Birchmeier et al v. Caribbean Cruise Line, Inc. et al

Filing 421

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 4/18/2016: For the reasons stated in the accompanying Memorandum Opinion and Order, the Court grants plaintiffs' motion for partial summary judgment [dkt. no. 336] in p art, finding that plaintiffs have established the unlawfulness of calls with prerecorded messages made to the cellular phone class. The Court otherwise denies plaintiffs' motion and also denies defendants' motions for summary judgment [dkt. nos. 340, 342, 344]. The case is set for a status hearing on April 25, 2016 at 9:00 a.m. to discuss a schedule for further proceedings, including a trial date. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

GERARDO ARANDA, GRANT
BIRCHMEIER, SEPHEN PARKES, and
REGINA STONE, on behalf of themselves
and classes of others similarly situated,
Plaintiffs,
vs.
CARIBBEAN CRUISE LINE, INC.,
ECONOMIC STRATEGY GROUP,
ECONOMIC STRATEGY GROUP, INC.,
ECONOMIC STRATEGY, LLC, THE
BERKLEY GROUP, INC., and VACATION
OWNERSHIP MARKETING TOURS, INC.,
Defendants.

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Case No. 12 C 4069

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
Plaintiffs filed suit on behalf of themselves and two classes of individuals against
Caribbean Cruise Line, Inc. (CCL), Vacation Ownership Marketing Tours, Inc. (VOMT),
The Berkley Group, Inc., and Economic Strategy Group and its affiliated entities
(collectively ESG). Plaintiffs alleged that defendants violated the Telephone Consumer
Protection Act, 47 U.S.C. § 227, by using an autodialer and an artificial or prerecorded
voice to call their cellular and landline phones. CCL, VOMT, and Berkley have each
moved for summary judgment pursuant to Federal Rule of Civil Procedure 56. Plaintiffs
have also moved for partial summary judgment. For the reasons stated below, the
Court grants plaintiffs' motion in part and denies defendants' motions.

Background
The following facts are not disputed except where otherwise noted. This case
centers on a call campaign that began in or around August 2011. Over the course of
about one year, over a million people throughout the United States received phone calls
that were made to their cellular phones and residential landlines by an organization
representing itself as "ESG" or "Political Opinions of America" requesting their
participation in various short political surveys. Every one of these calls featured
prerecorded messages, some or all of which offered recipients an incentive to
participate: if they would briefly answer a handful of questions regarding their
satisfaction with Congress and the President or their perspectives on certain issues of
national concern, they would be eligible for a "free cruise to the Bahamas."
Upon completing the survey, call recipients were asked if they wanted to learn
more about their prize. The name of the cruise provider was not mentioned in the
prerecorded messages, but those people who chose to learn more were transferred to a
representative from CCL, a Florida company in the business of marketing and selling
cruise and vacation packages to consumers. Although the cruise was nominally free,
representatives requested call recipients' credit card numbers and informed them that
they would be responsible for taxes, port fees, and gratuities, as well as the cost of any
upgraded amenities or activities during their trip. Participants who opted to partake in a
cruise were also offered an upgraded package that would require them to take a
timeshare tour at a Berkley facility. Berkley's name was never mentioned during these
phone calls.
ESG was responsible for the phone campaign. ESG's founder, director, and sole

2

employee, Jacob DeJongh, incorporated each of the ESG entities and registered them
as tax-exempt nonprofit organizations. He also registered ESG with the Federal
Election Commission (FEC), though evidence in the record shows that he repeatedly
failed to comply with FEC filing rules. According to DeJongh, the purpose of the phone
campaign was to raise awareness of political issues he cared about, spread his political
message, and conduct meaningful political surveys whose results he could market to
political parties, political action committees, and news outlets.
At the time he was setting up ESG, DeJongh had discussions with Jason Burkett
(his cousin) and Scott Broomfield, both of whom worked for a company called Linked
Service Solutions (LSS). Broomfield testified before the Federal Trade Commission that
during the brief testing phase of the phone campaign, in which call recipients were not
offered an incentive for completing the surveys, over ninety percent of recipients hung
up after hearing the first question in the survey. Broomfield stated that it became clear
that an incentive would be necessary in order to ensure that the call campaign was
worth its cost. DeJongh testified that at the time he was forming ESG, he discussed
with Burkett and Broomfield the possibility of offering a free cruise incentive.
LSS brokered supplier agreements between DeJongh's companies and CCL.
Each contract provided that ESG would "solicit[] survey takers by transmitting or
causing to be transmitted prerecorded survey messages using an autodialer . . . ." LSS
paid ESG for the call campaign, and LSS in turn received somewhere between $2 and
$2.50 from CCL for every call that was transferred to a CCL representative and lasted
more than thirty seconds beyond the transfer. Defendants contend that this evidence
shows that the phone calls were made by and for DeJongh and ESG alone, and that

3

offering a free cruise as incentive to participate in the surveys did nothing to modify the
nature or purpose of the calls. According to DeJongh, Broomfield, and defendants,
these calls were made by and for a tax-exempt nonprofit, with the sole, express purpose
of collecting political survey information.
Plaintiffs, however, view the evidence quite differently: They argue that ESG
made these calls not to collect information or raise awareness but rather to drum up
business for CCL, VOMT, and Berkley as their agent. Plaintiffs filed this lawsuit in May
2012 alleging that the telephone calls at issue violated two provisions of the TCPA.
First, they alleged that defendants delivered prerecorded messages by calling
consumers' cellular telephone lines without prior express consent and for no emergency
purpose in violation of 47 U.S.C. § 227(b)(1)(A)(iii). Second, they alleged that
defendants delivered prerecorded messages by calling consumers' residential landlines
without prior express consent and for no emergency purpose in violation of 47 U.S.C.
§ 227(b)(1)(B). Named plaintiffs Aranda, Birchmeier, and Parkes all alleged that they
received the calls on their cellular phones. Named plaintiff Stone alleged that she
received calls on both her cellular phone and her residential landline.
CCL and ESG moved to dismiss plaintiffs' complaint on the grounds that (1)
plaintiffs failed to adequately distinguish the role played by each defendant in the
allegedly unlawful call campaign; (2) the TCPA only permits direct liability for the party
that actually places unlawful calls; and (3) political survey calls to residential landlines
and cellular telephones are exempt from TCPA liability. The Court denied CCL's and
ESG's motion in December 2012. See Birchmeier v. Caribbean Cruise Line, Inc., No.
12 C 4069, 2012 WL 7062748 (N.D. Ill. Dec. 31, 2012). In its order, the Court explained

