INCREDIBLE WIN: Brand Not Liable for Calls by Telemarketer in TCPA Suit–Plus Overly Broad Class Definition Stricken!

I love a good double victory. And today’s case has two really nice wins in it, so read all the way to the end.

But first, some stage setting.

One of the prevailing themes in TCPAWorld right now is the terrible scenario of lead generators selling bad leads to brands that rely on them and end up sued in TCPA class actions. Really awful.

And while R.E.A.C.H. is now here to clean up the industry, these legacy TCPA cases caused–in many cases–by lead gen fraud continue to work their way through the system.

The good news, however, is that for companies buying third-party transfers TCPA liability does not necessarily follow from a lead partner making a mistake as the decision in Brown v. Nano Hearing, 2024 WL 3367536 (S.D. Cal. July 9, 2024) demonstrates.

The background facts here are important, so pay close attention:

Brown alleges she received two phone calls that both promoted Nano Hearing Aids.

She then received a third call during which she spoke to an agent who said he was with “Life Care.” That agent then transferred the call to someone named Ken, who allegedly worked for the Defendant Nano Hearing.

The Plaintiff sued alleging that the three calls at issue were all made by Nano Hearing, but the fact that the agent she spoke to claimed to work with something called “Life Care” and not Nano made it pretty clear to the Court Nano had not made the calls directly:

the only caller whose identity Brown describes in the Complaint identified himself as an employee of Life Care, not Nano. (ECF No. 1, ¶ 32.) Brown does not allege that “Life Care” is Nano or affiliated with Nano. In addition, the only phone number which Brown alleges she called is the alleged callback number, 619-348-6968 (“619 Number”). (Id.) Even if the Court takes Brown’s allegation that the 619 Number belongs to Nano as true, the Complaint indicates that no call was placed from the 619 Number. The allegation that, after being transferred from a representative of Life Care, someone identified only as “Ken” gave Brown a callback number that reaches Nano is insufficient to show that Nano made any of the calls to Brown. (See id.)

Good stuff.

Onto vicarious liability the Court was also entirely unimpressed with the allegations linking the calls to Nano. The mere fact that Nano accepted a call transfer from Life Care does NOT create vicarious liability and there were no facts alleged establishing Nano allowed Life Care to hold itself out as Nano’s agent or that Nano knowingly accepted the benefit of illegal calls. So the case was thrown out!

The Court also took a moment to grant the Plaintiff’s motion to strike class allegations–which might be an even bigger victory. The Court CORRECTLY determined the class was overly broad because it included members that lacked standing:

A defendant may move to strike class allegations before discovery when the complaint shows a class action could not be maintained on the facts alleged. “[N]o class may be certified that contains members lacking Article III standing.”” In Sanders, the court granted a motion to dismiss and struck class allegations under FRCP 12(f) because the class definition “include[d] all persons within the United States who own a 20–inch Aluminum iMac,” which “necessarily include[d] individuals who did not purchase their 20–inch Aluminum iMac, individuals who either did not see or were not deceived by advertisements, and individuals who suffered no damages.” Id. The court explained that “[s]uch individuals would lack standing to bring these claims.” Id. Here, the class definition is overly broad because it fails to exclude any members who may have consented to receiving phone calls from Nano. The TCPA expressly precludes claims made by individuals who consented to be called. 47 U.S.C. § 227(b) (1)(A) (excluding from liability any call “made with the prior express consent of the called party.”) Brown’s class definition necessarily includes any individuals who have consented to calls from Nano. (See ECF No. 1, ¶ 41.) Like in Sanders, these individuals would also lack standing. 672 F. Supp. 2d at 991; see Hernandez, No. 16CV200-LAB (JLB), 2017 WL 932198, at *6 (striking class allegations in part “[b]ecause the class definition includes insureds who were not injured at all.”)

Fantastic! And completely correct!

Would be class counsel commonly INCORRECTLY define classes that include consenting class members. This is entirely inappropriate. Yet courts commonly allow these uncertifiable class definitions to make it past the pleadings stage–even though the Plaintiff fully intends to change the definition later and sandbag the defense.

It is a real problem, and I love it when I see a court do the right thing and strike these terrible misformed class definitions at the pleadings stage–as they should!

Some real nice take aways on this one. TCPA litigators should be very fierce in challenging vicarious liability allegations. While it sometimes feels like a brand will always be liable for calls made by marketers and lead generators that should NOT always be the case. And while some courts give these issues short shrift and leave INNOCENT parties trapped in a case wrongfully, some courts–like the Brown court–will do the right thing.

Really looking forward to seeing everyone Sunday and Monday at LCOC. Travel safe and chat soon!