Bowler et al v. Monitronics International, Inc. et al
ORDER GRANTING SUMMARY JUDGMENT: Defendant UTC Fire & Security Americas Corporation, Inc.'s Motion for Summary Judgment ( 735 in 1:13-md-2493 ALL) and Defendant Honeywell's Motion for Summary Judgment ( 761 in 1:13-md-2493 ALL) are GRANT ED. Defendants UTC Fire & Security Americas Corporation, Inc. and Honeywell International, Inc. are DISMISSED from these actions. Signed by District Judge John Preston Bailey on 12/22/2016. Associated Cases: 1:13-md-02493-JPB-JES et al.(kac)(Copy to pro se parties by cm/rrr)
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF WEST VIRGINIA
IN RE: MONITRONICS
PROTECTION ACT LITIGATION
MDL NO. 1:13-MD-2493
---------------------------------------THIS DOCUMENT RELATES TO ALL CASES
ORDER GRANTING SUMMARY JUDGMENT
Pending before this Court are Defendant UTC Fire & Security Americas Corporation,
Inc.’s Motion for Summary Judgment [Doc. 735] and Defendant Honeywell’s Motion for
Summary Judgment [Doc. 761]. Both motions have been fully briefed and are ripe for
Defendants UTC Fire and Security Americas Corporation, Inc. (“UTC”) and
Honeywell International, Inc. (“Honeywell”) seek summary judgment on the issue of liability
in this multi-district litigation case, consisting of, at this time, 30 cases.
All cases are filed seeking damages under the Telephone Consumer Protection Act,
47 U.S.C. §§ 227(b) and (c). These cases contain allegations that UTC and/or Honeywell
are vicariously liable for calls made in violation of the Act. There are no allegations that
UTC or Honeywell actually placed the telemarketing calls.
Rule 56(e) of the Federal Rules of Civil Procedure provides that “an opposing party
may not rely merely on allegations or denials in its own pleading; rather, its response must–
by affidavits or as otherwise provided in this rule– set out specific facts showing a genuine
issue for trial. If the opposing party does not so respond, summary judgment should, if
appropriate, be entered against that party.”
Rule 56 further provides that summary judgment is appropriate “if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits,
if any, show that there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” FED. R. CIV. P. 56(c); see Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). A genuine issue exists “if the evidence is such that a
reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 250 (1986). Thus, the Court must conduct “the threshold
inquiry of determining whether there is the need for a trial -- whether, in other words, there
are any genuine factual issues that properly can be resolved only by a finder of fact
because they may reasonably be resolved in favor of either party.” Anderson, 477 U.S.
Additionally, the party opposing summary judgment “must do more than simply show
that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). That is, once the movant has
met its burden to show absence of material fact, the party opposing summary judgment
must then come forward with affidavits or other evidence demonstrating there is indeed a
genuine issue for trial.
Fed. R. Civ. P. 56(c); Celotex Corp., 477 U.S. at 323-25;
Anderson, 477 U.S. at 248. “If the evidence is merely colorable, or is not significantly
probative, summary judgment may be granted.” Anderson, 477 U.S. at 249 (citations
“The TCPA was enacted in response to ‘[v]oluminous consumer complaints about
abuses of telephone technology.’ Mims v. Arrow Financial Services, LLC, 132 S.Ct. 740,
744 (2012). In Mims, the Supreme Court summarized Congress' findings on the matter:
In enacting the TCPA, Congress made several findings .... ‘Unrestricted
telemarketing,’ Congress determined, ‘can be an intrusive invasion of
TCPA, 105 Stat. 2394, note following 47 U.S.C. § 227
(Congressional Findings) (internal quotation marks omitted). In particular,
Congress reported, ‘[m]any consumers are outraged over the proliferation of
intrusive, nuisance [telemarketing] calls to their homes.’
quotation marks omitted). ‘[A]utomated or prerecorded telephone calls’ made
to private residences, Congress found, were rightly regarded by recipients as
‘an invasion of privacy.’ Ibid. (internal quotation marks omitted).
Id. at 745.
“The unanimous decision in Mims also isolated four practices that the TCPA was
designed to halt:
[T]he TCPA principally outlaws four practices.
First, the Act makes it
unlawful to use an automatic telephone dialing system [(‘autodialer’)] or an
artificial or prerecorded voice message, without the prior express consent of
the called party, to call any ... cellular telephone, or other service for which
the receiver is charged for the call. See 47 U.S.C. § 227(b)(1)(A). Second,
the TCPA forbids using artificial or prerecorded voice messages to call
residential telephone lines without prior express consent. § 227(b)(1)(B).
Third, the Act proscribes sending unsolicited advertisements to fax machines.
§ 227(b)(1)(C). Fourth, it bans using automatic telephone dialing systems to
engage two or more of a business' telephone lines simultaneously.