4

that because plaintiffs had plausibly alleged that CCL and ESG acted in concert, they
were not required to delineate in the complaint where one defendant's conduct ended
and another's began. The Court also noted that TCPA liability applies not only to the
entity that places unlawful calls but also to entities that can be held jointly or vicariously
liable under common law agency and partnership principles. Lastly, the Court rejected
the argument that the calls were political survey calls exempt from TCPA coverage.
The Court observed that this exemption "appears to involve the prohibition on calls with
artificial or prerecorded voices, not the prohibition on calls made with automated
dialers." Id. at 1. Because plaintiffs had alleged both that the defendants had played a
prerecorded message and that they had used an autodialer to make the calls, the Court
denied CCL's and ESG's motion without addressing the question "whether the statute
as interpreted by the FCC permits liability for a nonautodialed but unsolicited
prerecorded call to a cellular phone for the purpose of initiating a commercial
transaction where the call includes what is alleged to be a 'sham' political survey." Id.
The Court granted plaintiffs' motion for class certification in August 2014. See
Birchmeier v. Caribbean Cruise Line, Inc., 302 F.R.D. 240 (N.D. Ill. 2014). The Court
certified two classes of persons who allegedly received calls featuring prerecorded
messages from ESG from August 2011 to August 2012. Individuals in the first class,
represented by Aranda, Parkes, Stone, and Birchmeier, allegedly received calls on their
cellular phones. Individuals in the other class, represented by Stone alone, allegedly
received calls on their residential landlines.
Plaintiffs filed an amended consolidated complaint in March 2015. Discovery
closed in July 2015, and after that, CCL, VOMT, and Berkley moved for summary

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judgment. Plaintiffs moved for partial summary judgment as well.
Discussion
Summary judgment is proper when the moving party "shows that there is no
genuine dispute as to any material fact and [that] the movant is entitled to judgment as a
matter of law." Fed. R. Civ. P. 56(a). On a motion for summary judgment, the Court
draws reasonable inferences in favor of the non-moving party. Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986); McCann v. Iroquois Mem. Hosp., 622 F.3d 745, 752 (7th Cir.
2010). The Court "may not weigh conflicting evidence or make credibility
determinations, both of which are the province of the jury." Omnicare v. UnitedHealth
Grp., Inc., 629 F.3d 697, 704–05 (7th Cir. 2011) (internal citations and quotation marks
omitted). "Summary judgment is not appropriate 'if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.'" Payne v. Pauley, 337
F.3d 767, 770 (7th Cir. 2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249 (1986)).
On cross-motions for summary judgment, the Court assesses whether each
movant has satisfied the requirements of Rule 56. See Cont'l Cas. Co. v. Nw. Nat'l Ins.
Co., 427 F.3d 1038, 1041 (7th Cir. 2005). "As with any summary judgment motion, [the
Court] review[s] cross-motions for summary judgment construing all facts, and drawing
all reasonable inferences from those facts, in favor of the nonmoving party." Laskin v.
Siegel, 728 F.3d 731, 734 (7th Cir. 2013) (internal quotation marks omitted).
Plaintiffs seek summary judgment in their favor only on the question of whether
the calls were unlawful under the TCPA. They argue that the record evidence
undisputedly shows that the calls were made by an autodialer and played a prerecorded

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message and that no exception to TCPA liability applies. Defendants counter that the
evidence is inconclusive regarding whether an autodialer was used and whether a
prerecorded voice was actually played on each and every call. They also cite an
exception to TCPA liability that they contend should apply to all of the allegedly unlawful
calls in this case.
Although each defendant has separately moved for summary judgment, their
motions are variations on a theme: defendants contend that none of them can be held
liable for the allegedly unlawful calls because it was ESG that actually made the calls.
Defendants first argue that summary judgment must be granted in their favor because
plaintiffs failed to adequately allege vicarious liability in their complaint. Second,
defendants contend that the evidence does not support any theory of joint or vicarious
liability on the part of CCL, VOMT, and Berkley. Third, defendants seek summary
judgment based on evidence they say shows that the sole named plaintiff representing
the landline class did not receive any calls to her landline and that another named
plaintiff hung up before ever hearing prerecorded messages on some or all of the calls
he received. Plaintiffs dispute whether issues of vicarious liability can be resolved at
summary judgment, and in any event they contend that the evidence would permit a
reasonable jury to find joint or vicarious liability for ESG's calls. They also argue that
evidence in the record supports the claims of all four named plaintiffs.
A.

Legality of the calls
The TCPA imposes limitations on those who engage in telephone advertising or

telemarketing. Specifically, the statute prohibits a person from
mak[ing] any call (other than a call made for emergency purposes or made
with the prior express consent of the called party) using any automatic
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telephone dialing system or an artificial or prerecorded voice . . . to any
telephone number assigned to a . . . cellular telephone service . . . or any
service for which the called party is charged for the call, unless such call is
made solely to collect a debt owed to or guaranteed by the United States.
47 U.S.C. § 227(b)(1)(A)(iii). The statute also states that it is unlawful
to initiate any telephone call to any residential telephone line using an
artificial or prerecorded voice to deliver a message without the prior
express consent of the called party, unless the call is initiated for
emergency purposes, is made solely pursuant to the collection of a debt
owed to or guaranteed by the United States, or is exempted by rule or
order by the [Federal Communications Commission (FCC)] under
paragraph (2)(B).
Id. § 227(b)(1)(B). The provision referenced in section 227(b)(1)(B) states that the FCC
"shall prescribe regulations to implement the requirements of this subsection" and that
the agency
(B)

may, by rule or by order, exempt from the requirements of
paragraph (1)(B) of this subsection, subject to such conditions as
the Commission may prescribe—
(i)

calls that are not made for a commercial purpose; and

(ii)

such classes or categories of calls made for commercial
purposes as the Commission determines
(I)

will not adversely affect the privacy rights that this
section is intended to protect; and

(II)

do not include the transmission of any unsolicited
advertisement.

