A recent decision in Cunningham v. Montes, 16-cv-761-jdp, 2019 U.S. Dist. LEXIS 74721 (W.D. Wisc. May 3, 2019) has companies and their business owners that provide telephone dialing services on the edge of their seats. Why? Well, in this case the business owner was personally sued for Telephone Consumer Protection Act violations made by his customers—mostly local politicians—who used his website-based autodialer platform to send messages of their own to lists of their own targets.
Though the plaintiff, Craig Cunningham (yes, that Craig Cunningham—a serial plaintiff who has filed more than 150 TCPA lawsuits, of which 37 are currently pending) had no direct evidence that the defendant sent any of the messages himself, or even that he knew that some of the messages could be violative, the Court sent the issue to the jury to determine whether the defendant will be liable for the calls others placed using his equipment.
To give you some context, defendant Michael Montes has owned and operated several businesses that provide autodialing, predictive dialing, and virtual telemarketer services to customers seeking to engage in high-volume telephone call operations. Virtual telemarketer services permit users to place telemarketing calls that play prerecorded messages for call recipients. Montes provided these services relevant to this case through a now defunct California company called TollFreeZone.com (also a defendant in the suit), which did not have any employees other than Montes.
Once customers had access to the autodialing platform (the platform itself was furnished by a third party, the Panamanian company Technologic, Inc., operating under the name “dialer.TO.”), they were able to upload a recorded message and phone number lists and then launch auto-dialing campaigns on their own. They were also able to “scrub” their phone number lists so that numbers on the federal Do-Not-Call registry would be removed.
During 2015 and 2018, Cunningham claims to have received numerous calls from Montes’ customers. Consistent with his serial litigation experience, he logged the calls and made audio recordings of the calls. Cunningham sued Montes and TollFreeZone.com over the calls, claiming violations of the TCPA.
Who Called Cunningham?
The defendants filed a motion for summary judgment, arguing lack of vicarious liability. The Court overruled the motion, taking issue with the fact that Montes sometimes helped his clients fashion their messages and launch their calls.
The defendants raised a number of points, including the fact that Cunningham had no evidence that directly demonstrated that Montes’ company—much less Montes himself—had actually sent any of the challenged messages. According to the Court’s ruling, though, it was enough that Cunningham received messages from individuals that were clients of Montes’ company. This, in theory, could allow a jury to infer that the calls came from Montes.
Further, Montes testified during his deposition that that he would sometimes send messages for some of his clients. He also was not able to specifically state during his deposition that he had not sent the messages at issue here. In response to a question about whether he ran or was involved in campaigns for his clients, Montes said, “No, not usually.” And he answered a question about whether he ever wrote scripts for commercial customers by saying that he “might have.”
The Court was also concerned that Montes had “actual knowledge” that his clients’ use of his system had drawn legal objections and his testimony that he does not take action to ensure TCPA compliance by his customers. As such, using a “totality of the circumstances” approach, the Court held that “a provider of auto-dialing services cannot blithely sit back and blame his customers for any TCPA violations that result from their use of his service.”
The Court ultimately concluded that Montes had significant control over, and knowledge of, his clients’ use of the platform and that summary judgment in their favor was not warranted on the basis that they could not be deemed to have “made” or “initiated” the prohibited calls—meaning that Montes could be liable for the calls regardless of who actually made them.
Vicarious liability remains an important issue in TCPA cases. While some companies believe that a “hands up” approach will insulate them from liability, any misstep towards participation can and likely will be construed against them in litigation. Working with business partners to ensure TCPA compliance – and clearly spell out which entity is responsible for what – should lead to better results sooner (and hopefully an earlier exit strategy).