Building TCPA lawsuits that survive Jones v. Royal Admin. Servs
- Peter Schneider
- Mar 28
- 7 min read
Updated: Apr 14
I want to talk about a recent summary judgment loss for the plaintiff in the telephone consumer protection act lawsuit Sapan v. LendingTree, 8:23-cv-00071 (C.D. Cal March 18, 2025), but because trial court predicated the loss on ninth circuit decision Royal Admin. Servs., Inc., 887 F.3d 443, (9th Cir. 2017), I need to cover that case first, then come back to Sapan.
As usual, let's look at the history of the case. Plaintiffs Charles and Josh got several unwanted phone calls from an All American Auto Protection, Inc. ("AAAP") intending to sell vehicle service contracts ("VSC"). You might know them from the obnoxious folks selling junk "extended warranties" over the phone.
AAAP had a contract with Royal Administration Services ("Royal") to sell Royal's contracts with AAAP's telemarketers, but AAAP sold other companies VSC's too. Apparently the way AAAP worked is they (allegedly) illegally called a lot of people, and whoever they could get on the phone, they would try to sell the concept of a vehicle service contract to the customer..
Then, during the phone call, the telemarketer would pick a particular service plan from one of their many vendors to sell to the consumer, based on the make, model, and mileage of the consumer's car, and the price and benefits in which the consumer expressed interest.
TCPA plaintiffs Charles and Josh tried suing Royal for AAAP's calls and lost at the district court level on summary judgment.
In granting Royal's motion for summary judgment, the district court held that no agency relationship existed between Royal and AAAP that could give rise to Royal's liability—rejecting theories of actual authority, apparent authority, and ratification. On appeal, Jones and Watson do not address apparent authority or ratification. They have limited their challenge to two theories of liability. First, they assert that AAAP had actual authority as Royal's agent to place the unlawful calls. Second, they assert that Royal had enough authority to control the manner and means of AAAP's telemarketing that it can be held vicariously liable to the same degree that an employer may be held liable for the acts of its employees.
There is an overriding fact about Royal Admin Servs that should limit its application to a lot of other cases
An AAAP telemarketer pitched a VSC to Appellants during only one call at issue in this case. During that call, a telemarketer attempted to sell a "Diamond New Car" protection plan—a plan not sold by Royal through AAAP. Thus, there is no evidence that AAAP telemarketers ever tried to sell Royal VSCs to Appellants. Accordingly, Royal never specifically controlled any part of any of the calls at issue in this case.
Suppose you are a hot dog manufacture and you sell your hot dogs to street vendors. A lot of courts are going to be loath to hold you responsible for any illegal selling practices of your street vendors that you can claim you didn't know about, and even more so if the hot dog the lawsuit is about came from a different manufacture.
Royal Admin Servs is (or should be) about what must the relationship between you (the hot dog manufacturer) and your customer (the hot dot street vendor) be such that you are liable for what they do no matter who's hotdog they sell. This case is (or should be) pretty much about when is one entity the employee of another, which is why the court said:
We adopt the ten non-exhaustive factors set forth in the Restatement (Second) of Agency § 220(2) (Am. Law Inst. 1958) for determining whether a principal exercises sufficient control over an agent to be held vicariously liable as if it were the agent's employer. 1) the control exerted by the employer, 2) whether the one employed is engaged in a distinct occupation, 3) whether the work is normally done under the supervision of an employer, 4) the skill required, 5) whether the employer supplies tools and instrumentalities [and the place of work], 6) the length of time employed, 7) whether payment is by time or by the job, 8) whether the work is in the regular business of the employer, 9) the subjective intent of the parties, and 10) whether the employer is or is not in business.
This case isn't really TCPA focused, this case could be equally applicable in determining if an Uber driver is an employee of Uber.
All that said, lets look at when a trial court applied Royal Admin Servs to a TCPA case as justification to dismiss it in telephone consumer protection act lawsuit Sapan v. LendingTree, 8:23-cv-00071 (C.D. Cal March 18, 2025). I pulled the complaint if you would like to see it and I'll pull background from it and the judges order granting LendingTree summary judgment because the Order is a little sparse.
Like Royal Admin Servs, LendingTree has relationships with marketing affiliates, and those marketing affiliates talk to people, then possibly transfer the calls to LendingTree, and possibly transfer the calls to someone else. The marketing affiliate at issue here appears to be a "National Mortgage Advantage". I'll call them NMA.
