Petri v. Mercy Health

Filing 43

MEMORANDUM AND ORDER. (See Full Order.) Because there is no evidence that an agency relationship existed between Valarity and Mercy, and because Petri has not alleged that any of Mercy's actions directly violated the TCPA, I will grant Mercy& #039;s motion for summary judgment. Accordingly, IT IS HEREBY ORDERED that for the reasons discussed above, defendant's motion for summary judgment 27 is GRANTED. IT IS FURTHER ORDERED that defendant's motion to strike 41 DENIED as moot. A separate Judgment in accordance with this Memorandum and Order is entered this same date. Signed by District Judge Catherine D. Perry on 12/5/2016. (CBL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
JOSEPH PETRI, individually and on
behalf of all others similarly situated,
Plaintiff,
vs.
MERCY HEALTH D/B/A MERCY
HOSPITAL ST. LOUIS,
Defendant.

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Case No. 4:15 CV 1296 CDP

MEMORANDUM AND ORDER
Plaintiff Joseph Petri claims that defendant Mercy Health violated the
Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq., when Valarity, LLC,
a company Mercy retained to collect its debts, called his cell phone using an
autodialer without his prior express consent. Now before me is Mercy’s motion
for summary judgment. After careful consideration, I conclude that Petri has failed
to provide evidence sufficient to create a disputed issue of material fact that
Valarity acted as Mercy’s agent such that Mercy may be held liable for Valarity’s
conduct. Petri has made no claims regarding Mercy’s own actions. Therefore, I
will grant Mercy’s motion for summary judgment.

Background1
In July 2010, Mercy entered into a Collection Services Agreement with
Valarity, LLC. Under the agreement, Valarity was to perform various collection
services for Mercy including “telephone calls and requests for payment.” (Def.
SUMF, Ex. B-1, p. 8). The agreement contains a provision stating that Valarity
would be acting as an independent contractor for Mercy and that nothing in the
agreement should be deemed to create an agency relationship between them. It
further states that each party would be solely responsible for the acts, omissions,
and control of its own employees. Mercy itself expressly disclaims the existence
of any agency relationship between the entities and states, by affidavit, that
Valarity had no authority to act on behalf of Mercy and Mercy had no authority to
control the activities or actions of Valarity.

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Petri has not offered any statement of material facts that are in dispute as required by
Local Rule 4.01(E) and Federal Rule of Civil Procedure 56(c)(1). Local Rule 4.01(E) provides:
“The opposing party also shall note for all disputed facts the paragraph number from movant's
listing of facts. All matters set forth in the statement of the movant shall be deemed admitted for
purposes of summary judgment unless specifically controverted by the opposing party.” “Courts
have neither the duty nor the time to investigate the record in search of an unidentified genuine
issue of material fact to support a claim or a defense.” Libel v. Adventure Lands of America, Inc.,
482 F.3d 1028, 1032 (8th Cir. 2007) (internal quotation and citation omitted). Accordingly,
Mercy’s Statement of Facts is deemed admitted because it was not controverted by Petri. Turner
v. Shinseki, 2010 WL 2555114, at *2 (E.D. Mo. June 22, 2010) (citing Deichmann v. Boeing Co.,
36 F.Supp.2d 1166, 1168 (E.D.Mo.1999)), aff'd, 232 F.3d 907 (8th Cir.2000).
Petri’s failure to respond properly to the motion for summary judgment does not mean
that summary judgment is automatically granted for Mercy. Mercy’s facts must still establish
that it is entitled to judgment as a matter of law. Tyler v. Missouri Baptist Med. Ctr., No.
4:14CV1917 HEA, 2015 WL 6529966, at *1 n.1 (E.D. Mo. Oct. 27, 2015).

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In his complaint, Petri alleges that Valarity used an automated dialing
system to call his cellular phone approximately 26 times between February and
April 2014. The calls were made to collect debt that “supposedly arose from
medical services claimed to be provided by [Mercy] to [Petri], which was
ultimately found to be a mistake.” (Complaint, ¶ 8). He claims Valarity’s conduct
violated the TCPA at 47 U.S.C. 227(b)(1), and because Valarity was acting on
behalf of and as an agent for Mercy, Mercy should be held liable here.2 In his
opposition to summary judgment, Petri has included references to corporate and
tax records that he claims show that Valarity is owned by Mercy.
Summary Judgment Standard
In determining whether to grant summary judgment, the court views the
facts—and any inferences from those facts—in the light most favorable to the
nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986). The movant bears the burden of establishing that (1) it is
entitled to judgment as a matter of law and (2) there are no genuine issues of
material fact. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). Once the movant has met this burden, however, the nonmoving party may
not rest on the allegations in its pleadings but must, by affidavit and other
evidence, set forth specific facts showing that a genuine issue of material fact
2

Petri brought a previous lawsuit based on the same or similar conduct against Valarity. That
matter was settled by the parties. See Petri v. Valarity, LLC, No. 4:15cv000072 (E.D. Mo.).

