The most unfair rule in all of American jurisprudence strikes again.

Gustav Renny–the “managing member” of  Pelican Investment Holding, LLC–may be sued personally for calls made by Pelican to sell auto warranties offered by Dimension Service Corporation a court held yesterday.

Apparently, Renny had the misfortune of signing a marketing agreement with Dimension. He is also alleged to have overseen Pelican’s marketing efforts in connection with the challenged campaign. On that basis, the Court determined he could be personally sued.

The Court also overruled the Defendants’ motion to dismiss more broadly, which is unsurprising since none of the arguments really made any sense (the motion challenged, for instance, that the precise date the consumer placed their number on the national DNC was not alleged–but that’s hardly a basis to dismiss a complaint.)

Given that Renny and Pelican face suit for four years worth of prerecorded calls here the liability may end up being extraordinarily high.

The case is ROYAL SPURLARK, Plaintiff, v. DIMENSION SERVICE CORPORATION, et al.,  2022 WL 2528098 (S.D. Ohio July 7, 2022). I will note that the FCC yesterday issued an alert that auto warranty scam calls are its single biggest complaint right now.

Folks in the auto warranty vertical should be extremely cautious. I know this is a “few bad apples” situation–but they really are ruining the entire bunch.

Takeaways:

1. If you are in the auto warranty business the crosshairs are on you right now so be extremely cautious out there;

2. Always remember that if YOU are not a lawyer and you are signing a marketing agreement you might end up personally sued if that marketing arrangement results in illegal calls or texts;

3. More broadly, personal liability–i.e. not just liability for a business or an LLC but for the actual employee, officer, or director– remains a risk for anyone that oversees marketing campaigns or makes outbound calls;

4. Prerecorded calls continue to drive massive litigation. Directionally you should be moving away from such calls and toward texts and “human selection” outbound dialing. This is true even where you think you have consent–remember, fraud in the affiliate network may be as high as 45%;

5. Oh, and you might want to get yourself a good lawyer if you’re facing one of these cases. At $500.00 a call the liability here could be millions–or billions. And a willfulness finding may preclude bankruptcy discharge. So… make sure you have powerful attorneys on your side. (I know a guy.)