:
Georgia law supports the theory that a principal can be held liable for the acts of someone falsely claiming to be
their agent if the principal’s conduct created an appearance of authority and the third party reasonably relied on
this appearance. These cases demonstrate the application of apparent authority and estoppel in holding principals
accountable for their negligence in preventing false assertions of affiliation.
ANALOGY BETWEEN TRADEMARK OWNERS AND PRINCIPALS
IS THERE A GOOD ANALOGY BETWEEN THE OWNER OF A TRADEMARK BEING CHARGED WITH THE RESPONSIBILITY
TO MAKE SURE NO ONE IS MISUSING THAT TRADEMARK
ChatGPT
Yes, there is a strong analogy between a principal's responsibility to prevent false representations of agency and a
trademark owner's duty to prevent misuse of their trademark. Both responsibilities stem from the need to control
and protect the credibility and trust associated with their respective representations.
Analogy Explanation:
Control and Supervision:
Trademark Owner: A trademark owner must actively monitor and control how their trademark is used to ensure
that no unauthorized or misleading use occurs. This helps maintain the integrity and distinctiveness of the
trademark, preventing consumer confusion and protecting the owner's brand.
Principal in Apparent Authority: Similarly, a principal must monitor and control representations of their agency
relationships. This involves ensuring that no unauthorized person claims to be their agent, which can prevent third
parties from being misled and relying on false representations.
Preventing Misrepresentation:
Trademark Owner: If a trademark owner is aware of misuse (e.g., counterfeit products or unauthorized
endorsements) and fails to take action, they can be held responsible for allowing such misuse, which can harm
consumers and dilute the brand.
Principal in Apparent Authority: If a principal knows or should have known that someone is falsely claiming to be
their agent and does nothing to correct this, the principal can be held liable for the resulting actions of the false
agent. This is because their inaction effectively endorses the misrepresentation.
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Legal Consequences:
Trademark Owner: Trademark law imposes a duty on owners to police their marks. Failure to do so can lead to loss
of trademark rights and potential liability for damages caused by the misuse.
Principal in Apparent Authority: The doctrine of apparent authority imposes a duty on principals to manage their
agency representations. Failure to do so can lead to vicarious liability for the actions of someone falsely
representing themselves as an agent.
Case Law Analogy:
Trademark Law: Under the Lanham Act, trademark owners must take action against infringement to prevent their
trademark from becoming generic or losing its distinctiveness. Courts have held owners liable when their
negligence in monitoring and enforcing trademark rights leads to consumer confusion.
Apparent Authority: As discussed in cases like Hinely v. Barrow and Graham v. HHC St. Simons, Inc., principals can
be held liable for the actions of false agents if they negligently allowed or failed to correct the misrepresentation of
agency.
Conclusion:
The responsibility of a trademark owner to ensure proper use of their mark closely parallels a principal's duty to
prevent unauthorized claims of agency. Both require vigilance and proactive measures to prevent misleading
representations that could harm third parties. Failure to fulfill these duties can result in significant legal and
financial consequences, highlighting the importance of maintaining control over one's brand and agency
relationships.
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