The United States District Court for the District of Massachusetts, in a case of apparent first impression, held that an email sent from the domain name of a company was not enough, standing alone, to cloak an agent in apparent authority that would allow him to bind that company to a contract. In the case, defendant Recovery Express, Inc. (Revovery Express) moved for summary judgment after plaintiff CSX Transportation, Inc. (CSX), a seller of out-of-service railcars and parts, brought an action alleging breach of contract, account stated, unjust enrichment, and quantum meruit. The claims arose from an arrangement CSX had entered into with Albert Arillotta (Arillotta), a partner at Interstate Demolition and Environmental Corp. (IDEC). Arillotta sent an email to CSX from the Recovery domain, recoveryexpress.com, in which he claimed to be from IDEC and Recovery Express and offered to buy rail cars. IDEC and Recovery Express shared offices and email services but were distinct companies. Recovery denies that Arillotta ever worked for them. Based on the email and subsequent telephone conversations, CSX agreed to sell the rail cars to Arillotta. After delivery of the goods and a bounced check from Arillotta in the amount of $115,757.36, Recovery refused to pay CSX, who subsequently brought suit against Recovery Express and IDEC.
The issue in the case was “whether an e-mail domain name, by itself, cloaks a purported agent with authority sufficient as matter of law to be called ‘apparent’.” The Court defined the doctrine of apparent authority as “the power held by an agent or other actor to affect a principal’s legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations.” CSX claimed that through all of its dealings with Arillotta, it believed that he was acting on behalf of Recovery Express because of his use of the recoveryexpress.com domain and his representations in his emails and phone calls.
However, apparent authority could only exist if “the plaintiff reasonably may believe as a result of the principal’s words or conduct that the agent is authorized to act on its behalf.” The Court granted summary judgment to Recovery Express, holding that simply issuing an email address to Arillotta did not cloak him with “carte blanche authority to act on behalf of [Recovery],” because such a rule would permit any employee with a company email address to bind the company to a contract. The Court analogized this matter to cases involving business cards, company vehicles, and letterheads which held that those items could not, by themselves, cloak an agent in apparent authority. For example, in one case, the Court held that the “issuance of a company credit card, business cards with company logo, possession of company paraphernalia, and appearing in company advertisements was insufficient to create apparent authority.” With respect to reasonableness, the Court emphasized the poorly written nature of the subject email, with its “horrendous grammar,” saying that CSX “should have been more suspicious of an unsolicited, poorly written e-mail that arrived late one Friday afternoon.” Thus, because two additional equitable claims lacked evidence sufficient to survive the motion, summary judgment was granted in favor of Recovery Express on all claims.