Id. § 227(b)(2)(B).
Plaintiffs seek summary judgment only regarding whether the calls made to the
named plaintiffs and the two certified classes were unlawful calls under the TCPA.
According to plaintiffs, uncontroverted evidence shows that ESG used an autodialer and
played a prerecorded message on the calls it made to plaintiffs' cellular phones and

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residential landlines. Because no exception to the TCPA applies, plaintiffs say,
summary judgment should be granted in their favor on this point.
Defendants do not dispute that the calls were made without the prior express
consent of their recipients. But defendants offer three reasons why plaintiffs are not
entitled to summary judgment for either class on the question of the legality of the calls.
First, defendants argue that the evidence is insufficient to establish that an autodialer
was used and that such evidence is irrelevant in any event because the class definitions
do not contemplate the use of an autodialer. Second, defendants argue that the calls
did not violate the TCPA because the evidence does not show that plaintiffs actually
heard a prerecorded message when they received phone calls from ESG. Third,
defendants argue that the calls were not unlawful because the FCC has exempted
political survey calls and calls made by tax-exempt organizations. Even though this
exemption was crafted as an exception to liability for calls to landlines, defendants
contend it should be understood to protect them from liability for calls to cellular
telephones as well.
Defendants begin by arguing that it does not matter whether the evidence shows
that every phone call was made using an autodialer because the class definitions do not
reference the manner in which the calls were dialed. The relevant question, however, is
not how the class is defined but rather whether use of an autodialer bears on the
question of liability. It does not matter whether the landline calls were made with an
autodialer, because the TCPA does not prohibit the use of an autodialer to make calls to
residential landlines. See 47 U.S.C. § 227(b)(1)(B). As for the cellular phone class, the
same statutory provision that prohibits making a call to a cellular phone using an

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artificial or prerecorded voice also prohibits making such a call using an automatic
telephone dialing system. Thus if the evidence shows that ESG used an autodialer to
place the prerecorded phone calls to the members of the cellular phone class, the
defendants will have violated section 227(b)(1)(A)(3).
There is a genuine factual dispute regarding whether ESG used a prohibited
autodialer to make the calls. "The term 'automatic telephone dialing system' means
equipment which has the capacity (A) to store or produce telephone numbers to be
called, using a random or sequential number generator; and (B) to dial such numbers."
47 U.S.C. § 227(a)(1). As the FCC has explained, not every dialing device amounts to
an "automatic telephone dialing system" within the meaning of the TCPA. See In the
Matter of Rules and Regs. Implementing the Tel. Consumer Prot. Act of 1991, 30
F.C.C.R. 7961, ¶ 17 (2015). In a recent order, the Commission observed that
the basic functions of an autodialer are to "dial numbers without human
intervention" and to "dial thousands of numbers in a short period of time."
How the human intervention element applies to a particular piece of
equipment is specific to each individual piece of equipment, based on how
the equipment functions and depends on human intervention, and is
therefore a case-by-case determination.
Id. Plaintiffs describe evidence that an "autodialer" was used, but it consists entirely of
individuals involved in the call campaign using the word "autodialer" to describe the
equipment used in the campaign. Plaintiffs have not pointed the Court to evidence
showing what equipment was used, how it functioned, or the degree to which it required
human intervention. The record is insufficient to take away from a jury the
determination of whether the equipment that was used was the type that the TCPA
prohibits.
Plaintiffs do, however, point to evidence that shows that every call ESG made
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featured a prerecorded message. Defendants argue that summary judgment is
inappropriate because it is not clear that plaintiffs actually heard their prerecorded
message. Citing Ybarra v. Dish Network, LLC, 807 F.3d 635 (5th Cir. 2015),
defendants argue that at least some of the calls were not unlawful because phone
records indicate that at least one of the named plaintiffs hung up before he could hear a
prerecorded message. The Fifth Circuit's holding in Ybarra is not binding on this Court,
but even if the Court were to adhere to its logic, the evidence in this case would not
require the same result. In Ybarra, the Fifth Circuit confronted a situation in which a
prerecorded voice played only when a call was picked up and there was a "positive
voice" response, which could be either a human voice or a recorded voicemail greeting.
Id. at 637. The record indicated that when the result of the call was not a positive voice
response, no prerecorded message ever played. Id. at 637.
The evidence in this case is markedly different; it reflects that a prerecorded
message played without regard to whether a call recipient gave a voice response. The
Fifth Circuit held that for TCPA liability to accrue, a prerecorded message must actually
play; it did not hold that a recipient must stay on the line long enough to hear it. See id.
at 641 ("We hold that making a call in which a prerecorded voice might, but does not,
play is not a violation of the TCPA. Instead, the prerecorded voice must 'speak' during
the call."). Put another way, Ybarra does not indicate that a caller escapes liability if the
recipient receives a prerecorded call and hangs up the phone once she realizes this,
without hearing much (or any) of the message. Plaintiffs have established that they
received calls as part of this call campaign, and that every call included a prerecorded
message. This is sufficient to trigger TCPA liability, and Ybarra does not counsel

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otherwise.
Finally, defendants argue that under FCC regulation, the calls are not unlawful
because they were made for a political purpose by a tax-exempt organization. Through
47 U.S.C. § 227(b)(2), Congress conferred rulemaking and interpretative authority upon
the FCC to fashion exemptions to TCPA liability. Under 47 C.F.R. § 64.1200(a)(3), it is
not unlawful to call "any residential landline using an artificial or prerecorded voice to
deliver a message without the prior express written consent of the called party" under
certain limited circumstances.
Defendants acknowledge that the FCC has not extended this rule to cover
cellular phones. They nevertheless urge the Court to do so. They argue that the
TCPA's distinction between landlines and cellular phones is outdated and that the
FCC's continued adherence to the distinction is misguided in light of the paradigm shift
that has occurred since the TCPA's enactment in 1991. According to defendants, the
FCC created exemptions for political surveys and calls placed by or on behalf of taxexempt nonprofit organizations so that socially beneficial phone campaigns could be
made to places where callers could count on reaching recipients. The same
exemptions were not initially extended to cellular phones because calls to those phones
less frequently reached their recipients while also being substantially more costly to
those recipients. Now that many people do not have landlines and use cellular phones
with inexpensive phone plans as their primary telephone lines, defendants say it makes
little sense to confine the FCC's exemption to landlines.
This argument ignores both the language of the regulation and the statutory
design of the TCPA. Congress did not confer upon the courts the authority to make

