|Putative Class Plaintiffs’ TCPA Claims Run Out
Last month, the Second Circuit, in Leyse v. Lifetime Entertainment Services, LLC, Nos. 16-1133-cv & 16-1425-cv, 2017 WL 659894 (2d Cir. Feb. 15, 2017), affirmed that receipt of a pre-recorded voicemail on the plaintiff’s residential line satisfies the concrete-injury requirement, and affirmed the denial of class certification for lack of an ascertainable class. At issue were unsolicited, pre-recorded messages by a co-host of the TV show “Project Runway” regarding the channel’s renumbering in the named plaintiff’s geographic area. A list of called numbers, however, was unobtainable following discovery. In a nonprecendential summary opinion, rendered shortly after oral arguments, the Second Circuit joined other circuits and district courts' conclusion that evidence of such a TCPA violation satisfies Article III standing requirements – before and after the Supreme Court’s guidance in Spokeo Inc. v. Robins, 136 S. Ct. 1540 (2016). Nevertheless, the named plaintiff could not meet the implied requirement of ascertainability to maintain a class action pursuant to Brecher v. Republic of Argentina, 806 F.3d 22 (2d Cir. 2015). His proposal to identify the putative class by soliciting individual affidavits and telephone bills, in lieu of a list of called numbers, was not “a sufficiently reliable method” obviating ‘“mini-hearing[s] on the merits of each case.’” Leyse, 2017 WL 659894, at *2 (quoting Brecher, 806 F.3d at 25 (alteration in original)). Yet, the Second Circuit did warn that such a list “will not always be necessary to render a class ascertainable.” Id. Finally, the Second Circuit affirmed the mooting of the plaintiff’s remaining individual claim via the defendant’s depositing a check with the clerk of court for the full amount of statutory damages and costs recoverable.
No TCPA Exception – or Vicarious Liability – for Student Loan Guarantor
Two weeks ago, in Henderson v. United Student Aid Funds, Inc., No. 13cv1845 JLS (BLM), 2017 WL 766548 (S.D. Cal. Feb. 28, 2017), a district judge in San Diego granted a federal student loan guarantor’s motion for summary judgment on the putative class representative’s claim that it was vicariously liable for the unsolicited calls to her cell phone by its loan servicer to collect $6,100 in defaulted loans. The class action complaint did not allege direct liability on the part of the non-profit defendant guarantor. (The loan servicer and its collectors were previously dismissed from the lawsuit for lack of jurisdiction.) The service agreement and a year of discovery revealed that the loan servicer agreed to submit to periodic audit rights focused on collection performance and conformance with federal loan law (rather than the TCPA), but otherwise acted in an independent capacity.
As an initial matter, the district court held that the TCPA amendment excepting from liability calls “made solely to collect on a debt owed to or guaranteed by the United States,” created by the Bipartisan Budget Amendment Act of 2015 (codified at 47 U.S.C. § 227(b)(1)), did not apply to the defendant. Following a footnote in the FCC's order implementing the amendment, In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 31 F.C.C. Rcd. 9074, 9082 n.54 (2016), the court held that it did not apply to the defendant, but “solely when calls are made during a period in which the United States’ obligations as the ultimate guarantor or debtee have been triggered and are active.” 2017 WL 766548, at *5.
As to the vicarious liability argument, the court laid out the FCC’s 2013 order that “a seller may be vicariously liable under agency principles for violations of [the TCPA],” In re DISH Network, LLC, 28 F.C.C. Rcd. 6574, 6590 n.124 (2013), under “a broad range of agency principles, including not only formal agency, but also principles of apparent authority and ratification,” id. at 6584. It then summarized the common law agency principles under Ninth Circuit precedent. As to express agency with the servicer, and subagency with the servicer’s collectors, the court noted the requirement of mutual assent to the principal’s right to control the agent. Indeed, “[a]gency is not established when ‘control may be exercised only as to the result of the work and not the means by which it is accomplished[;]’ in such a case ‘an independent contractor relationship exists.’” 2017 WL 766548, at *6 (citation omitted) (alteration in original). The plaintiff must prove – and could not – control of more than the resulting calls, but also “‘the manner and means of the … conduct,’” id. (quoting Thomas v. Taco Bell Corp., 879 F. Supp. 2d 1079, 1084 (C.D. Cal. 2012), aff’d, 582 F. App’x 678 (9th Cir. 2014). The court rejected the named plaintiff’s arguments that the defendant’s termination right and periodic audit of, and post-audit recommendations to, the servicer qualified as such control. Rather, “to extend vicarious liability to such a circumstance would result in almost any long-term contract automatically creating an agency relationship unless the hiring entity turned a completely blind eye to the contract once signed.” Id. Even if the servicer was an agent, they could not “reasonably believe” that the defendant granted the authority to hire violators of the TCPA.
Finally, without any indication that audits covered TCPA compliance or that they revealed violations thereof, the collectors could not reasonably believe that the defendant implicitly authorized them to violate the TCPA. And without the requisite principal-agent relationship between the defendant and the servicer, or subagency with the collectors, the defendant could not have ratified the alleged conduct.