Mey v. Monitronics International, Inc.

Citations: 959 F. Supp. 2d 927; 2013 WL 4105430; 2013 U.S. Dist. LEXIS 114837Docket: Civil Action No. 5:11CV90

Court: District Court, N.D. West Virginia; August 14, 2013; Federal District Court

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The Court, led by District Judge Irene M. Keeley, has denied the summary judgment motions filed by Monitronics International, Inc. and UTC First and Security Americas Corp. regarding a TCPA violation claim by plaintiff Diana Mey. Mey alleges that Versatile Marketing Solutions, Inc. (VMS) made 19 calls to her from November 2009 to July 2011, despite her number being on the national Do Not Call Registry since 2003. She claims Monitronics and UTC are vicariously liable under the TCPA for these calls, even though they did not place the calls themselves. 

The Court had previously stayed the case pending a FCC ruling on the interpretation of "on behalf of" liability under the TCPA, which was issued on May 9, 2013, coinciding with the lifting of the stay. The Court has since invited supplemental briefing on the FCC’s ruling, which led to extensive documentation and argumentation from both parties. 

In evaluating summary judgment, the Court highlighted that it must consider evidence favorably for the nonmoving party and cannot weigh evidence or determine truth. The moving party must demonstrate the absence of genuine factual disputes, while the nonmoving party must present specific facts to show there is a triable issue. The case hinges on the interpretation of TCPA liability, necessitating further examination of the Act's scope in relation to the specific facts of this case.

The Telephone Consumer Protection Act (TCPA) was enacted to address significant consumer complaints regarding the misuse of telephone technology, specifically intrusive telemarketing calls. Congress characterized unrestricted telemarketing as a violation of privacy, leading to the TCPA's creation as a remedial statute that should be broadly construed to counteract evasions by wrongdoers. It allows individuals receiving multiple calls from the same entity within a year to take legal action for violations, seeking injunctions or monetary damages up to $500 per violation.

The TCPA's regulations prohibit telemarketing calls to residential subscribers listed on the national do-not-call registry. While the TCPA does not define "on behalf of," courts have interpreted this phrase through agency principles, leading to inconsistent rulings. Some courts have determined that a strict agency relationship is unnecessary if a benefit to the entity from third-party calls can be established. Other approaches have included assessing the level of control exerted over the callers or examining the overall relationship between the parties involved. This variability in interpretation has been acknowledged by the Sixth Circuit in recent rulings.

Phillip Charvat sued EchoStar Satellite, LLC, regarding illegal calls made by the company's independent contractors, not by EchoStar directly. The Sixth Circuit analyzed the ambiguity of the term "on behalf of" in 47 U.S.C. 227(c)(5), questioning whether it establishes liability for entities whose calls are made through independent contractors. The court noted inconsistencies in how various courts interpret this liability, which could lead to different outcomes for individuals and companies. The court invited the FCC to provide its interpretation due to its authority to clarify the statute and regulations.

The FCC, in its amicus brief, asserted that an entity can be liable for calls made on its behalf, even if it did not directly make those calls, thus aligning with the statute’s interpretation of "initiating" a call. The FCC also stated that while the statute may incorporate agency principles, it does not necessarily follow state agency law. Acknowledging the need for regulatory clarity, the Sixth Circuit referred the case to the FCC under the primary jurisdiction doctrine.

On May 9, 2013, the FCC issued a Declaratory Ruling clarifying that while a seller typically does not "initiate" calls made by third-party telemarketers, it can still be held vicariously liable under federal common law agency principles for violations committed by those telemarketers. The FCC emphasized that an "on behalf of" liability does not necessitate a formal agency relationship; instead, a plaintiff can also establish vicarious liability through concepts of ratification and apparent authority. The court is now set to consider the pending motions based on this guidance.

Mey, the non-movant, has successfully demonstrated sufficient evidence at summary judgment indicating that VMS acted "on behalf of" Monitronics and UTC, potentially exposing them to liability under 47 U.S.C. 227(c). Both Monitronics and UTC have agreements with VMS that permit it to represent itself as an "authorized dealer" of their products, which may give rise to apparent authority and liability. The defendants argue that the FCC's Declaratory Ruling exceeds its authority to interpret the TCPA and assert that they are merely "manufacturers," not "sellers," thus claiming immunity from liability. However, the Court refers to the Sixth Circuit’s finding that the phrase "on behalf of" is ambiguous and highlights that Congress has not clearly addressed this issue. The Court will assess whether the FCC's interpretation is permissible under the TCPA. Defendants have not demonstrated that the FCC's conclusion is impermissible, as it aligns with federal common law agency principles. The apparent authority theory is established in federal law, supporting the FCC's interpretation of vicarious liability under the TCPA. Furthermore, the FCC defines "seller" in a manner that includes entities like Monitronics and UTC, indicating they cannot evade liability simply by categorizing themselves as manufacturers.

The determination of whether an entity qualifies as a 'seller' hinges on whether a telephone solicitation is conducted on its behalf, as defined by FCC rules. The Court found that the argument regarding summary judgment did not align with a straightforward reading of these rules. An alternative basis for denying the motions for partial summary judgment from Monitronics and UTC arises from F.R. Civ. P. 56(d), where Mey asserts that limited discovery hindered her ability to gather essential facts to counter the defendants' motions, particularly regarding a ratification theory. The Fourth Circuit has emphasized the importance of allowing adequate discovery before granting summary judgment. Mey's attorney provided an affidavit stating that the restricted discovery prevented her from acquiring relevant information related to alleged violations. The Court noted that such information is critical to assessing whether Monitronics or VMS ratified any misconduct. A seller may be liable under the TCPA for unauthorized actions by a telemarketer if the seller was aware or should have been aware of the violations and did not take appropriate measures to stop them. Consequently, the Court denied the motions for partial summary judgment, canceled a previously scheduled oral argument, and set a status conference for August 15, 2013. The Court also reiterated that apparent authority can bind a principal to the actions of a third party if the third party reasonably believes that the agent is acting within their authority.