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Allstate Ordered to Produce its Entire Internal DNC List to Alex Burke in Stunning Decision Highlighting a Critical New TCPA Theory

So I’m freaking out a little.

Allstate was just ordered to produce its entire internal DNC list to Alex Burke.

Allstate. Entire Internal DNC list. Delivered to Alex Burke.

Huge. Terrifying. Huge. Terrifying. Huge. Terrifying.

How?

Let me set the stage here.

Many of you have been around long enough to remember the jaw-dropping result in the old Dish Network ruling resulting in $283MM in penalties.

The single most important take away from that ruling was that sellers who rely on third parties to market their goods need to coordinate between vendors to make sure that a DNC report to any one of them is properly communicated upstream to the seller and then re-communicated downstream back to the web of marketers pitching the sellers’ goods.

Stated alternatively, a DNC request to any marketer must be treated as a DNC request to every marketer selling the same good or service for the seller. And a failure by the seller to coordinate those requests through all marketers can yield really bad results.

So, for instance, if marketer A is told to stop calling about seller X’s goods, seller X needs  to make sure that marketers B and C–who also sell X’s goods–are notified and stop calling. If B or C call the same consumer who asked for calls to stop, Seller X is liable for a TCPA violation–although B and C likely are not directly liable.

There is a bit of a disconnect then between the needs of the seller to stop calls and the incentives of the marketers, who are not directly liable for calls they make in that scenario–which makes contract terms and policies critical.

But I digress.

The point of all of this is that the Plaintiff’s bar has apparently landed on a way to effectively determine whether sellers are properly coordinating with their marketing network– and it is truly terrifying from a data perspective.

The scheme is simple–they demand that the marketer that made the challenged calls produce its internal DNC list. Then they demand that the seller produce its list. If the two lists do not match then there was a failure to coordinate and–the argument goes–the seller is liable for calls made to individuals that are one but not both lists.

Hmmmm.

In order for this scheme to work, of course, Plaintiffs have to obtain the internal DNC list for the seller. And in some cases that might mean a HUGE list and a giant headache for a big company.

Take Allstate for instance.

Allstate is a great brand that sells an important product and has hundreds of thousands if not millions of customers.

Without question, however, many many people have likely told Allstate and its web of third-party marketers and agents to stop calling about this purpose, or that program, over the last five years. I can only imagine how difficult it would be for a multifarious institution of that sort to keep all of its DNC requests flowing in and out between all of its agents and vendors seamlessly.

Well the Plaintiff in  Hossfeld v. Allstate Ins. Co., Case No. 20-CV-7091, 2021 U.S. Dist. LEXIS 199023 (N.D. Ill.  October 15, 2021) just convinced a court to require Allstate to produce its entire internal DNC list–going back at least five years folks–to test their theory that Allstate wasn’t properly monitoring its vendors.

For context, something called Transfer Kings apparently called the Plaintiff on behalf of something called Atlantic Telemarketing, which in turn had the relationship with Allstate.

Those of you attending Leadscon in the next few days need to really pay attention here– Allstate’s vendor was Atlantic. It is not clear to me whether Allstate even knew about Transfer Kings. But if TK’s internal DNC list doesn’t match Allstate’s somebody is going to be in trouble (and it likely isn’t TK.) Here’s why:

Hossfeld states that he plans to compare Allstate’s internal DNC list to Transfer Kings’ internal DNC list (and the internal DNC list of Atlantic Telemarketing) to show that the lists are materially different from Alllstate’s internal DNC lists. Presumably, this material difference will allow Hossfeld to argue that Allstate and its vendors do not coordinate.

CAVEAT VENDITOR (Sellers beware) pal. (And yes, that was a vague Rounders allusion).

I cannot emphasize enough how important this ruling is folks. Sellers MUST make sure that they are communicating DNC requests effectively through all marketing channels that are making use of outbound calls or texts. MUST. Because the day may come when YOUR internal DNC list is compelled and tested.

A couple of notes here from a litigation perspective.

First, this is why you ALWAYS see me emphasize the need to bifurcate discovery between class and merits issues. Yes it can be a costly and time consuming battle to fight but this is why you do it. Allstate apparently did not obtain such an order and the Magistrate Judge that ordered the production rubbed that in their face a little: “Merit and class fact discovery are not bifurcated in this case and thus, there is only one fact stage of discovery, which closes on December 30, 2021.”

Next, TCPA defendants should NEVER expect the “but Plaintiff is a scumbag” argument to save them. Yes, they are all mostly scumbags. But that doesn’t mean they can’t turn you inside out if you’re not making the right procedural moves:

The Court acknowledges Allstate’s argument that Hossfeld’s conduct in calling “back and engaging the telemarketing vendors who called him,” “pretending to be other people and providing otherwise false information to the telemarketing vendors in order to continue the call long enough to be transferred to an independent agent,” and on at least one call, “consent[ing] to be transferred to an Allstate agent after being informed his number was on the Allstate DNC list,” could result in a conclusion that Hossfeld is not an adequate class representative. 

But the Court went ahead and ordered the production anyway. Because there was no bifurcation order and discovery closed before certification. So Plaintiff had to get the discovery before the issue of his worthiness to represent the class could be decided.

And that’s why TCPA Defendants must never, never, never, never, never allow discovery to close before certification is decided.

Never.

One last thing here, the production comes with a couple of caveats. First, Allstate’s internal DNC list will be treated as confidential under the parties’ Agreed Confidentiality Order. That’s good.

Second, Hossfeld and his counsel are prohibited from: (a) contacting any person appearing on Allstate’s internal DNC list unless and until a class is certified and (b) from using Allstate’s internal DNC list for any purpose in the event that a class is not certified.

All right, so there’s your nightmare TCPA report for the day. I sincerely hope you all followed this as it is a major development–especially for those who sell products through third-party marketers. 

© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 292
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About this Author

Eric Troutman Class Action Attorney
Of Counsel

Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance. He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems.

Eric has built a national litigation practice based upon deep experience, rigorous...

213-689-6510
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