Trouble in New Mexico for a Company and Its Officer

In a decision with several important takeaways, the United States District Court for the District of New Mexico refused to dismiss a lawsuit filed by Robert Mestas against CHW Group Inc. and one of its corporate officers, Victor Mandalawi. See Mestas v. Chw Grp., No. 19-CV-792 MV/CG, 2020 U.S. Dist. LEXIS 236357 (D.N.M. Dec. 16, 2020).  According to Plaintiff, CHW Group sells home warranty programs through telemarketing calls, and its officer, Mr. Mandalawi, “directly or indirectly controlled the persons who actually initiated those calls.”

Plaintiff alleged that CHW Group called him multiple times using an ATDS and despite his number being listed on the National Do-Not-Call Registry.  For each call, Plaintiff alleged that CHW had used an ATDS because Mr. Mestas heard “dead air” or “strange clicking sounds before a live human telemarketer came on the line.”

In addition to TCPA claims against both CHW Group and Mr. Mandalawi, Plaintiff asserted several New Mexico State law claims: trespass to chattels, civil conspiracy, and claims under the New Mexico Unfair Practices Act.  Mr. Mandalawi sought dismissal, arguing that the Court lacked personal jurisdiction over him.  Additionally, both CHW Group and Mr. Mandalawi argued that Plaintiff’s claims failed as a matter of law, including because Plaintiff lacked standing.

The Court rejected most of these arguments.  Its analysis is particularly instructive for understanding New Mexico law, the exercise of personal jurisdiction over a corporate officer, and corporate officer liability for company-initiated telemarketing calls.

Unfair Practices Act.  New Mexico’s Unfair Practices Act prohibits the solicitation of good or services “without disclosing within fifteen seconds of the time the person being called answers the name of the sponsor and the primary purpose of the contact.”  N.M. Stat. Ann. 57-12-22(C)(1).  It also duplicates the TCPA’s prohibition again calling an individual on the national do-not-call registry.  N.M. Stat. Ann. 57-12-22(D)(3).  The Court held that Plaintiff adequately plead a claim because he alleged that during calls that lasted more than fifteen seconds “at no time did the telemarketers provide the name of any sponsor” (except possibly a fake name).

Notably too, New Mexico’s Unfair Practices Act gives Plaintiff a range of remedies, each is in addition to Plaintiff’s TCPA remedies.  He can obtain: (1) injunctive relief, (2) 3X actual damages or $300, whichever is greater, and (3) attorneys’ fees and costs.  Additionally, the New Mexico attorney general can seek injunctive relief and damages, plus a $5,000 penalty per “willful” violation.

That’s not all.  The New Mexico Unfair Practices Act gives an injured plaintiff the right to demand early mediation, for which the defendant must pay all costs “more than fifty dollars.”  N.M. Stat. Ann. 57-12-10(G).

Trespass to Chattels.  Under New Mexico law, “trespass to chattel is the intentional use or interference with a chattel which is in the possession of another, without justification.”  The Court predicted that the New Mexico Supreme Court “would adopt” a “liberal recovery” rule and hold that unwanted calls “are sufficient to state a trespass to chattels claim.”  Plaintiff adequately alleged this claim too.

Personal Jurisdiction.  On personal jurisdiction over CHW’s officer, Mr. Mandalawi, the Court held that Mr. Mandalawi failed to provide any evidence (“affidavit or other written materials”) to contradict Plaintiff’s allegations.  Accordingly, because Plaintiff alleged facts “connecting the callers . . . to Mandalawi,” Plaintiff met “his burden of making a prima facie showing of specific jurisdiction over Mandalawi.”  Individual officers should always present evidence to defeat a court’s exercise of personal jurisdiction over him or her.

Officer Liability for Calls.  The Court also rejected Mr. Mandalawi’s contention that he could not be held personally and vicariously liable for calls made by third-party telemarketers.  Instead, the Court explained that the Plaintiff had sufficiently plead individual liability because: (1) he controlled the numbers and equipment used to make the calls; (2) he provided scripts to be read by telemarketers; and (3) calls stopped once he was sued.

Given the overlapping state law claims and officer liability, this is an important case for TCPA litigants.

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