Id. at 745.” Mey v. Honeywell Intern., Inc., 2013 WL 1337295, *1 (S.D. W.Va. March 29,
2013) (Copenhaver, J).
“The TCPA is a remedial statute and thus entitled to a broad construction. See, e.g.,
Holmes v. Back Doctors, Ltd., 695 F.Supp.2d 843, 854 (S.D. Ill. 2010) (‘It is true that ...
the TCPA is a remedial statute.’). As such, it ‘should be liberally construed and should be
interpreted (when that is possible) in a manner tending to discourage attempted evasions
by wrongdoers.’ Scarborough v. Atlantic Coast Line R. Co., 178 F.2d 253, 258 (4th Cir.
1950). At the same time, a remedial purpose ‘will not justify reading a provision “more
broadly than its language and the statutory scheme reasonably permit.”’ Touche Ross &
Co. v. Redington, 442 U.S. 560, 578 (1979) (quoting SEC v. Sloan, 436 U.S. 103, 116
(1978)).” Id. See also In re Monitronics Intern., Inc., Tel. Consumer Protection Act
Litigation, 2015 WL 1964951, *3 (N.D. W.Va. April 30, 2015) (Keeley, J) (same).
Movants do not dispute that there can be vicarious liability on the part of a seller
under the TCPA, nor could they. Smith v. State Farm Mut. Auto Ins. Co., 30 F.Supp.3d
765 (N.D. Ill. 2014); Kristensen v. Credit Payment Svcs., 12 F.Supp.3d 1292 (D.Nev.
2014); Mey v. Honeywell Intern., Inc., 2013 WL 1337295 (S.D. W.Va. March 29, 2013);
Cunningham v. Kondaur Capital, 2014 WL 8335868 (M.D. Tenn. Nov. 19, 2014), report
and recommendation approved, 2015 WL 1412737 (M.D. Tenn. Mar. 26, 2015).
“In Charvat v. EchoStar Satellite, LLC, 630 F.3d 459, 468 (6th Cir. 2010), the Sixth
Circuit was faced with the issue of whether the TCPA and its accompanying regulations
permitted a plaintiff to recover damages under Sections 227(b) and (c) from a defendant
that did not place any illegal calls but whose independent contractors did so in attempts to
sell the products and services of the defendant. The Sixth Circuit invoked the doctrine of
primary jurisdiction and referred the matter to the Federal Communications Commission
(“FCC”) to allow the agency to interpret certain provisions of the TCPA and its
accompanying regulations. The FCC issued a declaratory ruling clarifying that, even
though a seller may not have initiated or made a call under the TCPA, the seller may
nonetheless be vicariously liable under the TCPA based on federal common law principles
of agency for violations of Sections 227(b) and (c) that are committed when a third-party
telemarketer initiates or places an unlawful call on behalf of the seller. In re Dish Network,
LLC, 28 FCC Rcd. 6574, 2013 WL 1934349 (May 9, 2013).” Cunningham v. Kondaur
Capital, 2014 WL 8335868, at *5 (M.D. Tenn. Nov. 19, 2014), report and recommendation
approved, 2015 WL 1412737 (M.D. Tenn. Mar. 26, 2015).
The FCC opined that “a seller cannot avoid liability simply by delegating placing the
call to a third-party. The FCC determined that ‘while a seller does not generally “initiate”
calls made through a third-party telemarketer within the meaning of the TCPA, it
nonetheless may be held vicariously liable under federal common law principles of agency
for violations of [ ] section 227(b) ... that are committed by third-party telemarketers.’ See
id. at 6574. This includes ‘a broad range of agency principles, including not only formal
agency, but also principles of apparent authority and ratification.’ Id. at 6584.” Hossfeld
v. Gov't Employees Ins. Co., 88 F. Supp. 3d 504, 510 (D. Md. 2015) (Quarles, J).
The FCC also stated:
[T]he seller is in the best position to monitor and police TCPA compliance by
third-party telemarketers. . . . We thus agree that, consistent with the
statute's consumer protection goals, potential seller liability will give the seller
appropriate incentives to ensure that their telemarketers comply with our
rules. . . . By contrast, allowing the seller to avoid potential liability by
outsourcing its telemarketing activities to unsupervised third parties would
leave consumers in many cases without an effective remedy for
telemarketing intrusions. This would particularly be so if the telemarketers
were judgment proof, unidentifiable, or located outside the United States, as
is often the case. . . . Even where third-party telemarketers are identifiable,
solvent, and amenable to judgment, limiting liability to the telemarketer that
physically places the call would make enforcement in many cases
substantially more expensive and less efficient, since consumers (or law
enforcement agencies) would be required to sue each marketer separately
in order to obtain effective relief.
