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7th Cir. Holds TCPA Plaintiff Sufficiently Alleged ‘Agency’ Relationship for Complaint to Survive Dismissal

tcpaThe U.S. Court of Appeals for the Seventh Circuit recently reversed the dismissal of a plaintiff’s complaint alleging supposed violations of the federal Telephone Consumer Protection Act and the Illinois Automatic Telephone Dialing Act, concluding that the plaintiff alleged enough of an agency relationship between the defendants and the entities that placed the subject calls for the complaint to move forward.

A copy of the opinion in Bilek v. Federal Insurance Company is available at:  Link to Opinion.

The plaintiff received unauthorized robocalls concerning health insurance that allegedly violated the TCPA, 47 U.S.C. § 227, and IATDA, 815 ILCS 305/30(a)(b). The plaintiff sued on a vicarious liability theory, claiming that an insurer contracted with a marketer to sell its insurance. The marketer then hired lead generators to effectuate telemarketing, and the lead generators made the unauthorized robocalls that formed the basis of the plaintiff’s claims. The plaintiff cited three agency theories: actual authority, apparent authority, and ratification.

The insurer and the marketer each moved to dismiss the plaintiff’s complaint. The insurer brought a motion to dismiss for failure to state a claim under Rule 12(b)(6), arguing that the plaintiff failed to plausibly allege an agency relationship between itself and the lead generators. Making the same agency arguments, the marketer moved for dismissal for lack of personal jurisdiction under Rule 12(b)(2). It argued that without alleging a plausible agency relationship, the plaintiff failed to connect the marketer to Illinois through the lead generators’ conduct.

The trial court agreed with the defendants, ruling that the plaintiff failed to plausibly allege that the lead generators acted pursuant to a valid agency theory. 

On the actual authority claim, the trial court reasoned that the plaintiff failed to plausibly allege agency because his complaint lacked allegations of the defendants’ control over the timing, quantity, and geographic location of the lead generators’ unauthorized robocalls. It next found the apparent authority claims insufficient because the plaintiff alleged only that the purported agents — not the principals — made manifestations to the plaintiff. Finally, the trial court reasoned that the plaintiff failed to allege agency under the ratification theory because the plaintiff did not allege that he purchased health insurance from the robocalls, so the defendants accepted no benefits from the calls.

In light of its determinations on the plaintiff’s three agency theories, the trial court held that the plaintiff neither stated a claim against the insurer nor established a prima facie case of personal jurisdiction over the marketer.

Accordingly, the trial court dismissed the plaintiff’s complaint and entered final judgment in the defendants’ favor. The plaintiff timely appealed.

The Seventh Circuit began its analysis with the trial court’s Rule 12(b)(6) dismissal of the insurer.

The Court noted that actual authority requires that, at the time of an agent’s conduct, “the agent reasonably believes, in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act.” RESTATEMENT (THIRD) OF AGENCY § 2.01 (2006); see Moriarty v. Glueckert Funeral Home, Ltd., 155 F.3d 859, 866 (7th Cir. 1998).

Thus, the Seventh Circuit held that, to prove that the lead generators in this case had actual authority to act as the agents of the insurer, the plaintiff needed to show evidence that (1) a principal/agent relationship existed, (2) the principal controlled or had the right to control the alleged agent’s conduct, and (3) the alleged conduct fell within the scope of the agency. See Spitz v. Proven Winners N. Am., LLC, 759 F.3d 724, 732 (7th Cir. 2014).

The Seventh Circuit determined that it need not decide whether the plaintiff’s allegations were sufficient, if true, to prove his vicarious liability claims. Instead, the Court determined it only needed to ascertain whether the plaintiff’s allegations included enough detail to render his actual authority theory of agency liability plausible.

The plaintiff, as his theory of liability, alleged that the lead generators acted as the insurer’s agents, with actual authority, when they allegedly initiated robocalls to the plaintiff’s cellphone without his consent. The Seventh Circuit held that the plaintiff’s underlying factual allegations included enough supporting detail to render this theory plausible. The plaintiff alleged that the lead generators initiated robocalls that solicited the insurer’s health insurance, and that the insurer authorized the lead generators to use its approved scripts, tradename, and proprietary information in making these calls.

The Seventh Circuit held that these allegations, viewed in the light most favorable to the plaintiff, supported the inference that the insurer authorized the lead generators to act on its behalf and subject to its control. See RESTATEMENT (THIRD) OF AGENCY § 2.01; Warciak v. Subway Rests., Inc., 949 F.3d 354, 357 (7th Cir. 2020).

The Court reasoned that the plaintiff alleged more than a formulaic recitation of his cause of action, see W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d 670, 675 (7th Cir. 2016), and included specific facts to support his theory of relief, see McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011). The Court concluded that nothing more was required to comply with Rule 8(a)(2), nor to meet the plausibility standard articulated by Twombly.

