The Sixth Circuit Court of Appeals recently held that, because Ohio’s privity requirements only require that the interests of one party adequately represent the interests of another, a plaintiff’s Telephone Consumer Protection Act claim was subject to binding arbitration because of a settlement agreement entered into by the plaintiff’s son.
Plaintiff’s counsel in this case, Bryan Reo (herein referred to as “Bryan”), previously threatened to file a lawsuit against Palmer Administrative Services in 2016, claiming that the company made unauthorized telemarketing calls to him in violation of the TCPA, and sought both damages and injunctive relief. Palmer settled that claim with Bryan, with the settlement agreement waiving Bryan’s claims up until the day of execution and providing that any future disputes would be submitted to arbitration. In 2018, Bryan – who is an attorney – filed a TCPA suit against Palmer on behalf of his father, Anthony Reo (herein referred to as “Anthony”), again alleging unauthorized telemarketing calls in violation of the TCPA. Based on the 2016 settlement agreement, Palmer subsequently moved to compel arbitration in the 2018 case, arguing that Anthony was in contractual privity with his son Bryan for the purposes of the pending claims. The district court granted the motion, and Anthony appealed.
In the Sixth Circuit’s opinion, the Court focused on the first of the four prongs to be considered in a motion to compel arbitration under the Federal Arbitration Act – whether the parties agreed to arbitrate.
The issue before the Court was whether Anthony, as a co-habitor with Bryan, sharing the same address and telephone line as the calls at issue in the 2016 case, was subject to the arbitration agreement in Bryan’s 2016 settlement agreement. The Court looked to the law of privity in Ohio to determine if Bryan and Anthony were in privity with each other for purposes of the arbitration agreement. It concluded that, under Ohio law, the only requirement for privity is that the interests of one party adequately represent the interests of another. Because both Anthony and Bryan sought relief for an alleged injury stemming from calls to the same shared residential landline, and because Anthony sought damages as well as injunctive relief, the same as Bryan sought in 2016, Anthony and Bryan were in privity with each other, and the 2016 arbitration agreement bound Anthony to arbitration. In particular, because the injunctive relief would benefit Bryan and Anthony equally and in the same way, Bryan’s interests can be said to “adequately represent” those of Anthony.
This case addresses another interesting twist to the evolving landscape of TCPA litigation. Specifically, it provides another mechanism that businesses may want to consider when settling a claim based on telephone calls that family members related to the plaintiff may later assert in follow-on TCPA claims. Depending on the law of privity in the particular jurisdiction, a settlement agreement might be tailored to require arbitration of non-parties like Palmer did in this situation. Businesses may also consider whether a settlement agreement’s release and/or indemnification provisions could encompass privies.