Melito v. Am. Eagle Outfitters, Inc., 2015 WL 7736547, at *5 (S.D.N.Y. Nov. 30, 2015),
quoting 28 FCC Rcd., at 6588.
“Even if Chevron1 deference does not apply to that ruling because it arguably does
not have the force of law and arguably was not promulgated under the FCC's rulemaking
authority, Skidmore2 deference applies because the FCC's reasoning is sound.”
Kristensen v. Credit Payment Servs., 12 F.Supp.3d 1292, 1300 (D. Nev. 2014).
In this case, however, the parties have agreed that the FCC determination is entitled
to Chevron deference.
The plaintiffs do not contend that either movant is directly liable, nor could they.
“The FCC's ruling in In re Dish Network, LLC clearly indicates that, in the context of
telemarketing telephone calls [and text messages], direct liability under the TCPA applies
only to entities that initiate the phone calls:
Our rules have long drawn a distinction between the telemarketer who
initiates a call and the seller on whose behalf a call is made. In accordance
with those rules, as we explain below, we clarify that a seller is not directly
liable for a violation of the TCPA unless it initiates a call, but may be held
vicariously liable under federal common law agency principles for a TCPA
violation by a third-party telemarketer.
28 F.C.C. Rcd. at 6582, ¶ 24.” Cunningham v. Kondaur Capital, 2014 WL 8335868
(M.D. Tenn. November 19, 2014).
“Direct liability under the TCPA, however, applies only to entities that ‘initiate’ the
telemarketing calls. See In re Joint Petition filed by Dish Network, LLC, 28 F.C.C.R.
Chevron v. Natural Res. Def. Council, 467 U.S. 837 (1984).
Skidmore v. Swift & Co., 323 U.S. 134 (1944).
6574, 6582 ¶ 24 (2013) (hereinafter, the “FCC Ruling” or “Dish Network”) (“[W]e clarify that
a seller is not directly liable for a violation of the TCPA unless it initiates a call ....”); Golan
v. Veritas Entm't, LLC, 2014 WL 2095310, at *4 (E.D. Mo. May 20, 2014) (“[A] seller is not
directly liable for a TCPA violation unless it initiates [the] call.”). A person or entity “initiates”
a telephone call when “it takes the steps necessary to physically place a telephone call.”
See FCC Ruling, 28 F.C.C.R. at 6583 ¶ 26. Accordingly, a seller generally does not
“initiate” calls placed by third-party telemarketers. See id. at 6593 ¶ 48.” Smith v. State
Farm Automobile Ins. Co., 30 F.Supp.3d 765, 771 (N.D. Ill. 2014).
The FCC concluded in DISH Network that “a seller does not generally ‘initiate’ calls
made through a third-party telemarketer within the meaning of the TCPA,” and may only
“be held vicariously liable under federal common law principles of agency for violations ...
that are committed by third-party telemarketers,” Palm Beach Golf Ctr.- Boca, Inc. v.
John G. Sarris, D.D.S., P.A., 781 F.3d 1245, 1255 (11th Cir. 2015).
While there can be no direct liability on the part of a seller, “a seller may be liable for
violations by its representatives 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 6584.
“The classical definition of ‘agency’ contemplates ‘the 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.” Potential
liability under general agency-related principles extends beyond classical agency, however.
A principal may be liable in circumstances where a third party has apparent (if not actual)
authority. Such ‘[a]pparent authority holds a principal accountable for the results of thirdparty beliefs about an actor's authority to act as an agent when the belief is reasonable and
is traceable to a manifestation of the principal.’ Other principles of agency law may support
liability in particular cases. For example, a seller may be liable for the acts of another under
traditional agency principles if it ratifies those acts by knowingly accepting their benefits.
Such ratification may occur ‘through conduct justifiable only on the assumption that the
person consents to be bound by the act's legal consequences.” DISH Network, 28 F.C.C.
Rcd. 6586–87 (2013).
“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 [Ltd. v. Jerry Clark], 816 F.3d at 938–39 [(7th Cir.
2016)]. 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 939. 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 [v. Wheaton Van Lines], 231 F.3d at
1064 [(7th Cir. 2000)]. ‘To create apparent authority, the principal must speak, write, or
otherwise act toward a third party.’ Bridgeview Health Care, 816 F.3d at 939. 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).” Aranda v. Caribbean Cruise Line, Inc., 179 F.Supp.3d 817, 831 (N.D. Ill. 2016)
While the plaintiffs argue that the issue of agency is not susceptible to resolution by
summary judgment, “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.’).” Aranda v. Caribbean Cruise
Line, Inc., 179 F.Supp.3d 817, 829 (N.D. Ill. 2016). See also Wynn’s Extended Care, Inc.
v. Bradley, 619 Fed.Appx. 216, 218 (4th Cir. 2015); Hill v. Lockheed Martin Logistics
Mgmt, Inc., 354 F.3d 277, 287-99 (4th Cir. 2004) (en banc).
