What does it look like when a telemarketer doesn't ratify TCPA violations?

Many of my posts have discussed how to hook a Seller for the violations of their Telemarketer. Typically what I see is the TCPA plaintiff informs the Seller about the TCPA violations, the Seller does nothing to stop the illegal calls that are benefiting them, and the TCPA plaintiff is well on his or her way to proving the Seller ratified the illegal calls. You almost never see this strategy not work, so it is refreshing to see a Seller not want anything to do with the illegal calls. When did you last see that happen?

Well, if you said Roehrman v. McAfee, LLC, 1:23-cv-02146-JMS-MG, (S.D. Ind. Dec. 6, 2024), you would be correct. The plaintiff Victoria Roehrman received bothersome text messages from a contractor of a contractor - or perhaps even a contractor of a contractor of a contractor - of Defendant McAfee, LLC. Ms. Roehrman informed McAfee about the calls, and McAfee actually did something:

After receiving complaints about the text messages received by Ms. Roehrman, McAfee's Director of Marketing, Jessica Hsu, followed some of those text messages' hyperlinks to investigate their source. Director Hsu determined that they came from a marketing-vendor's subcontractors. McAfee sent cease-and-desist letters to each subcontractor, and although one has not responded, the remaining subcontractors agreed that such text messages violate McAfee policy and either investigated or terminated their own subsubcontractors.

Roehrman sued and McAfee moved to dismiss arguing they didn't aim any illegal calls to the forum state.

McAfee argues that specific jurisdiction for Ms. Roehrman's TCPA claims would require that McAfee be "directly or vicariously liable for sending the texts," but in this case, the vendors' subcontractors are not agents and had no authority to bind McAfee as principal. McAfee states that "there's no principal-agent relationship at all," and that "as the agreements make clear, McAfee's relationship with its marketing vendors is that of independent contractor, not agent." McAfee states that it "did not send, or authorize anyone else to send, the texts that form the basis of [Ms.] Roehrman's claims," which necessarily "do not arise out of or relate to any conduct that McAfee aimed at Indiana."

The court did a lengthy analysis of the subsubcontractor and maybe subsubsubcontractor situation and you should read the opinion to see it all. But one of the good takeaways was a reminder that a Seller can't hire a bunch of different callers, each caller placing one call, and place a long series of calls without consequence:

The Seventh Circuit has explained that "[t]he norm of agency is that a principal is liable for the wrongful acts of the agent taken within the scope of the agency-that is, the authority to complete the task as signed by the principal." United States v. Dish Network L.L.C., 954 F.3d 970, 976 (7th Cir. 2020). If a defendant and a contractor have an agency relationship, they are collectively "one 'seller'"; "otherwise any household could receive endless calls peddling [the defendant's] service, as long as each came from a different . . . retailer."

Roehrman ultimatly lost the motion to dismiss, but the court made some good observations that might help other plaintiffs later.

Although McAfee argues that the subcontractors are not agents because they were not employees, "not every agent is an employee. Some are independent contractors." Jeffords v. BP Prod. N. Am. Inc., 963 F.3d 658, 664 (7th Cir. 2020).

McAfee notes that the Special Terms and Conditions disavow agency, but "parties cannot . . . negate agency if the relation the contract creates is substantively one of agency." Dish Network L.L.C., 954 F.3d at 975.

There is the fact that there are multiple entities for whom the subcontractors worked, but that, too, is not decisive since they could be agents with multiple principles. Restatement (Third) of Agency § 3.14. . . . Fed. Trade Comm'n v. LifewatchInc., 176 F.Supp.3d 757, 776 (N.D. Ill. 2016) (observing that "[a]n agent can serve multiple principals at once, even principals that are competing with one another")

And the fact that the subcontractors or their sub-subcontractors are degrees below contractors also is not dispositive because they could be legally binding "subagents" themselves with multiple principals.

Ratification is personally my favorite tool in holding Sellers accountable for the Telemarketers because

in general, "ratification retroactively creates the effects of actual authority." Restatement (Third) Of Agency § 4.02(1). "A person ratifies an act by 'manifesting assent that the act shall affect the person's legal relations' or by 'conduct that justifies a reasonable assumption that the [principal] so consents.'" United States v. Aldridge, 642 F.3d 537, 541 (7th Cir. 2011) (quoting Restatement (Third) of Agency) § 4.01). Such consent can be shown when a principal "enjoys the benefits of the contract and does not repudiate it" within a reasonable time. NECA-IBEW RockfordLoc. Union 364 Health & Welfare Fund v. A & A Drug Co., 736 F.3d 1054, 1059 (7th Cir. 2013). Such consent also arises when a principal enjoys the benefits of the contract and "had knowledge of facts that would have led a reasonable person to investigate further," and the principal accepted the benefit "without further investigation." Restatement (Third) Of Agency § 4.06 cmt. d; Alterman v. Lydick, 241 F.2d 50, 53 (7th Cir. 1957) (finding ratification where the principal was ignorant only because "he preferred not to know what [an] investigation would have disclosed"). "A principal that learns of illegal behavior committed by its agents, chooses to do nothing, and continues to receive the gains, is liable for the agent's acts." Dish Network L.L.C., 954 F.3d at 976. "[T]he state of [a principal's] knowledge is [a] factual question." Id. at 978.

This lawsuit focused quite a bit on Roehrman not buying anything from McAfee. Had she, it sounds like this judge would have hooked McAfee. I don't think a purchase is always required, depending on what complaints about the calls are made to the Seller that hooks them via the Seller having "knowledge of facts that would have led a reasonable person to investigate further,", but clearly a purchase can be a way to create additional leverage with the court via "the principal have full knowledge of the facts and the choice to either accept or reject the benefit of the transaction."

McAfee's actions to investigate and terminating the offending callers got them out of the suit. I get it, some telemarketers are selling very expensive nonsense and folks are worried about giving out their credit cards. I highly recommend TCPA plaintiffs sign up for virtual credit cards through privacy.com. The virtual cards can be set with strict spending limits, or be set to only allow one purchase, and are a great tool to identify sellers like MaAfee without giving out credit card numbers that can be much more obnoxious if stolen.

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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