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exemptions under the TCPA. Thus it does not matter whether it would be good policy to
apply the FCC's exemption to calls made to cellular phones; the exemption expressly
applies only to calls made to residential landlines. Moreover, even if the FCC did intend
to apply the exemption more broadly—an argument clearly undercut by the FCC's 2012
order stating that even "non-telemarketing, informational calls, such as those by or on
behalf of tax-exempt non-profit organizations . . . require either written or oral consent if
made to wireless consumers," In re Rules & Regulations Implementing the Tel.
Consumer Prot. Act of 1991, 27 F.C.C.R. 1830, 1841 ¶ 28 (2012) ("2012 FCC Order")—
it is unclear that the TCPA permits the FCC to do so. Section 227(b)(1)(B) specifically
provides that the FCC may fashion exemptions to TCPA liability for calls made to
residential landlines. See 47 U.S.C. § 227(b)(1)(B) (a person may not "initiate any
telephone call to any residential telephone line using an artificial or prerecorded voice to
deliver a message without the prior express consent of the called party, unless the
call . . . is exempted by rule or order by the Commission under paragraph (2)(B)"). By
contrast, the TCPA contemplates exemptions to liability under section 227(b)(1)(A)(iii)
for calls to cellular phones in only one place, where it says that the FCC
may, by rule or by order, exempt from the requirements of paragraph
(1)(A)(iii) of this subsection calls to a telephone number assigned to a
cellular telephone service that are not charged to the called party, subject
to such conditions as the Commission may prescribe as necessary in the
interest of the privacy rights this section is intended to protect.
Id. § 227(b)(2)(C). Aside from this, section 227(b)(1)(A)(iii) does not contemplate any
involvement on the part of the FCC in crafting exemptions to liability. See id.
§ 227(b)(1)(A)(iii) (a person may not make a call using "any automatic telephone dialing
system or an artificial or prerecorded voice . . . to any telephone number assigned

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to a . . . cellular telephone service . . . unless such call is made solely to collect a debt
owed to or guaranteed by the United States"); see also 2012 FCC Order, 27 F.C.C.R. at
1842 ¶ 29 (stating that "Section 227(b)(1)(A) and our implementing rules continue to
require some form of prior express consent for autodialed or prerecorded nontelemarketing calls to wireless numbers").
The calls made to the cellular phone class were made without prior express
consent. The evidence is uncontroverted that a prerecorded message was played on
each call; DeJongh himself testified to this effect during his deposition. See Defs.' Ex.
3, dkt. no. 350-4, at 144. This is a violation of the TCPA, irrespective of whether the
calls were made by or on behalf of a tax-exempt nonprofit, were made for a political or
non-commercial purpose, or did not make reference to or play long enough to mention
defendants' vacation products. No reasonable jury could find otherwise based on the
evidence presented by the parties. The Court therefore grants summary judgment in
favor of plaintiffs on the question of whether the phone calls made to the cellular phone
class run afoul of the prohibition in 47 U.S.C. § 227(b)(1)(A)(iii).
The exemptions contained in 47 C.F.R. §§ 64.1200(a)(3) do apply to calls to
landlines featuring prerecorded messages, and thus they potentially could shield
defendants from liability for the calls made to the landline class. Under this regulation, a
call to a residential landline is exempt from TCPA liability if the call is "not made for a
commercial purpose," is "made for a commercial purpose but does not include or
introduce an advertisement or constitute telemarketing," or is "made by or on behalf of a

14

tax-exempt nonprofit organization." Id. §§ 64.1200(a)(3)(ii)–(iv). 1 Defendants argue
that all three exemptions apply in this case. First, they argue that the calls were made
with a political purpose and were therefore "not made for a commercial purpose."
Second, they argue that even if the calls were "made for a commercial purpose," they
did not "include or introduce an advertisement or constitute telemarketing." Third, they
argue that the calls were "made by or on behalf of" ESG, "a tax-exempt nonprofit
organization."
If the calls were made for a commercial purpose, the exemption for commercial
calls that do "not include or introduce an advertisement or constitute telemarketing" will
not shield defendants from liability. The FCC has defined "telemarketing" as "the
initiation of a telephone call or message for the purpose of encouraging the purchase or
rental of, or investment in, property, goods, or services, which is transmitted to any
person." 47 C.F.R. § 64.1200(f)(12). It has defined "advertisement" as "any material
advertising the commercial availability or quality of any property, goods, or services."
Id. § 64.1200(f)(1).
Plaintiffs note that the FCC recently clarified that non-telemarketing commercial
calls to landlines are exempt only "to the extent that they do not contain telemarketing
messages." 2012 FCC Order, 27 F.C.C.R. at 1841 ¶ 28. Plaintiffs argue that this
means that even if the calls were made with the dual purposes of conducting a political
1

Defendants erroneously cite 47 C.F.R. § 64.1200(a)(2) to support the argument that
"the telephone calls made by the ESG Defendants appear to be exempt from the
strictures of the TCPA because the calls were political surveys and made by 501(c)(3)
or 501(c)(4) companies." Defs.' Mem., dkt. no. 372, at 14. This regulation exempts
calls made by or on behalf of a tax-exempt nonprofit organization, but only where prior
express consent is given. See 47 C.F.R. § 64.1200(a)(2). No evidence tends to show,
and defendants have not argued, that any plaintiff gave prior express consent to be
contacted.
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survey and selling defendants' vacation products, they are still unlawful, because one of
their purposes was to market defendants' products and entice call recipients to
purchase them either during the call or at some later date. See Chesbro v. Best Buy
Stores, LP, 705 F.3d 913, 917–18 (9th Cir. 2012) (citing FCC orders and determining
that "dual purpose" calls are not shielded from liability because they still contain a
marketing or sales component). The Court agrees: even if the calls were made with
the primary purpose of raising political awareness and learning about people's political
preferences, the evidence would not permit a reasonable jury to find that they did not
advertise the commercial availability of defendants' vacation packages.. Cf. 2012 FCC
Order, 27 F.C.C.R. at 1841 ¶ 28; In re Rules & Regulations Implementing the Tel.
Consumer Prot. Act of 1991, 18 F.C.C.R. 14014, 14096–97 ¶ 138, 14098 ¶ 142 (2003)
(denying exemption to commercial calls with dual purposes of providing or acquiring
information and advertising the availability or quality of goods or services). If the calls
were made for a commercial purpose, no reasonable jury could find applicable the
exemption provided in 47 C.F.R. § 64.1200(a)(3)(iii).
Defendants do not concede, however, that the calls were made for a commercial
purpose. They contend that the exemption for calls "not made for a commercial
purpose" applies because the evidence shows that the calls were made for a political
purpose by a tax-exempt nonprofit organization. The FCC has stated that noncommercial calls include "calls conducting research, market surveys, political polling or
similar activities which do not involve solicitation as defined by our rules." In re Rules &
Regulations Implementing the Tel. Consumer Prot. Act, 7 F.C.C.R. 8752, 8774 ¶ 41
(1992). The agency defines "solicitation" by telephone in precisely the same terms as