With respect to actual agency, Judge Stamp noted in Mey v. Pinnacle Security,
LLC, 2012 WL 4009718 (N.D. W.Va. Sept. 12, 2012), that in order to prove actual agency,
the plaintiff must show that the defendant controlled or had the right to control the purported
agent and, more specifically, the manner and means of the solicitation campaign that was
conducted. Mey v. Pinnacle Security, LLC, 2012 WL 4009718 (N.D. W.Va. Sept. 12,
2012), citing Thomas v. Taco Bell Corp., 2012 WL 3047351 (C.D. Cal. June 25, 2012).
This is consistent with the Restatement (Third) of Agency § 1.01, which requires that
the agent must be subject to the principal’s control.
In their effort to demonstrate actual agency, the plaintiffs cite to a number of facts.
These include the fact that the movants may have permitted the persons who purchased
from the movants to represent that they are authorized representatives, that telemarketing
scripts were provided to the dealers, that the dealers were big players in the business
whose loyalty the movants sought to maintain, and that the movants did not move swiftly
enough to stop the illegal calling when it came to their attention.
The plaintiffs also describe what they call the “home security sales model.” The
“model” has three components, each of which plays a critical role in their efforts to sell their
products: a manufacturer that provides the home security equipment, a monitoring
company that provides monitoring services, and dealers that install the systems.
Honeywell and UTC are the manufacturers that provide the home security equipment,
defendant Monitronics provides the monitoring service, and defendants such as ISI and
VMS are Monitronics authorized dealers that install the systems.
Authorized dealers like ISI and VMS call consumers like plaintiffs and pitch a
security system package that consists of a “free” alarm system and a multi-year home
security monitoring contract with monthly payments. Monitronics pays the dealer for each
monitoring contract and retains a security interest in the dealer’s assets to protect against
unpaid charges by consumers. The authorized dealer pays Honeywell or UTC a negotiated
amount for each home security “kit.” The dealers pocket the difference between the
revenue from Monitronics and the amount they pay for the kits.
In evaluating these arguments, two things must be kept in mind. First, while inperson telemarketing calls may be harassing to the consumer, they do not violate the
TCPA. It is only when the calls are “robo-calls” or are made to persons on the do-not-call
list that the calls violate the Act. Accordingly, assisting a party in setting up telemarketing
centers or providing scripts for in-person calls is not evidence of agency.
Second, “a distributor of goods for resale is normally not treated as an agent of the
manufacturer. Restatement of the Law of Agency, 2d § 14J (1957) (‘One who receives
goods from another for resale to a third person is not thereby the other's agent in the
transaction.’); Stansifer v. Chrysler Motors Corp., 487 F.2d 59, 64–65 (9th Cir. 1973)
(holding that nonexclusive distributor was not agent of manufacturer where distributorship
agreement expressly stated ‘distributor is not an agent’).” Asante Techs., Inc. v. PMCSierra, Inc., 164 F.Supp.2d 1142, 1148 (N.D. Cal. 2001).
There are three cases which this Court finds particularly instructive. The first of
these is Leon v. Caterpillar Industrial, Inc., 69 F.3d 1326 (7th Cir. 1995). While Leon
applies Indiana law, Indiana has judicially adopted section one of the Restatement of
Agency, which is the foundation of the federal common law of agency.
In Leon, the plaintiff sought to impose liability on Caterpillar for certain modifications
made to equipment by Calumet, an authorized Caterpillar dealer, on the basis that Calumet
was an agent of Caterpillar. The Seventh Circuit noted the following:
The agreement between the parties specifically stated that Calumet was not
the agent of Caterpillar;
Calumet purchases equipment from caterpillar and others to resell, with the
prices calculated based upon the quantity of goods purchased. Caterpillar has no say in
the prices that Calumet charges to its customers;
“Caterpillar has no interest, financial or otherwise, in Calumet, nor does it
share in the revenue, profits or losses of Calumet, much less does it have the authority to
exercise any control over the day to day operations of Calumet. The only exceptions are
that: (1) Calumet is required to ‘maintain a suitable place or places of business at the points
shown in Exhibit A [of the agreement] to provide adequate sources of products and
mechanical service for the products in the service territory [set forth]. . .. The location of
any additional places of business and the relocation or abandonment of any existing places
of business may only be made with the consent of [Caterpillar];’ and (2) if Calumet violates
any provision of agreement, such as by failing to live up to its ‘parts and service
responsibilities and performance,’ Caterpillar has reserved the right to terminate the
agreement. As part of its contract, Caterpillar reimburses Calumet for warranty work
performed on the Caterpillar units, as well as providing that representatives from Calumet
must visit those who purchase Caterpillar products from time to time. 69 F.3d at 1330.
