Failure To Establish Agency Relationship Dooms TCPA Class Action

A federal court in Nevada recently granted a motion to dismiss, reaffirming that an agency relationship between a target defendant and the people actually making the calls is necessary for a plaintiff to sustain a claim for Telephone Consumer Protection Act (TCPA) violations.

What was the case about?

The plaintiff in the matter was on the national Do Not Call Registry (DNC Registry). They listed land for sale, then later withdrew it from the market. They started receiving numerous unsolicited phone calls from independent real estate agents regarding that property. The plaintiff gathered that many of them could be linked to the same real estate company. The plaintiff then filed a complaint, advancing a TCPA class action for the repeated calls they received despite being listed on the DNC Registry.

What did the Court decide?

In order to sustain a TCPA claim, a plaintiff must demonstrate either a) that the defendant made the calls or b) that an agency relationship exists between the defendant and the callers. “Agency” is defined by federal common law, and is essentially a principal (here, the real estate company) manifesting assent that an agent (the real estate agent) will act on the principal’s behalf and under their control. The agent must also manifest assent to the principal’s control. The most important element in determining whether an agency relationship exists is the extent of control by the principal.

There are three theories of agency: actual authority, apparent authority, and ratification. The plaintiff failed to allege sufficient facts to prove any of them.

• Actual authority requires that the principal assent to an agent taking action on the principal’s behalf. The agent must reasonably believe that they are doing what the principal wants them to do. Here, the plaintiff could only show that the real estate company hosted training sessions and encouraged real estate agents to make cold calls to people with expired real estate listings. The plaintiff was unable to demonstrate that the real estate agents made calls to people on the DNC Registry at the company’s direction.
• Apparent authority requires the principal to supply a reasonable basis to cause an agent to act in a certain way. It takes more than just an agent claiming to have authority to act; there must be proof of something said or done by the principal that causes the agent to act. The plaintiff in this matter had nothing of the sort. Even though some of the agents claimed to be calling from the real estate company, that was not evidence that the real estate company had instructed the agents to make the calls. With no apparent authority, the plaintiff could not sustain their claim.
• Ratification can occur in two ways. First, it can be found with a principal’s knowing acceptance of a benefit, which requires an objectively observable indication that the principal chose and consented to the agent’s actions. Ratification can also occur through willful ignorance. This requires a principal not to know material facts about how an agent is acting, but to be aware that it lacks that knowledge. The plaintiff again failed to demonstrate that the company took any steps to encourage the agents to make the calls, nor did the plaintiff show that the real estate company derived any benefit from the allegedly unlawful act.

The court granted the real estate company’s motion to dismiss, finding that there was no agency relationship between the real estate company and the people who actually made the calls.