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"telemarketing": "the initiation of a telephone call or message for the purpose of
encouraging the purchase or rental of, or investment in, property, goods, or services,
which is transmitted to any person." But it provides exceptions for calls to people who
have given prior express consent and calls made by or on behalf of a tax-exempt nonprofit. 47 C.F.R. § 64.1200(f)(14).
Plaintiffs argue that at the very least, these calls had both non-commercial and
commercial purposes and thus are not entitled to the exemption contained in 47 C.F.R.
§ 64.1200(a)(3)(ii). Because the FCC has stated that "dual purpose" calls are not
entitled to exemption, plaintiffs argue, the exemption should not apply. But the "dual
purpose" calls to which the FCC has referred are not calls made for both "commercial"
and "non-commercial" purposes, but rather commercial calls made for both
"informational" and "telemarketing" purposes. See 2012 FCC Order, 27 F.C.C.R. at
1841 ¶ 28; In re Rules & Regulations Implementing the Tel. Consumer Prot. Act of
1991, 18 F.C.C.R. 14014, 14096–97 ¶ 138, 14098 ¶ 142 (2003). The FCC's guidance
concerning calls made with dual purposes does not control whether the calls were made
with or without a commercial purpose.
The crux of defendants' argument invoking this exemption and the next is that the
calls were made for a political purpose by and on behalf of ESG, a tax-exempt nonprofit organization. As explained above, non-commercial calls are exempt if they do not
include solicitations, and FCC regulations indicate that calls made by or on behalf of a
tax-exempt non-profit organization are not telephone solicitations. Accordingly, if the
calls were made "by or on behalf of a tax-exempt nonprofit organization," defendants
can invoke both the exemption for calls "not made for a commercial purpose," 47 C.F.R.

17

§ 64.1200(a)(3)(ii), and the exemption for calls "made by or on behalf of a tax-exempt
nonprofit organization," id. § 64.1200(a)(3)(iv).
DeJongh registered the ESG entities as tax-exempt nonprofit entities. If they
were acting on their own behalf, these exemptions would absolve ESG of liability for the
calls. But it is not clear at this stage of the litigation—as the Court will explain in detail in
the next section—that ESG made the calls on its own behalf or rather did so as an
agent of other defendants. Indeed, plaintiffs have not moved for summary judgment on
whether ESG acted as the other defendants' authorized agent; they argue that this is a
question the jury must decide. If ESG was acting as a conduit for CCL, VOMT, and
Berkley to solicit business and generate profit, then the calls can hardly be said to have
been made "by or on behalf of a tax-exempt nonprofit organization." Because a
reasonable jury could find that ESG was acting on its own and without the authorization
of CCL, VOMT, and Berkley, the Court cannot say at this juncture whether the
exemptions contained in sections 64.1200(a)(3)(ii) and 64.1200(a)(3)(iv) might shield
defendants from liability.
For this reason, the Court denies plaintiffs' motion for summary judgment
regarding the landline class. If plaintiffs successfully demonstrate at trial that ESG was
not a tax-exempt non-profit organization making calls on its own behalf, but rather made
the calls as an agent for CCL, VOMT, and Berkley, then none of the exemptions
contained in section 64.1200(a)(3)(ii)–(iv) will protect defendants from liability.
B.

Joint or vicarious liability
Defendants seek summary judgment on the basis that they cannot be held

vicariously or jointly liable for calls that ESG made. Their initial point is that plaintiffs

18

failed to plead vicarious liability adequately in their amended consolidated complaint.
Defendants continue to press this point even though the Court has already rejected it.
Defendants also argue that the evidence would not permit a reasonable jury to find
vicarious liability under any theory of agency, joint venture, or partnership.
As an initial matter, defendants take issue with plaintiffs' assertion that "courts
generally refuse to decide agency issues at summary judgment" because agency issues
must be determined by a jury except where "no competent evidence legally sufficient to
prove it has been introduced." Pls.' Mem., dkt. no. 336, at 11 & n.4 (quoting Cabrera v.
Jakabovitz, 24 F.3d 372, 386 & n.14 (2d Cir. 1994)). Although both sides argue
vigorously about this issue, they are both right to an extent: vicarious liability, like any
other issue of fact, may be adjudicated summarily only where the evidence would not
permit a reasonable jury to find for the nonmoving party. See Spitz v. Proven Winners
N.A., LLC, 759 F.3d 724, 731 (7th Cir. 2014) (internal quotation marks omitted)
("Agency is a notoriously fact-bound question, but summary judgment on the existence
of an agency relationship is still appropriate when the plaintiff fails to meet her burden in
presenting sufficient facts to show that a genuine issue of material fact exists with
respect to the agency issue.").
Defendants next argue that they may not be held liable for unlawful phone calls
ESG made to members of both classes because plaintiffs did not sufficiently allege
vicarious liability in their complaint. A plaintiff is required to allege facts sufficient to put
defendants on notice of the nature of the claims against them and allow for a plausible
inference that defendants are liable, and a plaintiff typically may not offer new and
significantly different contentions at the summary judgment stage. Whitaker v.