The Seventh Circuit affirmed a finding of no agency. In doing so, the Court stated:
the mere existence of a formal licensing or dealership agreement will not
create an agency relationship in the absence of evidence that the principal is exercising
control over the details of the purported agent's work;
“the mere express denial of an agency relationship is not itself determinative
of the matter. The true test in such a situation is how much control the principal has over
the alleged agent and the intent and functioning of the parties.” Dutton v. International
Harvester Co., 504 N.E.2d 313, 317 n. 2 (Ind. App. 4th Dist.1987) (citation omitted).
Leon discussed Wood v. Shell Oil Co., 495 So.2d 1034, 1037 (Ala. 1986),
in which Shell specified that Parker must remain open 24 hours a day, as well as dictated
the architectural style of Parker's service station, and retained the rights to inspect Parker's
financial records, and cancel the dealership agreement for “failure of the dealer to comply
or exert good faith efforts to carry out the provisions of the dealer agreement.” Finally,
Shell required that Parker obtain its permission before displaying any posters or
advertisements. Despite these requirements, the Court held that “Wood has produced no
evidence that Shell Oil retained any right of control over the manner in which Parker Shell
performed in order to meet the requirements of the lease and dealer agreement. Although
the lease and the dealer agreement specify, in some detail, what Parker Shell must do in
order to conform to the terms of these contracts, and gives Shell Oil a right to approve
certain aspects of Parker Shell's operation, they do not determine how Parker Shell is to
achieve compliance with these terms.” 69 F.3d at 1335;
The Restatement (Second) of Agency § 14J provides that “[O]ne who
receives goods from another for resale to a third person is not thereby the other's agent in
the transaction; whether he is an agent for this purpose or is himself a buyer depends upon
whether the parties agree that his duty is to act primarily for the benefit of one delivering
the goods to him or is to act primarily for his own benefit;
Although Calumet is allowed to use Caterpillar's name and trademark in its
advertisements, the mere fact that Calumet uses Caterpillar's name does not render it an
agent of Caterpillar, just as every bar which advertises that they sell a particular brand of
beer is not the agent of the brewery whose name they advertise;
“Like an actual agency relationship, an apparent agency is also initiated by
a manifestation of the principal.”
Chellew, 460 N.E.2d at 1248 (citations omitted).
However, the manifestation is one made by the principal to a third party who in turn is
instilled with a reasonable belief that another individual is an agent of the principal. The
essential element being there must be some form of communication, direct or indirect, by
the principal, which instills a reasonable belief in the mind of the third party. Manifestations
or statements made by the agent are not sufficient to create an apparent agency
The second case which this Court finds instructive is Makaron v. GE Security Mfg.
Co., 2015 WL 3526253 (C.D. Cal. May 18, 2015), in which Judge Wu in the Central District
of California also considered a motion for summary judgment by UTC in a TCPA case. In
granting summary judgment to UTC, Judge Wu stated the following:
UTCFSA sells its equipment, including the Interlogix and GE branded
equipment, to independent distributors and dealers, who then resell that equipment to other
businesses or consumer end-users. UTCFSA's security equipment can be mixed and
matched with other manufacturer's equipment by these resellers, who can put together a
complete security system package for the ultimate customers-consumer end-users.
UTCFSA provides a Return and Warranty Policy to a distributor or dealer to whom it sells
GE or Interlogix-branded security equipment, but this warranty only applies for those who
directly purchase from UTCFSA, not consumer end-users. UTCFSA's profits result from
the sale of the security equipment to its distributors and dealers.
Thousands of downstream, independent businesses sell UTCFSA's security
equipment. These resellers may sell UTCFSA's equipment alongside competitor brands,
such as Honeywell. The resellers who sell to consumers set their own prices for the
security equipment, often offering the equipment free of charge to consumers who sign up
for monthly monitoring services.
UTCFSA does engage in its own marketing, but that marketing is limited to
business to business marketing, targeted to reach UTCFSA's distributors and dealers.
UTCFSA does not market or promote its security equipment to consumer end-users.
UTCFSA does not approve, write, or review sales or telemarketing scripts used by dealers
in their own marketing or sales. UTCFSA requires its distributors and dealers to comply
with all local, state, and federal laws in their marketing, promotion, and resale of UTCFSAmade security equipment.
UTCFSA owns the Interlogix brand and has a license from GE Trademark
Licensing, Inc., pursuant to which it is able to grant limited licensing rights to use the GE
trademark and logo to resellers for the purpose of reselling GE-branded security
equipment. UTCFSA also has an “authorized dealer” program, whereby authorized dealers
are granted a limited license to identify themselves as “[Company Name], An Authorized
GE Security Dealer,” or as “[Company Name], An Authorized Interlogix Dealer.”
