CAUGHT BETWEEN DEALER AND CUSTOMER: Court Finds Insurance Administrator Plausibly Initiated Texts And Rejects Established Business Relationship Exemption

Hi TCPAWorld!

In Miller v. S. Brown & Associates, Inc., No. 2:26-cv-01480-MWC-SSC, 2026 WL 2855518 (C.D. Cal. Sept. 22, 2026), the Court denied S. Brown & Associates’ (“SBA”)  motion to dismiss in its entirety. Defendant raised the Seventh Circuit’s new text message decision that says “texts are not calls,” direct and vicarious liability, the established business relationship exemption, injunctive relief, and treble damages. Every argument failed, and the putative class action moves forward.

SBA is an insurance administrator that runs a point-of-sale auto insurance program for car dealerships. When a customer buys a vehicle, the dealership can bind temporary coverage with National General Insurance Company (“NGIC”) through SBA’s dealer portal, and SBA serves as the NGIC program administrator. Through that program SBA receives the customer’s name, phone number, vehicle, coverage terms, and the date the temporary binder expires. Plaintiff bought a GMC Terrain, and the dealership placed temporary NGIC coverage on it through SBA’s program. Her cell phone number had been on the National DNC Registry since April 15, 2025. Between November 20 and November 28, 2025, she received multiple texts from the same number telling her that her “temporary auto insurance with NGIC” would end on December 19, 2025, and that Direct Auto Insurance, an Allstate brand, could save her up to 25% on six or twelve months of coverage. Each text included a phone number and a link for a quote. Plaintiff alleged she never applied for insurance with SBA, never asked it for a quote, never visited its website, and never gave it her number.

Plaintiff first sued Direct General Insurance Agency d/b/a Direct Auto Insurance, the company whose product the texts advertised. On June 8, 2026, the Court dismissed Direct General because Plaintiff had not pleaded direct liability and her vicarious liability theories were conclusory. Plaintiff then amended, dropped Direct General, and named SBA, alleging that Direct Auto’s own counsel had told Plaintiff’s counsel that SBA sent the messages.

SBA led with Steidinger v. Blackstone Medical Services, 182 F.4th 532 (7th Cir. 2026), where the Seventh Circuit held that texts are not calls, so there is no private right of action under § 227(c)(5). However, the Seventh Circuit reached that result by expressly rejecting the Ninth Circuit’s decision in Howard v. Republican National Committee, 164 F.4th 1119 (9th Cir. 2026), which held that text messaging fits the literal definition of a “call.” Adopting Steidinger would have meant rejecting Ninth Circuit precedent and a district court in the Ninth Circuit is bound by Ninth Circuit law. The Court held that texts are calls under § 227(c). The circuit split is real, but for now the answer depends on where the case is filed.

On direct liability, SBA argued that the complaint tied it only to the number the texts came from and said nothing about who provisioned that number, who operated the texting platform, or who caused any individual message to go out. The Court agreed that a plaintiff needs more than a “bare allegation” that the defendant sent the texts and found that Plaintiff had more. According to the complaint, the texts contained information that only SBA and the originating dealership had: Plaintiff’s identity, her vehicle, her temporary NGIC coverage, and the date that coverage would expire. The texts referred to her “temporary auto insurance with NGIC,” which is the program SBA administers, and they arrived as her binder was about to run out. Direct Auto’s counsel also identified SBA as the sender. As a result, the Court found it plausible that SBA initiated the messages. Because direct liability was adequately pleaded, the Court did not reach SBA’s vicarious liability arguments.

SBA’s established business relationship argument was a more creative one. SBA contended that because Plaintiff’s vehicle purchase “ran through SBA’s own infrastructure,” the complaint itself pleaded every element of the exemption. The Court disagreed. An established business relationship requires voluntary two-way communication based on the subscriber’s purchase or transaction with the entity. Plaintiff transacted with the dealership, and the dealership placed the coverage. She never applied to SBA, never contacted it, and never asked it for continuous coverage. Relying on Abboud v. Circle K Stores Inc., the Court explained that a defendant’s dealings with a third party do not become an established business relationship with the plaintiff when the plaintiff made no purchase, inquiry, or application of her own.

Plaintiff did not respond to SBA’s injunctive relief argument at all. The Court denied that part of the motion anyway. A TCPA plaintiff does not need to allege harm beyond the one Congress identified, and because SBA had given no assurance that it would stop texting, it was plausible that Plaintiff could receive more messages.

Treble damages survived as well. The prayer for relief did not specifically request treble damages, but the complaint alleged that willfulness was a common question for the class and that the class was entitled to trebled damages. It also alleged that SBA selected Plaintiff and the class members for the campaign because its own point-of-sale records showed their temporary coverage was about to expire. The Court noted that courts in the Ninth Circuit have repeatedly accepted similarly conclusory willfulness allegations at the pleading stage and let the request stand.

This case is a good lesson for companies that sit between a business and its customers. First, handling a customer’s data for a partner will not keep you out of a direct liability claim. A point-of-sale administrator holds the data that makes a text traceable back to it, and when a message’s content tracks information only a handful of entities have, a plaintiff can plead direct liability without knowing who provisioned the number or ran the platform. Second, receiving a customer’s information from a dealer partner also does not, on its own, create an established business relationship with that customer. Anyone running campaigns off partner data should confirm it has consent or a relationship of its own before the first text goes out, especially with courts in the Ninth Circuit continuing to treat texts as calls.

We will keep you posted, TCPAWorld!