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exists. Fed. R. Civ. P. 56(c)(1), (e). Where a factual record taken as a whole could
not lead a rational trier of fact to find for the nonmoving party, there is no genuine
issue for trial. Matsushita, 475 U.S. at 587.
Analysis
Petri alleges that Valarity’s calls to his cell phone were made with an
autodialer without his prior express consent and therefore in violation of 47 U.S.C.
§ 227(b). He claims that Mercy is vicariously liable for Valarity’s violations
because Valarity was acting as Mercy’s agent. In its motion for summary
judgment Mercy argues that it cannot be liable for Valarity’s actions because
Valarity was not its agent.
Courts should apply federal common-law principles of agency in
determining the existence of vicarious liability for TCPA violations. In re Joint
Petition Filed by Dish Network, LLC, 28 F.C.C.R. 6574 (2013). See CambellEwald Co. v. Gomez, 136 S.Ct. 663, 673 (2016); Golan v. Veritas Entertainment,
LLC, No. 4:14CV00069 , 2016 WL 880402, at *4 (E.D. Mo. March 8, 2016).
Federal common law generally follows the Restatement of Agency. Golan, 2016
WL 880402, at *4 (citing Opp v. Wheaton Van Lines, Inc., 231 F.3d 1060, 1064
(7th Cir. 2000).
“Agency is the fiduciary relationship that arises when one person (a
‘principal’) manifests assent to another person (an ‘agent’) that the agent shall act
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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) Of Agency
§ 1.01 (2006); see also S. Pac. Transp. Co. v. Cont’l Shippers Ass’n, Inc., 642 F.2d
236, 238 (8th Cir. 1981) (“[a]gency is a legal concept that depends upon the
existence of certain factual elements: (1) the manifestation by the principal that the
agent shall act for him; (2) the agent’s acceptance of the undertaking; and (3) the
understanding of the parties that the principal is to be in control of the
undertaking”). “The party asserting that a relationship of agency exists generally
has the burden in litigation of establishing its existence.” Restatement (Third) of
Agency § 1.02 cmt. d; see also Nippon Yusen Kaisha v. FIL Lines USA Inc., 977 F.
Supp. 2d 343, 350 (S.D.N.Y. 2013) (applying federal common law of agency and
noting that party asserting agency has burden of proof as to its existence).
Mercy argues that Valarity was not its authorized agent and points to the
language of its collections agreement with Valarity, which contains a provision
explicitly stating that Valarity was not subject to Mercy’s control and was acting as
an independent contractor. [ECF #28-1, p. 2]. Mercy has also provided an
affidavit from one of its vice presidents, confirming that, as stated in the

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agreement, Valarity did not have the authority to act on Mercy’s behalf and Mercy
had no right to control Valarity. [ECF #28-2, p. 1].3
In arguing that Valarity is Mercy’s authorized agent, the only evidence
submitted by Petri is an affidavit from his attorney, John Yanchunis, attesting that
he found corporate and tax records on the internet indicating Mercy is the parent
company of Valarity. This is not enough to create an issue of material fact as to
whether Valarity was acting as Mercy’s agent. Even assuming the records
submitted by Petri constitute admissible evidence, the Restatement provides that,
without more, evidence of a “common legal relationship,” such as the relationship
between “parent corporations and their subsidiaries” is not enough to create an
agency relationship. Restatement (Third) Of Agency § 1.02. A close look at the
documents cited by Yanchunis reveal that they provide evidence only as to the
legal and tax relationship between Mercy and Valarity. They establish nothing
about the day-to-day business relationship between the companies, and they
provide no evidence that Mercy controlled Valarity’s collections activities. As
such, Petri has provided no evidence to indicate that Valarity was acting as
Mercy’s authorized agent when it violated the TCPA.
Petri next cursorily argues that even if a formal agency relationship did not
exist between Valarity and Mercy, an agency by ratification was created when
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Notably, the affidavit stops short of directly averring that Mercy did not control the actions of
Valarity.

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Mercy accepted the benefits of Valarity’s actions. Petri is correct that in pursuing
TCPA claims, a formal agency relationship is not required to establish a party's
vicarious liability for the illegal acts of a third-party; plaintiffs can also employ
principles of ratification and apparent authority. Golan, 2016 WL 880402, at *4
(citing Dish Network, 28 F.C.C.R. at 6586-87). “Ratification is the affirmance of a
prior act done by another, whereby the act is given effect as if done by an agent
acting with actual authority.” Restatement (Third) Of Agency § 4.01 (2006). Petri
argues that Mercy ratified Valarity’s actions by accepting money obtained in
connection with Valarity’s calls. But Petri has neither alleged in his complaint nor
submitted evidence to show that he paid any money to Valarity or Mercy. In fact,
in his complaint, Petri states that Valarity’s attempts to collect money from him
turned out to be “mistaken.” Even if there were evidence that Mercy received
money collected from Petri by Valarity, Mercy could not have ratified Valarity’s
conduct because there is no evidence Mercy knew Valarity’s activities violated the
TCPA. A party is not “is not bound by [a] ratification if it was made without
knowledge of material facts about the act of the agent….” Id. at § 4.06 cmt. b.; see
also Toney v. Quality Resources, Inc., 75 F. Supp.3d 727, 745 (N.D. Ill. 2014).
Here, the collection agreement between Valarity and Mercy stated that Valarity
agreed to perform its services in compliance with all applicable federal laws and
regulations. Petri has not presented evidence indicating Mercy was aware of
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collections services by Valarity that violated the TCPA. In light of the above,
there is no evidence that Mercy created an agency by ratification.
Rule 56(c) mandates the entry of summary judgment against a party who
“fails to make a showing sufficient to establish the existence of an element
essential to that party's case, and on which that party will bear the burden of proof
at trial.” Celotex, 477 U.S. at 322-23. Because there is no evidence that an agency
relationship existed between Valarity and Mercy, and because Petri has not alleged
that any of Mercy’s actions directly violated the TCPA, I will grant Mercy’s
motion for summary judgment.
Accordingly,
IT IS HEREBY ORDERED that for the reasons discussed above,
defendant’s motion for summary judgment [27] is GRANTED.
IT IS FURTHER ORDERED that defendant’s motion to strike [41]
DENIED as moot.
A separate Judgment in accordance with this Memorandum and Order is
entered this same date.

CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 5th day of December, 2016.
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