Authorized dealers also have a limited license to use certain GE and/or Interlogix logos and
trademarks in their advertising and marketing materials, in accordance with their
agreements with UTCFSA. Authorized dealers are not permitted to market as or “on behalf
of” GE or Interlogix.
The parties agree that UTCFSA did not itself initiate the calls to Plaintiffs (see
RGD ¶ 37), thus precluding a claim on a direct liability theory; however, Plaintiffs argue
UTCFSA is vicariously liable for the calls made in violation of section 227(b)(1). The
question of vicarious liability is the sole issue before the Court on summary judgment.
Although section 227(b) of the UTCFSA does not explicitly provide for
recovery under a vicarious liability theory, the Federal Communications Commission
(“FCC”), in a recent 2013 declaratory ruling, interpreted section 227(b) to include liability
for sellers under common law vicarious liability principles, including the principles of
apparent authority and ratification. In the Matter of the Joint Petition Filed by Dish
Network, LLC, 28 F.C.C. Rcd. 6574, 6587 (2013) (“While section 227(b) does not contain
a provision that specifically mandates or prohibits vicarious liability, we clarify that the
prohibitions contained in section 227(b) incorporate the federal common law of agency and
that such vicarious liability principles reasonably advance the goals of the TCPA.”). This
interpretation of section 227(b) is accorded Chevron deference, and the vicarious liability
question should be considered under the FCC's stated framework. See Gomez v.
Campbell–Ewald Co., 768 F.3d 871, 878 (9th Cir. 2014) (“Because Congress has not
spoken directly to this issue and because the FCC's interpretation was included in a fully
adjudicated declaratory ruling, the interpretation must be afforded Chevron deference.”
(citing Metrophones Telecomms., Inc. v. Global Crossing Telecomms., Inc., 423 F.3d
1056, 1065 (9th Cir. 2005)). Both parties agree that the FCC's interpretation should be
Though the reasoning is somewhat circular, the implication of the FCC's
declaratory ruling is that the definition of a “seller” depends on whether the person or entity
making the allegedly illegal calls was an agent of the alleged seller. Even though UTCFSA
is technically a “manufacturer” of security equipment that sells to distributors and third-party
dealers rather than directly to the consumer, UTCFSA could also be a “seller” under the
TCPA if it turns out it has an applicable agency relationship with the entities that made the
calls to Plaintiffs in this case.
Thus, UTCFSA's vicarious liability, and its possible
designation as a “seller,” turns on the agency principles the FCC espoused in its
“An agent acts with actual authority when, at the time of taking action that has
legal consequences for the principal, the agent reasonably believes, in accordance with the
principal's manifestations to the agent, that the principal wishes the agent so to act.”
[Restatement (Third) of Agency] § 2.01. The traditional agency test requires establishing:
“(1) a manifestation by the principal that the agent shall act for him; (2) that the agent has
accepted the undertaking; and (3) that there is an understanding between the parties that
the principal is to be in control of the undertaking.” Sun Microsystems [v. Hynix
Semiconductor, Inc.], 622 F.Supp.2d at 899 [(N.D. Cal. 2009)] (citing Restatement (Third)
of Agency § 1.01). A key requirement of classic common law agency is that the principal
is “in control” of the agent's actions. See United States v. Bonds, 608 F.3d 495, 506 (9th
Cir. 2010) (“To form an agency relationship, both the principal and the agent must manifest
assent to the principal's right to control the agent.”); Lushe v. Verengo Inc., 2014 WL
5794627, at *2 (C.D. Cal. Oct. 22, 2014).
Here, the only evidence that UTCFSA has control of the sales tactics of its
third-party distributors and/or authorized dealers is that it licenses the use of the GE and
Interlogix trademark to its authorized dealers. As part of the licensing agreements,
UTCFSA restricts the use of the GE and Interlogix trademark and logo, and grants
authorized dealers a limited license to identify themselves simply as “An Authorized GE
Security Dealer” or “An Authorized Interlogix Dealer” in their marketing materials.
Authorized dealers cannot market “as” or “on behalf of” GE or Interlogix. UTCFSA also
requires its distributors and dealers to comply with all local, state, and federal laws in their
marketing and sales tactics. Taking all of these facts together in the light most favorable
to Plaintiffs, the evidence does not support a finding that UTCFSA exercises control over
the actual marketing of the security equipment after it is sold to distributors and dealers.
Similarly, Plaintiffs have not shown that a reasonable jury could find that
authorized dealers acted with apparent authority on behalf of UTCFSA. “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 (2006). Apparent authority “cannot be established merely by
showing that [the alleged agent] claimed authority or purported to exercise it.” NLRB v.
Dist. Council of Iron Workers of Cal. & Vicinity, 124 F.3d 1094, 1099 (9th Cir. 1997).
