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Court Grants Plaintiff’s Motion for Summary Judgment on Vicarious Liability Issues

The Western District of Oklahoma recently granted a plaintiff’s motion for summary judgment against NorthStar Alarm Services, LLC (“NorthStar”) in a certified class action.  The court held, in part, that NorthStar was vicariously liable for telemarketing calls that sales lead generator Yodel Technologies, LLC (“Yodel”) placed on its behalf.  Braver v. NorthStar Alarm Services, LLC, No. 17-cv-0383, 2019 WL 3208651, at *1 (W.D. Okla. July 16, 2019).  The case illustrates the factors that one court found relevant in a particular factual context when assessing vicarious liability issues related to a lead generator’s telemarketing calls.

Plaintiff alleged that defendants NorthStar and Yodel violated the TCPA and certain regulations when Yodel allegedly placed telemarketing calls to consumers to market NorthStar’s residential security and home automation systems.  Id.  The Braver case involved a unique factual context.  For instance, the recorded calls at issue allegedly stated, with no apparent factual basis, that home security systems “in your neighborhood” had experienced “issues with false alarms,” creating “a big concern” with “crime rates and mass shootings on the rise in the US and national security with our borders.”  Id. at *8.  The court characterized the calls as “plainly deceptive,” to the point of being “predatory” when heard by “credulous or otherwise vulnerable listeners,” although the court stated that the nature of the calls did not factor into the opinion.  Id.at *8 n.45.  Furthermore, defendants expressly conceded numerous important facts.  Id. at *4.  Notably, defendants conceded that the calls were telemarketing and that Yodel did not obtain consent for the calls; the lack of any effort to obtain consent was apparent from the fact that Yodel blanketed various territories with approximately 78 million calls.  See id.  In a previous opinion, the court dismissed all of plaintiff’s direct liability claims against NorthStar and held that NorthStar could only be held vicariously liable for Yodel’s acts.  Id. at *1.  The court certified the case as a class action and the parties subsequently filed cross-motions for summary judgment.  See id. at *1-4.  NorthStar’s motion for summary judgment argued, in part, that it was not vicariously liable for Yodel’s conduct.  Id. at *4, 7-14.

Initially, the court noted that a TCPA defendant may be vicariously liable under theories of actual agency (or “classical agency”), apparent authority and ratification.  Id.at *7 (citing In re Joint Petition Filed by Dish Network, LLC, et al. for Declaratory Ruling Concerning the Tel. Consumer Prot. Act (TCPA) Rules, 28 F.C.C. Rcd. 6574 (2013) (hereafter “In re Dish Network”)).  The court held that a plaintiff can only establish actual agency if it can demonstrate that “the principal controlled or had the right to control the purported agent.”  Id. (citing Restatement (Third) of Agency § 1.01 cmt. f(1) (2006)).  “In the TCPA context, some courts have characterized the control necessary to establish agency as control over the manner and means of the agent’s calling activities.”  Id. (citing Mey v. Venture Data, LLC, 245 F.Supp.3d 771, 787 (N.D. W. Va. 2017)).

The court determined, in part, that plaintiff’s evidence was sufficient to establish actual agency.  Id. at *7-14.  The court held that the case involved an unusual degree of coordination between NorthStar and Yodel regarding the calls.  Id.  For example, NorthStar allowed Yodel to upload consumer lead data directly into NorthStar’s telemarketing software.  Id. at *11.  Moreover, Northstar and Yodel agreed that the calls would be made using a fictional alias, the “Security Help Center.”  Indeed, NorthStar expressed concern to Yodel that the calls not be traced back to NorthStar.  Id. at *10.  For instance, when a called party contacted NorthStar directly to complain, a NorthStar employee wrote an email to Yodel saying: “I’m feeling exposed here, please advise.”  Id. at *10.  Yodel responded that the call had inadvertently provided NorthStar’s number as the call-back number but “it won’t happen again.”  Id.

In this context, the court found an agency relationship based on facts that showed that NorthStar controlled the manner in which Yodel made the calls.  Specifically, the court observed that: 1) NorthStar was involved in determining the content of the prerecorded messages that Yodel delivered via its soundboard technology; 2) NorthStar was involved in determining which telephone numbers Yodel would call; 3) NorthStar implemented changes in Yodel’s calling procedures, including the content of the calls, and procedures governing the delivery of leads to NorthStar; 4) on at least one occasion, Yodel corrected its procedures in response to an inquiry from NorthStar about a complaint NorthStar received from a consumer; 5) Yodel acquiesced to NorthStar’s instructions regarding call transfers; 6) NorthStar accepted Yodel leads; and 7) NorthStar followed-up on some Yodel leads.  Id.

The factors the court considered in finding vicarious liability should not be considered a “check the box” list that would necessarily lead to a finding of vicarious liability in a different factual context.  There are many situations in which a company purchases leads from a lead generator where the company should not be held vicariously liable under the TCPA for the calling activities of the lead generator.  Nonetheless, entities that retain third-party lead generators should be aware of the potential for vicarious liability under the TCPA and should review their relationships with these entities to assess their potential exposure to TCPA claims.  Although vicarious liability is always a case specific and fact driven inquiry, the Braver decision represents an application of the traditional common law agency principles to an idiosyncratic TCPA dispute involving a lead generator.

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About this Author

Laura Phillips, Drinker Biddle Law Firm, Washington DC, Communications Law Attorney
Partner

Laura H. Phillips is a partner in and chair of the firm's Government & Regulatory Affairs Practice Group and a member of the Telecommunications & Mass Media Team.  She has over 25 years of experience working in nearly every aspect of the telecommunications market.

Laura counsels wireless and wired technology entrepreneurs and represents these clients on issues related to the development of new technologies, including devoting substantive attention to the development of spectrum auctions, network...

202-842-8891
Bradley Andreozzi, Litigation Attorney, Complex, Drinker Biddle Law Firm, Chicago
Partner

Bradley J. Andreozzi represents clients in complex high-stakes civil litigation, including class action trials and appeals. Brad has represented clients in virtually every federal appellate court, including the Supreme Court, and in many trial courts throughout the country.

Brad defends clients in class actions under various federal and state consumer protection laws, including the Telephone Consumer Protection Act (TCPA), the Fair and Accurate Credit Transaction Act (FACTA) and many state false advertising statutes. His practice has a particular focus on the development of creative arguments to dismiss or limit claims and defeat class certification.

Brad represents public companies and auditors in the defense of shareholder class actions and derivative actions, both at trial and appeal. He also represents securities issuers in matters before the SEC. He tried a death penalty case and won before the U.S. Supreme Court and significant commercial cases won before the U.S. Circuit Court of Appeals in the First, Second, Fourth, Sixth and Seventh Circuits as well as the Illinois Supreme Court.

(312) 569-1173
Matthew Morrissey, Drinker Biddle Law Firm, Litigation Attorney
Associate

Matthew M. Morrissey litigates claims in federal and state courts throughout the country. Matt represents clients in commercial disputes, class actions, internal investigations and financial services litigation. He is also frequently called upon to represent clients in regulatory and enforcement actions involving federal, state and municipal authorities.

Matt is a contributor to the firm's SEC Law Perspectives Blog, which provides reports, discussions, and...

312-569-1365