Defendants Dodge Vicarious Liability in Sixth Circuit

TCPA Connect

The U.S. Court of Appeals, Sixth Circuit, recently weighed in on a third party’s potential Telephone Consumer Protection Act (TCPA) liability for assistance to telemarketers.

In a putative class action, Vincent Lucas alleged that he received telemarketing calls while listed on the National Do Not Call (DNC) Registry. He claimed that the three corporate and three individual defendants were therefore liable for calls placed to his residential number, some of which contained prerecorded messages.

The defendants sold telephone numbers to their telemarketer clients and provided the telemarketers with Caller Name Management Service (CNMS), which allowed them to specify any name they chose to be displayed on a consumer’s caller ID device and engage in number spoofing. Revenue sharing among the defendants—fueled in part by payments from local telephone companies each time the CNMS was accessed—spurred the illegal conduct, the plaintiff told the court.

A district court judge granted the defendants’ motion to dismiss. Lucas appealed to the Sixth Circuit, but the federal appellate panel affirmed dismissal of the suit.

Lucas argued that the defendants were liable under the TCPA for knowingly assisting telemarketers in the making of illegal telemarketing calls and financially rewarding those telemarketers by sharing revenue with them derived from local telephone companies.

“Despite Lucas’s arguments, he failed to state a claim under the TCPA,” the court said. The defendants were not directly liable under the statute and “Lucas failed to sufficiently allege facts indicating that the defendants can be held vicariously liable under the TCPA.”

While the plaintiff alleged the defendants willfully encouraged and contributed to illegal telemarketing practices, he missed a link in the chain of liability, the court said, neglecting “to allege facts indicating ‘formal agency,’ ‘apparent authority,’ or ‘ratification.’ Lucas did not allege facts indicating that the telemarketers were acting ‘on behalf of’ the defendants or that they were subject to their control. Nor did he allege that the telemarketers believed that they had apparent authority to act as agents for the defendants . . . . Lucas also failed to allege that the telemarketers took any action on behalf of the defendants that the defendants ratified.”

Without these allegations, the plaintiff was unable to make out a case of vicarious liability against the defendants, the panel explained.

Further, having already filed three amended complaints, the district court did not abuse its discretion when it denied Lucas the opportunity to file a fourth, the Sixth Circuit said.

To read the order in Lucas v. Telemarketer Calling From (407) 476-5680 and other telephone numbers, click here.

Why it matters: The federal appellate panel was not opposed to the theory of vicarious liability for TCPA violations, but concluded that the plaintiff was unable to state a claim against the defendants because he failed to allege facts that formed the basis of an agency relationship between the defendants and the telemarketers that placed the calls.