Sapan got one of those NMA calls, and NMA transferred Sapan to Lending Tree. The call disconnected and LendingTree themselves didn't call Sapan back.
NMA did though, calling Sapan nine more times, but
Since Mr. Sapan had already determined this was a junk call from LendingTree’s agent and affiliate and confirmed that LendingTree was a real company and not a fake name, he did not answer.
"National Mortgage Advantage" was probably a fake business name because LendingTree does not operate under the name “National Mortgage Advantage,” and it has no relationship with any entity known as “National Mortgage Advantage.”
I'll pull from the order ruling against Sapan:
The primary dispute in this case is whether LendingTree could be liable for the calls that were placed to Sapan. Under Ninth Circuit precedent, LendingTree cannot . . . Per Federal Communications Commission regulations, “[c]alls placed by an agent of the telemarketer are treated as if the telemarketer itself placed the call.” . . . To decide whether an agency relationship exists, a district court must apply traditional tort principles . . . The Ninth Circuit has held that marketing affiliates like those in LendingTree’s pay-per-call program do not constitute agents for the purpose of TCPA liability. In Jones v. Royal Administration Services, Inc., the defendant vehicle service contract provider entered into a marketing contract with telemarketer AAAP. Through that program, AAAP would first “sell the concept of a vehicle service contract to the consumer.” Id. (alterations adopted). Then, AAAP would “pick a particular service plan from one of their many vendors” and transfer the consumer to that vendor. The Ninth Circuit held that the defendant could not be held vicariously liable for AAAP’s TCPA violations because AAAP was an “independent business” that “provided its own equipment, set its own hours, and only received payment if one of its telemarketers actually made a sale” and because the defendant “did not specifically control the calls” to the plaintiff. As in Jones, here no basis exists upon which LendingTree could be vicariously liable for the calls placed by National Mortgage Advantage to Sapan. Indeed, Sapan’s only argument to the contrary appears to be his assertion that “National Mortgage Advantage” is a “fake name used by one of the telemarketers hired by LendingTree.” Such bold, unsupported assertions are insufficient to create a genuine dispute of fact. Moreover, even if Sapan is correct that “National Mortgage Advantage” is a fake name used by one of LendingTree's marketing affiliates, it is undisputed that those calls were not made at LendingTree's direction, that LendingTree did not influence or control its marketing affiliates, and that the marketing affiliate was an independent business. In sum, there is no genuine dispute regarding whether LendingTree could be vicariously liable for any TCPA violation committed by the entity that called Sapan, whether or not that entity was one of LendingTree's marketing affiliates.
What theory of vicarious liability did the judge skip over, be it mistake or intentional? Apparent authority! By accepting the transfer, LendingTree gave NMA the apparent authority to place the calls.
Apparent authority, also known as ostensible authority, is a legal concept where a principal is bound by an agent's actions even if the agent lacked actual authority, if a third party reasonably believed the agent had such authority due to the principal's actions or omissions.
And its close cousin implied authority
Implied authority is a legal concept where an agent is assumed to have the power to act on behalf of a principal, even without explicit authorization, based on the circumstances, the agent's role, or the principal's conduct.
Sapan is a bad ruling but I'm not sure it is bad enough that this one is the poster child to go on appeal because I don't know that Sapan adequately plead apparent authority / implied authority. And Sapan's facts are not so strong an appeals court is forced to do the right thing. Some courts hate it, but this is why someone in Sapan's position could have/should have answered more calls and built a stronger case. Or carried on with applying for a loan to firmly hook in a ratification theory of recovery.
TCPA plaintiffs should work with a TCPA attorney while building their cases to bring a strong set of facts trial judges and appellant judges can't ignore.
Now you know more about building a solid TCPA lawsuit. Would you like a free case review? Do you have a question or a telemarketing, debt collection, or bankruptcy case that would make a great blog article? We might even review your pro-se complaint or motion in a blog post. Email peter@nwdebtresolution.com and/or nathen@nwdebtresolution.com and we may answer it for everyone!
Are telemarketers harassing you in Washington, Oregon, or Montana? My Washington State TCPA plaintiff law practice can help, just give us a call at 206-800-6000 or email peter@nwdebtresolution.com.
The thoughts, opinions and musings of this blog are those of Peter Schneider, a consumer advocate and Washington State plaintiff's TCPA attorney at Northwest Debt Resolution, LLC. They are just that, his thoughts, opinions and musings and should be treated as such. They are not legal advice. If you are looking to file a lawsuit for TCPA violations and unwanted calls please contact me for a consultation.
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