Rather, it is only established “by proof of something said or done by the [alleged principal],
on which [the plaintiff] reasonably relied.” Id.
Here, the only arguable “manifestation” UTCFSA made was to SOAS and its
other authorized dealers-giving these dealers a limited license to declare themselves
authorized dealers of GE Security and/or Interlogix. However, this manifestation was
between UTCFSA and SOAS, not between UTCFSA and consumer end-users such as
Plaintiffs. It is undisputed that UTCFSA does not market to end-users; it only sells and
markets to dealers and distributors of its equipment, who then package and resell that
equipment to consumers. Thus, UTCFSA did not make (or cause to make) any direct
communications to end-users such that they might think a reseller or dealer was acting on
As observed in Lushe v. Verengo, Inc., 2015 U.S. Dist. LEXIS 16961 * 8–9
(C.D.Cal. Feb. 2, 2015):
Apparent authority arises from the principal's manifestations to a third party
that supplies a reasonable basis for that party to believe that the principal has
authorized the alleged agent to do the act in question. [T]he ostensible
authority of an agent cannot be based solely upon the agent's conduct. The
third party's belief must not only be reasonable, but also “traceable” to the
principal's manifestations. See Restatement (Third) of Agency § 2.03 (2006).
[Quotation marks and case citations omitted.]
Here, the Plaintiffs have not produced any evidence from which one could trace their belief
as to SOAS's apparent authority to UTCFSA's conduct or statements.
As for ratification, on the undisputed facts before the Court, the Defendant
would be entitled to summary judgment. “Although a principal is liable when it ratifies an
originally unauthorized tort, the principal-agent relationship is still a requisite, and
ratification can have no meaning without it.” Batzel v. Smith, 333 F.3d 1018, 1036 (9th
Cir. 2003). Here, Plaintiffs have not presented evidence that would support that an
applicable principal-agent relationship existed between SOAS (or any other reseller or
dealer) and UTCFSA. Without this prerequisite, UTCFSA could not “ratify” the actions of
its resellers or authorized dealers.
The third case which this Cout finds instructive is Johansen v. HomeAdvisor, Inc.,
2016 WL 6432821 (S.D. Ohio October 31, 2016), in which Judge Marbley found no
jurisdiction over HomeAdvisor in a TCPA case, inasmuch as the party making the calls in
violation of the do-not-call list was not the agent of HomeAdvisor. In Johansen, the only
issue was ratification. In his decision, Judge Marbley stated:
Johansen does not argue that jurisdiction is proper based on (1) a formal
agency relationship between HomeAdvisor and One Planet and/or Lead House or (2)
apparent authority. Nor could he; HomeAdvisor's unrefuted supporting declarations show
See Kerry Steel, 106 F.3d at 153 (permitting courts to accept as true
uncontroverted factual assertions of the defendant). Instead, Johansen relies solely on a
ratification theory to show that jurisdiction is proper. (“Plaintiff has sufficiently alleged
HomeAdvisor ratified the illegal actions of its agent, One Planet, and its subagents,
including Lead House. . .. Accordingly, Plaintiff has set forth a prima facie showing that
HomeAdvisor is vicariously liable for One Planet and Lead House's conduct and, therefore,
that HomeAdvisor is subject to personal jurisdiction in Ohio.”)). The Court will focus solely
on the ratification issue as well.
Johansen argues that personal jurisdiction is proper based on a ratification
theory. In short, he argues that Lead House or One Planet violated the TCPA through
Ohio–based telemarketing calls to numbers on the Do Not Call Registry; that HomeAdvisor
knowingly benefited from those violations (or, at the very least, turned a blind eye to them);
and that, as a result, HomeAdvisor should be subject to suit in Ohio.
As explained below, there are two problems with Johansen's ratification
argument. First, HomeAdvisor submitted two unrefuted declarations showing that Lead
House, who made the offending calls, was not acting or purporting to act as HomeAdvisor's
agent, as required for ratification Restatement (Third) of Agency, § 4.03 (2006) (“Acts That
May Be Ratified”). Second, HomeAdvisor's declarations show that the company neither
knew nor should have known that Lead House violated the TCPA when HomeAdvisor
accepted Johansen's sales lead, as also required for ratification. Id. § 4.06 (“Knowledge
Requisite to Ratification”). Both problems prove fatal to Johansen's ratification theory and
to his assertion that personal jurisdiction over HomeAdvisor is proper.
In TCPA cases, the Sixth Circuit looks to the Restatement of Agency to
determine whether vicarious liability should be imposed. Keating [v. Peterson’s Nelnet,
LLC], 615 Fed.Appx. at 371 [(6th Cir. 2015)] (adopting FCC's opinion in DISH Network,
which looked, in turn, to “a broad range of [federal common-law] agency principles” for
imposing vicarious liability); id. at 373 (adopting Restatement definitions of “actual” and
“apparent authority”). Other jurisdictions similarly look to the Restatement of Agency to
determine whether a seller has ratified the conduct of third-party telemarketers. See, e.g.,
Kristensen v. Credit Payment Servs., Inc., 2015 WL 4477425, at *3 (D. Nev. July 20,
2015) (adopting Restatement (Third) of Agency on ratification in TCPA case); Smith, 30
F.Supp.3d at 779 (same).
