Sometimes corporate landlords or railroads hire out of home companies to act as their agent to manage out of home leases.  It will be expensive for you if you use an agent’s position to advantage your company.  That’s the lesson of Craig Outdoor, Midwest Outdoor and Patriot Outdoor v Viacom and Walter Kelly.  Here are the facts.

• Viacom Outdoor was hired by various railroads to act as an agent in processing applications for erect billboards on railroad property on a first come, first-served basis.
• Viacom Outdoor reviewed each application and to decide whether to submit its own application to build the sign itself while telling the applicant that another company had filed first.  Viacom did not disclose to the applicants that it was building signs.
•  When they became aware of what Viacom was doing, three independent out of home companies (Craig Outdoor, Midwest Outdoor and Patriot Outdoor) sued Viacom Outdoor and Viacom executives Wally Kelly and Harold Bustin individually, for fraud and racketeering in Missouri and Connecticut.
• A jury found Viacom Outdoor guilty of fraud and awarded the independent out of home companies $14 million in actual and punitive damages.   In June 2008, the United States Eight Court of Appeals agreed although it dismissed some claims: “Plaintiffs evidence established that Viacom misled them into believing that Viacom – an agent of the railroads – employed the industry standard first-come, first-served method for processing applications when, in fact Viacom was surreptitiously reviewing site applications, improperly delaying action on those applications, and appropriating those billboard sites that Viacom considered financials of strategically desirable.”

Billboard Insider’s Take: Mixing up your duties as a principal and agent creates huge legal risks.  Better to act as a principal or as an agent but never as both in the same transaction.

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