19

Milwaukee Cty., 772 F.3d 802, 808 (7th Cir. 2014). But "plaintiffs are not required to
plead legal theories, even in the new world of pleading that is developing in the wake of
the Supreme Court's decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007),
and Ashcroft v. Iqbal, 556 U.S. 662 (2009)." Del Marcelle v. Brown Cty. Corp., 680 F.3d
887, 909 (7th Cir. 2012) (en banc) (parallel citations omitted).
Defendants say that summary judgment should be granted in their favor because
this case is like The Siding & Insulation Co. v. Alco Vending, Inc., No. 11 C 01060, 2015
WL 1858935, at *7 (N.D. Ohio Apr. 22, 2015), in which a district court in Ohio found a
plaintiff's failure to plead agency liability fatal to his TCPA claim. In Alco Vending, the
plaintiff alleged that the defendant was directly liable for junk faxes sent in violation of
the TCPA. At the summary judgment stage, the parties were in agreement that two
others who were neither directly named nor indirectly mentioned in the complaint had
actually sent the faxes. The plaintiff, however, argued that the defendant should be
held liable under theories of vicarious liability that the plaintiff "failed to plead and raised
only in its opposition to Defendant's summary judgment motion." Id.; see also
Bridgeview Health Care Ctr., Ltd. v. Jerry Clark, Nos. 14-3728 & 15-1793, 2016 WL
1085233, at *3 n.2 (7th Cir. Mar. 21, 2016).
This case is nothing like Alco Vending. Throughout the course of litigating this
case, plaintiffs have consistently contended that defendants acted in concert and that
the phone calls were made by or on behalf of some combination of ESG, CCL, VOMT,
and Berkley. See Birchmeier, 2012 WL 7062748, at *1 (ruling on motion to dismiss;
noting that "[p]laintiffs allege that the defendants acted in concert . . . and that is
sufficient for present purposes. The whole point of plaintiffs' allegations is that it is

20

difficult to tell where one defendant stops and the next one starts."). And in their
amended consolidated complaint, plaintiffs repeatedly alleged that "[d]efendants and/or
their agents made unsolicited telephone calls" in violation of the TCPA. Am. Cons.
Compl., dkt. no. 289, ¶¶ 50, 51, 58, 59; see also id. at ¶¶ 52, 60 (alleging that
defendants "ma[de], or ha[d] or allow[ed] to be made on their behalf, the unsolicited
robocalls utilizing an artificial or prerecorded voice"). Although the particular theories of
vicarious and joint liability upon which plaintiffs ultimately rest their claims may have
become clear to defendants only more recently, plaintiffs had no obligation under
federal pleading rules to apprise defendants of their legal theories in their complaint.
The bottom line is that defendants have been on notice since near the outset of the
case that plaintiffs seek to hold them vicariously or jointly liable, and that is all plaintiffs
were required to do.
The TCPA imposes liability upon any person who makes unlawful phone calls
using an autodialer or a prerecorded message. As the FCC—which Congress vested
with the authority to promulgate rules and regulations implementing the TCPA, see 47
U.S.C. § 227(b)(2)—has declared through rulemaking and adjudicative orders, liability
for a TCPA violation may be imputed to a party that did not itself place the unlawful calls
if the party that placed the calls did so as an agent of that party. 2 In re Joint Petition
filed by Dish Network, LLC, 28 F.C.C.R. 6574, 6593 ¶ 48 (2013) (hereinafter "Dish
Network"). The FCC calls such principals "sellers." See 47 C.F.R. § 64.1200(f)(9). As
both parties acknowledge, the FCC has made clear that federal common law agency

2

Under the Hobbs Act, the Court must apply any final FCC order that governs the
matter at issue. CE Design, Ltd. v. Prism Bus. Media, Inc., 606 F.3d 443, 450 (7th Cir.
2010).
21

principles apply in the TCPA context. Dish Network, 28 F.C.C.R. at 6574 ¶ 1. This
means that a seller may be vicariously liable in the context of an agency relationship,
which is a "fiduciary relationship that arises when one person (a 'principal') manifests
assent to another person (an 'agent') that the agent shall act on the principal's behalf
and subject to the principal's control, and the agent manifests assent or otherwise
consents so to act." Restatement (Third) Agency § 1.01 (2006). 3
Berkley and VOMT contend that they cannot be held vicariously liable under any
circumstances because they are not sellers. The FCC has defined a "seller" as "the
person or entity on whose behalf a telephone call or message is initiated for the purpose
of encouraging the purchase or rental of, or investment in, property, goods, or services,
which is transmitted to any person." 47 C.F.R. § 64.1200(f)(9). VOMT suggests that it
is not a seller because it does not sell or advertise any products to consumers, nor does
it own or operate CCL's cruises. Berkley argues that it is not a seller because neither
ESG's recorded messages nor CCL's representatives marketed Berkley's timeshare
products or encouraged call recipients to purchase them. Both VOMT and Berkley also
point out that their names were not mentioned during any of the calls.
If these arguments were valid, an entity could avoid TCPA liability by
empowering an agent to make prerecorded calls encouraging consumers to visit the
principal's store so long as the agent did not say the principal's name and did not
attempt to make a sale on the phone call. This narrow a reading of the TCPA would
undermine the law's purpose, and it would directly contradict the FCC's broad definition
of commercial messages. See In re Rules & Regulations Implementing the Tel.
3

The federal common law of agency is in accord with the third Restatement. See Opp
v. Wheaton Van Lines, Inc., 231 F.3d 1060, 1064 (7th Cir. 2000).
22

Consumer Prot. Act of 1991, 18 F.C.C.R. 14014, 14098 (2003). As explained in the
previous section of this opinion, the evidence in the present case would permit a
reasonable jury to determine that one purpose of the calls was to convince consumers
to take a nominally free cruise through CCL during which they would spend money on
food, drink, and other products CCL could sell them. A reasonable jury could also
conclude that one purpose of the calls was to help CCL sell an upgraded cruise
package that would fulfill VOMT's lead-generation obligations to Berkley and bring
customers to Berkley's facilities for timeshare presentations. If the calls were made to
increase the flow of consumers to CCL's cruises and Berkley's timeshare presentations,
then they were made in order to encourage consumers to engage in the type of
economic activity that renders VOMT and Berkley "sellers" who are vicariously liable for
their agents' violations of the TCPA.
The question, then, is whether the evidence would permit a reasonable jury to
find that CCL, VOMT, and Berkley were party to agency relationships under federal
common law agency principles such that they may be held liable for ESG's actions in
making the calls. Plaintiffs argue that CCL expressly or impliedly authorized ESG to act
as its agent in making the unlawful calls. They also argue that VOMT is liable because
VOMT and CCL are one and the same or because VOMT authorized CCL to enlist ESG
to make unlawful calls. Plaintiffs further contend that Berkley gave VOMT actual or
apparent authority to launch the unlawful call campaign and conscript ESG as a
subagent or that Berkley at least should be held liable based on a ratification theory,
because it knowingly accepted the benefits that flowed from the call campaign in the
form of increased business. Plaintiffs alternatively suggest that in their concerted effort

