Vehicle Service Contract Calls Leads to TCPA Judgment Against Warranty Provider—But Defendants Still Permitted to Deny Liability in Interesting Procedural Twist

Here’s an interesting one.

Vehicle Service Contract providers (VSCs) commonly rely on outbound dialing to attract customers. Most of the calls made by these companies are ostensibly consented—calls are made following interactions with websites offering services to interested customers—but there are undoubtedly some bad apples out there.

In Childress v. Desilva Auto. Servs., No. CIV 20-0136 JB\JHR, 2020 U.S. Dist. LEXIS 157367 (D. N.M. Aug. 31, 2020) the Plaintiff alleged that a warranty provider teamed up with a dealership and others to make “millions” of illegal robocalls pitching VSCs. While such an action-if true-could have resulted in exposure north of $500,000,000.00—the case settled for a mere $25k. Draw from that what you will.

But the interesting part of the case is how it settled.

The four defendants jointly submitted a Rule 68 offer of judgment to the Plaintiff offering to “to allow judgment to be taken against Defendants in this matter in the sum of $25,000.00,” which “includes all sums for reasonable attorneys’ fees incurred to date.” The Defendants further stated that neither the Offer of Judgment “nor any judgment that may result from this offer may be construed either as an admission of liability of the part of Defendants or that Plaintiff has suffered any damage.”

This is interesting for a few reasons. First, Rule 68 offers are usually made by only a single Defendant and you don’t ordinarily see mass offers of judgment of this sort. Second, and more interestingly, the Defendants expressly denied wrongdoing. The usual impact of a judgment, of course, is that a Court has found against one party or the other on the merits and determined—as a matter of law and fact-that one part or the other is at fault. And where a judgment is entered against a Defendant in a TCPA case this means, inter alia, that the Defendant did, in fact, violate the law.

But under the unique circumstances in Childress the Court elected to credit the Defendants’ refusal to admit liability and entered judgment consistent with the Defendant’s requested language. Specifically, the Court entered a judgment requiring the four Defendants to pay Plaintiff his $25k—plus post-judgment interest—but included language in the judgment disclaiming liability or harm to the Plaintiff.

As the Court reasoned: The Offer of Judgment provides that “neither it nor any judgment that may result from this offer may be construed either as an admission of liability on the part of Defendants or that Plaintiff has suffered any damage.” Childress accepted that offer without reservation. Because a court’s entry of judgment must mirror a rule 68 agreement’s terms, the Court concludes that the Defendants are entitled to their requested language in the Judgment. The Court thus will include language that the Judgment does not constitute an admission of liability on the Defendants’ part or that Childress has suffered any damage.”

So there you go. Pretty nifty maneuver by the Defendants. Remains to be seen what the legal impact of the disclaiming language is in future suits involving these Defendants—i.e. will a Court find that this judgment gives rise to an inference of willfulness or knowledge of TCPA violations. We’ll keep an eye out.



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