The insurer argued that the plaintiff failed to state a plausible agency claim to survive a Rule 12(b)(6) dismissal because his complaint lacked allegations that the insurer controlled the timing, quantity, and geographic location of the lead generators’ robocalls. However, the Seventh Circuit held that allegations of minute details of the parties’ business relationship are not required to allege a plausible agency claim. See generally Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).

With a viable agency claim on the actual authority theory, the Seventh Circuit held that the complaint should move forward at the pleading stage. In reaching this result, the Court also decided that it need not rule on the plaintiff’s apparent authority and ratification theories of agency liability.

The Seventh Circuit next addressed the trial court’s dismissal of the marketer for lack of personal jurisdiction.

When a trial court decides a motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) without conducting an evidentiary hearing, as here, a plaintiff need only make out a prima facie case of personal jurisdiction. See Matlin v. Spin Master Corp., 921 F.3d 701, 705 (7th Cir. 2019). “[The court] take[s] as true all well-pleaded facts alleged in the complaint and resolve[s] any factual disputes . . . in favor of the plaintiffs.” Id. (quotation and alterations omitted).

In a federal question case, “a federal court has personal jurisdiction over the defendant if either federal law or the law of the state in which the court sits authorizes service of process to that defendant.” Curry v. Revolution Labs, LLC, 949 F.3d 385, 393 (7th Cir. 2020) (quotation omitted). The plaintiff’s federal claim here arose under the TCPA, which does not authorize nationwide service of process in a private cause of action. See 47 U.S.C. § 227. Therefore, “a federal court sitting in Illinois may exercise jurisdiction over the defendants in this case only if authorized both by Illinois law and by the United States Constitution.” Curry, 949 F.3d at 393 (quotation and alteration omitted).

The Seventh Circuit held that the Illinois long-arm statute authorizes jurisdiction over a non-resident through the conduct of an agent. See 735 ILCS 5/2- 209(a). In addition, § 2-209(c) provides a catch-all provision, permitting a court’s exercise of jurisdiction to the full extent permitted by the Illinois and United States Constitutions. See 735 ILCS 5/2-209(c).

Moreover, to comport with federal due process, a defendant must maintain “minimum contacts” with the forum state such that “the maintenance of the suit ‘does not offend traditional notions of fair play and substantial justice.’” Tamburo, 601 F.3d at 701 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). When considering due process for specific personal jurisdiction, the court must determine whether “(1) the defendant has purposefully directed his activities at the forum state or purposefully availed himself of the privilege of conducting business in that state, and (2) the alleged injury arises out of the defendant’s forum-related activities.” Id. at 702 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).

The Seventh Circuit concluded that the attribution of an agent’s conduct to a principal to establish specific personal jurisdiction comports with federal due process. In doing so, the Court joined other circuits that have recognized the same. See, e.g., Nandjou v. Marriott Int’l, Inc., 985 F.3d 135, 150 (1st Cir. 2021); Celgard, LLC v. SK Innovation Co., 792 F.3d 1373, 1379 (Fed. Cir. 2015); Myers v. Bennett Law Offices, 238 F.3d 1068, 1073 (9th Cir. 2001).

Here, the lead generators’ alleged illegal phone calls formed the basis of the plaintiff’s TCPA and IATDA claims. The Seventh Circuit concluded that the plaintiff adequately alleged that the lead generators acted with the marketer’s actual authority, as the Court had ruled regarding the insurer. See RESTATEMENT (THIRD) OF AGENCY § 1.01; § 2.01; see Moriarty, 155 F.3d at 866. The plaintiff alleged not only that the marketer contracted with the lead generators directly to telemarket the insurer’s health insurance, but that the marketer participated in the calls in real-time by pairing the agents with the insurer’s health insurance quotes, emailing quotes to call recipients, and permitting the agents to enter information into its system.

These well-pleaded factual allegations were enough, in the Seventh Circuit’s view, to support an agency relationship on actual authority grounds at the pleading stage. As a result, the Court concluded that the plaintiff established a prima facie case of personal jurisdiction over the marketer.

Accordingly, the Seventh Circuit reversed the judgment of the trial court and remanded for further proceedings consistent with its opinion.

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Daniel Miller is an associate in the Chicago office of Maurice Wutscher LLP, practicing in the firm’s Consumer Credit Litigation and Commercial Litigation groups. Daniel has substantial experience as a litigation attorney representing clients in both individual and class action cases involving the FDCPA, TCPA, FCRA, TILA, RESPA, Illinois Consumer Fraud Act, and various other federal and state statutes. He also has experience in representing corporate clients in commercial transactions and executive compensation agreements. Daniel earned his Juris Doctor from the University of Illinois College of Law, and his Bachelor of Arts in History from Durham University in the United Kingdom. He is admitted to practice law in Illinois and the U.S. District Courts for the Northern District of Illinois and the Southern District of Illinois.

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