23

to put together the call campaign, CCL, VOMT, and Berkley were effectively a joint
venture. Accordingly, they argue that each defendant should be liable for the unlawful
acts ESG took in furtherance of the joint venture.
An entity may be held vicariously liable for violations of the TCPA "under a broad
range of agency principles, including not only formal agency, but also principles of
apparent authority and ratification." Dish Network, 28 F.C.C.R. at 6582 ¶ 28. "Formal
agency," as the FCC calls it, is also known as "actual authority." Actual authority may
be express or implied. Bridgeview Health Care, 2016 WL 1085233, at *3. An agent has
express actual authority when the principal expressly grants the agent the authority to
perform a particular act. "While express actual authority is proven through words,
implied actual authority is established through circumstantial evidence." Id. at 6. A
principal grants implied actual authority to an agent when the principal's reasonably
interpreted words or conduct would cause an agent to believe that the principal
consents to have an act done on her behalf. Opp, 231 F.3d at 1064. "To create
apparent authority, the principal must speak, write, or otherwise act toward a third
party." Bridgeview Health Care, 2016 WL 1085233, at *3. Finally, ratification occurs
when an agent acts for a principal's benefit and the principal does not repudiate the
agent's actions. Sphere Drake Ins. Ltd. v. Am. Gen. Life Ins. Co., 376 F.3d 664, 677
(7th Cir. 2004). It "requires that the principal have full knowledge of the facts and the
choice to either accept or reject the benefit of the transaction." NECA-IBEW Rockford
Local Union 364 Health & Welfare Fund v. A&A Drug Co., 736 F.3d 1054, 1059 (7th Cir.
2013).
Defendants are correct that the evidence does not support vicarious liability for

24

CCL, VOMT, or Berkley based on a theory of apparent authority. "Apparent authority is
the power held by an agent or other actor to affect a principal's legal relations with third
parties when a third party reasonably believes the actor has authority to act on behalf of
the principal and that belief is traceable to the principal's manifestations." Restatement
(Third) of Agency § 2.03. The conduct of the alleged principal, not that of the alleged
agent, determines whether the principal can be held liable based on a theory of
apparent authority. See Bridgeview Health Care, 2016 WL 1085233, at *3 ("[The
principal's] conduct must make the third party reasonably believe that he has consented
to an action done on his behalf by someone purporting to act for him."). In this case,
when the prerecorded messages stated that call recipients who completed the surveys
would qualify for a cruise, they arguably suggested that ESG was calling on CCL's
behalf. But ESG made this representation, not CCL. And plaintiffs cite no
representations or conduct along these lines by Berkley and VOMT either. They also
point to no evidence that third parties were aware of the contractual relationships
between ESG and CCL, CCL and VOMT, or VOMT and Berkley. The Court is
unpersuaded that merely entering into a contract authorizing calls to be made amounts
to taking action "toward a third party" sufficient to give rise to apparent authority where
there is no evidence of any third party's awareness of this.
The evidence could, on the other hand, support a finding by a reasonable jury
against each of the defendants on other bases. For example, plaintiffs have adduced
evidence that would permit a reasonable jury to find that CCL expressly or impliedly
granted ESG the actual authority to make unlawful calls on CCL's behalf. The supplier
agreements between CCL and ESG provide that ESG "shall provide [CCL] an exact

25

telephone script along with an exact audio file of each survey," Pls.' Ex. 16, dkt. no. 3381, at 54, and evidence in the record shows that on at least one occasion, CCL's
attorneys proposed edits to the survey script being used. A reasonable factfinder could
infer from this and other evidence in the record that CCL authorized the call campaign
and had control over the manner and means by which ESG conducted it.
There is also evidence that would permit a reasonable jury to find VOMT liable
for the unlawful calls because it is either the alter ego of CCL or gave CCL and ESG
actual authority to take action on its behalf. VOMT and CCL share identity of ownership
and management; indeed, Daniel Lambert served as the Rule 30(b)(6) witness for both
CCL and VOMT, and he testified that it was difficult even for him to clearly distinguish
his role with VOMT from his role with CCL. Lambert and James Verrillo, the founders
and operators of CCL and VOMT and the only employees of VOMT, used the same
telephone lines and CCL email accounts to conduct business for both companies. In
addition, VOMT expressly granted CCL (in a contract Lambert negotiated on both
companies' behalfs) the authority to conduct telemarketing and contract with subagents
in furtherance of the CCL–VOMT marketing arrangement. "A subagent is a person
appointed by an agent to perform functions that the agent has consented to perform on
behalf of the agent's principal and for whose conduct the appointing agent is
responsible to the principal." Restatement (Third) of Agency § 3.15(1). An agent may
appoint a subagent if the agent has actual or apparent authority from the principal to do
so. See id. § 3.15(2). A reasonable jury could find that VOMT and CCL are one and
the same, and that together they granted actual authority directly to ESG to make the
calls at issue. Even if a jury determined that VOMT and CCL are distinct entities, it

