The Managing Director’s Personal Liability for Injunctive Relief Regarding Tortious Violations of Legal Interests by the GmbH
The “new case law” of the Federal Court of Justice regarding the (personal) liability of a GmbH managing director for acts of unfair competition committed by the company he represents (BGH, judgment of June 18, 2014, Case No.: I ZR 242/12 – “Managing Director Liability”) is, according to the correct ruling of the Kammergericht, not applicable to facts that fall outside the scope of competition law.
The preliminary injunction proceedings, conducted by attorney Florian Daniel on behalf of the petitioner, concerned the following:
Facts of the Case:
The respondent sent our client a newsletter that consisted primarily of advertisements for services offered by the company against which the injunction was subsequently sought. Our client had not given the respondent consent to send promotional emails.
A letter from counsel objected to the legal violation and unsuccessfully demanded that both the GmbH and its (sole) managing director each undertake, under penalty of a fine, to refrain from sending such promotional emails. After the management also allowed the granted grace period to elapse without action, the petitioner sought a judicial ruling. The Berlin Regional Court ordered the first respondent—the GmbH—to cease and desist, as requested and pursuant to Sections 823 and 1004 of the German Civil Code (BGB), by way of a preliminary injunction.
The 52nd Chamber of the Berlin Regional Court dismissed the injunction request directed against the second respondent—the managing director—on the grounds that, according to the “Managing Director Liability” decision(BGH GRUR 2014, 883), the managing director’s liability requires that the infringing act be based on conduct which, based on its outward appearance and in the absence of contrary findings, is attributable to the managing director. This was not the case here. Nor did the second respondent, as an interferer, contribute in any way—either intentionally or through adequate causation—to the infringement of the protected legal interest, thereby violating reasonable duties of conduct.
By filing an immediate appeal, the petitioner seeks a judgment against the second respondent as well—namely, the managing director. She asserts that the email at issue was sent as part of a form of advertising initiated by Respondent No. 2 (direct marketing via a newsletter system) and that Respondent No. 2 failed to take the necessary steps to prevent the unlawful implementation of Respondent No. 1’s newsletter system.
Reasons for the Decision:
The Kammergericht deemed the immediate appeal admissible and well-founded pursuant to Sections 567(1)(2) and 569 of the German Code of Civil Procedure (ZPO) and, by order, held as follows:
1.
In cases involving the infringement of absolute rights, a person may be held liable for an injunction as a “contributor to the infringement” if—without being the perpetrator or a participant—they intentionally and with adequate causation contribute in any way to the infringement of the protected right. In this context, support for or exploitation of the act of a third party acting on their own initiative may suffice as a contribution, provided that the party against whom the claim is brought had the legal and factual ability to prevent such an act. Since liability as an interferer must not be unduly extended to third parties who cannot be held liable as either perpetrators or participants for the infringement committed, liability as an interferer presupposes a breach of reasonable duties of conduct, in particular duties to investigate. Whether and to what extent the party held liable as a “störer” can reasonably be expected to prevent the third party’s infringing act depends on the specific circumstances of the individual case, taking into account the party’s function and responsibilities, as well as the personal responsibility of the party who directly committed the unlawful infringement (BGH GRUR 2014, 657 – BearShare, para. 22 in juris).
2.
In accordance with the above principles, the second respondent is also liable for injunctive relief in the present case. The sending of the unsolicited promotional email infringed upon the applicant’s right to operate its established business. Under the circumstances, the infringing act is based on a decision and/or instruction by Respondent No. 2 to regularly advertise for Respondent No. 1 by sending a pre-formatted newsletter.
As the sole managing director of Respondent No. 1, it is reasonable to expect Respondent No. 2—provided that the disputed email was not sent by her personally—to ensure, through measures to instruct and supervise employees, that the newsletter is sent exclusively to persons from whom a properly documented declaration of consent has been obtained (see BGH GRUR 2011, 926 – double-opt-in procedure).