26

could reasonably find that VOMT granted actual authority to CCL to enlist ESG as a
subagent.
Similarly, a reasonable jury could conclude from the evidence that Berkley
impliedly authorized VOMT to act as its agent and enlist the subagents that carried out
the call campaign. The evidence permits the reasonable conclusion that Berkley
expressly authorized VOMT to seek out vendors to generate leads for its timeshare
products, that VOMT and CCL are one and the same or VOMT expressly authorized
CCL to create a package and enlist others to offer that package in a call campaign, and
that CCL expressly authorized ESG to make phone calls offering a free cruise. Even
considering the fact that all of the contracts expressly prohibited agents and subagents
from violating the law, a reasonable jury could find vicarious liability based on grants of
actual authority.
The evidence would also permit a reasonable jury to find that CCL, VOMT, and
Berkley ratified acts that ESG undertook on their behalf by knowingly accepting the
benefits that flowed from them. Ratification occurs when a principal knowingly chooses
to accept the benefits of unauthorized actions an agent takes on the principal's behalf.
See NECA-IBEW Rockford, 736 F.3d at 1059. 4 Specifically, there is evidence that
would support a reasonable finding that each of the three defendants now seeking
summary judgment was aware of the call campaign and the fact that the campaign

4

In a recent decision addressing agency principles in the TCPA context, the Seventh
Circuit stated that "[t]here are three types of agency: (1) express actual authority, (2)
implied actual authority, (3) apparent authority." Bridgeview Health Care, 2016 WL
1085233, at 3. But the Seventh Circuit has consistently recognized ratification as a
valid theory of agency liability, and the Court does not understand Bridgeview Health
Care to call its validity into question or suggest that ratification cannot give rise to
liability for violations of the TCPA.
27

could drum up business for it. There is even evidence that all three of these defendants
became aware of the possibility that some or all of the calls being made were unlawful
under the TCPA and that each of them continued to accept business flowing from the
campaign. Specifically, Berkley's Rule 30(b)(6) witness testified that in May 2012,
Berkley became aware (from a Fox News report and an email from Lambert) that call
recipients were complaining about the calls and that a lawsuit might be imminent. The
call campaign continued through August, and although Berkley points to evidence that it
made an attempt to either cease any unlawful conduct or no longer receive referrals
arising out of unlawful calls, it does not identify evidence that it took any steps to ensure
that it would no longer receive leads generated through potentially unlawful calls. A
reasonable jury could conclude from this evidence that CCL, VOMT, and Berkley all
knew that ESG was placing unlawful calls to gin up business for them and accepted the
benefits from this campaign.
Defendants are not wrong to suggest that plaintiffs have, at several points in their
statements of material facts submitted in connection with the pending motions,
overstated the evidence that supports their position. But plaintiffs have nonetheless
adduced evidence that, when characterized appropriately, would permit a reasonable
jury to find CCL, VOMT, and Berkley vicariously liable for unlawful phone calls made by
ESG. For these reasons, defendants are not entitled to summary judgment on the
grounds they cite.
D.

Stone's and Parkes's phone records
Finally, defendants contend that summary judgment should be granted in their

favor on the claims of Parkes and Stone based on those plaintiffs' phone records.

28

Specifically, defendants point out that Parkes claims to have received five calls via his
cellular phone, but his phone records show that he did not listen to the calls long
enough to hear a reference to a free cruise or to speak to a CCL representative. Parkes
also claims to have actually spoken to a CCL representative only during a call made to
his business line, a call that does not fit within the class definition. Defendants also
contend that summary judgment should be granted in their favor "as to the entire
Residential Landline Class" because Stone, the only named plaintiff to claim
membership in that class, claims to have received two landline calls that are not
reflected in either her phone records or ESG's records. See CCL's Reply, dkt. no. 411,
at 25. Defendants argue that this makes Stone an inadequate class representative, and
they seek summary judgment due to there being "no named Plaintiff with standing under
the Residential Landline class, and because the time to amend pleadings has long
passed." Id.
As an initial matter, defendants' latter challenge is procedurally improper.
Defendants are seeking summary judgment on claims belonging to an entire class of
plaintiffs based on the alleged inadequacy of its named representative. If Stone is an
inadequate representative because her claim is infirm, the appropriate course of action
would be to dismiss her individual claim and allow the plaintiffs to propose a different
class representative.
But even if summary judgment on the claims of the entire class were an
appropriate procedural mechanism to deal with this issue, it would not matter. Parkes
and Stone have viable claims, and they are adequate class representatives. In
defendants' view, class members may prevail on TCPA claims against defendants only

29

by producing phone records that show they received a call and heard a prerecorded
message offer a free cruise. But defendants' arguments are premised on a misreading
of the class definitions, which are not as narrow as defendants seem to think. The
classes include "[a]ll persons . . . to whom (1) one or more telephone calls were made,"
irrespective of whether those persons heard the messages in their entirety or asked to
be transferred to a CCL representative. Moreover, the classes include all such persons:
whose (i) telephone number appears in Defendants' records of those calls
and/or the records of their third party telephone carriers or the third party
telephone carriers of their call centers or (ii) own records prove that they
received the calls—such as their telephone records, bills, and/or
recordings of the calls—and who submit an affidavit or claim form if
necessary to describe the content of the call.
Birchmeier, 302 F.R.D. at 256 (emphasis added). Importantly, use of the words "such
as" indicates that the definition contains a non-exhaustive list of the methods by which
class membership may be shown. As the Court explained in its order granting class
certification, "[s]hould a putative class member's records fail to indicate that she
received a political survey call with a free cruise incentive, she may in addition to her
records provide a sworn statement at an appropriate point during the litigation." Id. at
250.
As discussed in an earlier section of this decision, Parkes did not need to hear
any defendant's name or stay on the line long enough to hear the free cruise offer in
order for the call to be unlawful, nor did he need to be connected with CCL
representatives. And although neither Stone's nor defendants' phone records reflect
that Stone received calls to her landline, other evidence, including her testimony and
complaints she filed with the Washington Attorney General's Office, would permit a
reasonable jury to conclude that she received such calls. The Court therefore denies
30

defendants' summary judgment motions insofar as they challenge the evidence
supporting Stone's and Parkes's claims.
Conclusion
For the foregoing reasons, the Court grants plaintiffs' motion for partial summary
judgment [dkt. no. 336] in part, finding that plaintiffs have established the unlawfulness
of calls with prerecorded messages made to the cellular phone class. The Court
otherwise denies plaintiffs' motion and also denies defendants' motions for summary
judgment [dkt. nos. 340, 342, 344]. The case is set for a status hearing on April 25,
2016 at 9:00 a.m. to discuss a schedule for further proceedings, including a trial date.

________________________________
MATTHEW F. KENNELLY
United States District Judge
Date: April 18, 2016

31