Even a single unsolicited sending of the newsletter to the petitioner establishes the risk of recurrence (see BGH MDR 2012, 1407 – para. 12 in juris), especially since the closing sentence of the newsletter indicates that there is a risk of recurring mailings if the “Unsubscribe” link is not clicked.
3.
The Senate (sole judge) granted the second respondent an opportunity in the appeal proceedings pursuant to § 571(4) of the German Code of Civil Procedure (ZPO) to fulfill its secondary burden of proof and to explain the measures intended to ensure that the newsletter is sent only to persons who have consented to its receipt.
In response, Respondent No. 1 stated that distribution of the newsletter had been discontinued and that “until new email newsletters are sent out … the following measures have been initiated” (followed by a list of three safeguards).
This statement allows for the conclusion that, at the time of the infringing act at issue in this proceeding —the time the promotional email was sent—Respondent No. 2 had not (yet) implemented sufficient safeguards, and the sending of the unsolicited email was due to inadequate organization of the newsletter distribution on the part of Respondent No. 2.
There is therefore no basis for the assumption that the present case might have been an “outlier,” as can occur in a high-volume business despite careful safeguards (see OLG Hamm AfP 2015, 247, para. 3 in juris; Senate in 5 U 30/12, GRUR-RR 2013, 172, 177), there is therefore no basis for such an assumption.
Comment:
The question of whether a newsletter system or advertising via email should be part of a company’s business model or business operations is, in principle, left to the discretion of management. Accordingly, management decided at some point in the past that promoting the company through direct marketing measures should be an integral part of the business concept.
This creates a source of risk for which a managing director is personally liable if the rights of third parties are infringed. Consequently, it is not the sending of the newsletter as a purely technical process, but rather the use of a direct marketing tool—which may even be an in-house tool and is (obviously) prone to errors—that forms the basis for liability. This is because, by deciding to conduct direct marketing via email, management knowingly and with adequate causation contributed to the infringement of the protected right (in this case: the right to establish and operate a business; informational self-determination; negative freedom of information) and violated reasonable duties of conduct.
Since the Higher Regional Court of Düsseldorf had already recognized that, in the absence of suitable protective and control mechanisms, the managing director of a GmbH is personally liable for injunctive relief in the event of such legal violations, the Kammergericht has now also clearly rejected the applicability of the reduced liability for a GmbH managing director regarding the company’s violations of competition law, as established by the Federal Court of Justice.
This is because the managing director of a GmbH has, among other things, a duty to protect the legal interest at risk from harm (position as guarantor), such that he can be held liable for a violation by omission to the extent that the monitoring and control duties required in the specific case are not fulfilled through appropriate measures.
This responsibility for the actions of his employees applies to the GmbH managing director even if he was unaware of the infringing act—for example, because it did not fall within his area of responsibility. Thus, courts have repeatedly ruled in such cases that a managing director cannot exonerate himself by invoking an internal division of responsibilities, arguing that he is not responsible for the area of the company in which the unlawful act was committed.
It should be noted in this context that the managing director of a GmbH is not only obligated to organize internal operations but is also, in particular, required to take preventive measures to avoid acts that infringe upon legal interests. Thus, he is subject to monitoring and oversight duties in this regard—including with respect to any agents!
Only when the GmbH’s management has demonstrably fulfilled its organizational, monitoring, supervisory, and control duties can it, if necessary, be exonerated from allegations of misconduct giving rise to liability.
The legislature has not specified how a managing director’s organizational and control obligations are to be fulfilled. Consequently, the legislature does not prescribe the company’s organizational structure but rather assumes it exists and grants companies corresponding organizational autonomy. In this context, it is the primary responsibility of management to document all significant decisions—as well as the decision-making process—in order to reduce the risk of liability.
The question of to what extent you personally meet these organizational and control obligations is fundamentally a matter specific to your individual case.
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