Under the Restatement, “[r]atification 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(1) (2006). A person may ratify an act of another by
“manifesting assent that the act shall affect the person's legal relations” or by “conduct that
justifies a reasonable assumption that the person so consents.” Id. § 4.01(2). The
Restatement imposes a critical restriction on what type of acts may be ratified, however.
Under the Restatement, a person may ratify an act only “if the actor acted or purported to
act as an agent on the person's behalf.” Id. § 4.03. As the commentary explains, “[w]hen
an actor is not an agent and does not purport to be one, the agency-law doctrine of
ratification is not a basis on which another person may become subject to the legal
consequences of the actor's conduct.” Id. § 4.03 cmt. b (emphasis added).
requirement “limits the range of ratifiable acts to those done by an actor who is an agent
or who is not an agent but pretends to be.” Id. § 4.01 cmt. b (citing Restatement (Third) of
Agency, § 4.03).
As several courts have explained, “[a]lthough a principal is liable when it
ratifies an originally unauthorized tort,” such as a TCPA violation, “the principal-agent
relationship is still a requisite, and ratification can have no meaning without it.” E.g., Murray
v. Choice Energy, LLC, 2015 WL 4204398, at *6 (S.D. Ohio July 10, 2015) (quotation
omitted) (dismissing TCPA claim based on ratification theory for failure to plead principalagent relationship); Makaron v. GE Sec. Mfg., Inc., 2015 WL 3526253, at *10 (C.D. Cal.
May 18, 2015) (granting summary judgment on TCPA claim based on ratification for failure
to present evidence that would support an applicable principal-agent relationship). Without
this “prerequisite” principal-agent relationship, a defendant cannot “ratify” the actions of
third parties. Makaron, 2015 WL 3526253, at *10.
Finally, in Perry v. Scruggs, 17 Fed.Appx. 81 (4th Cir. 2001), the Fourth Circuit
stated, in a footnote, that they “also reject the Perrys' argument that the Scruggs Group
was liable under the doctrine of agency by ratification. This doctrine states that ‘a principal
may ratify the voidable acts of his agent, and such ratification may be express or implied.
And where, after a discovery of such acts, the principal, with full knowledge of the facts,
acts in such a manner as to unmistakably indicate that he intends to avail himself of the
benefits of the contract made by the agent, he will be deemed to have ratified such acts in
their entirety.’ Bank of Occoquan v. Davis, 155 Va. 642, 156 S.E. 367 (1931). Because
we agree with the district court's finding that there was no evidence that Kahler and
Hanning acted on behalf of the Scruggs Group, we find that the doctrine of ratification does
not apply.” 17 Fed.Appx. at 91 n. 1.
After application of the above cases to the facts of this case, this Court holds that
the evidence advanced in this case is wholly insufficient to permit the plaintiffs to continue
against the movants.
First, the fact that entities were permitted to hold themselves out as authorized
dealers or some similar description is insufficient to hold the moving defendants in this case
liable. This Court is well aware that in so ruling, I am rejecting the prior decision of this
Court in this case. In Mey v. Monitronics International, Inc., 959 F.Supp.2d 927 (N.D.
W.Va. 2013), this Court denied a motion for summary judgment on the basis that the fact
that VMS was permitted to hold itself out as an authorized dealer cloaked VMS with the
apparent authority to act as the agent of UTC. This Court respectfully disagrees with that
ruling. As noted by Leon and echoed in Makaron, the mere fact that a dealer uses a
suppliers name does not render it an agent of the supplier, just as every bar which
advertises that they sell a particular brand of beer is not the agent of the brewery whose
name they advertise.
The plaintiffs also contend that the efforts to retain ISI and VMS as customers
demonstrate agency. This Court cannot agree. If VMS and ISI were subject to the control
of the movants there would be no need to woo their business.
There is no evidence whatsoever that VMS and ISI were acting primarily for the
movants’ benefit, rather than their own gain. In fact, ISI representatives testified that ISI
was acting for its own benefit.
There is no evidence that the moving companies turned a blind eye when they
learned of improper and illegal telephone calls. The earliest notice that Honeywell appears
to have received of calls placed by or for ISI which violated the TCPA would have been
after late April, 2012, when two TCPA suits were filed. There is no indication in the record
as to when Honeywell was served with the complaints in these cases.
It must be noted that on August 30, 2012, Keith Baird of Honeywell wrote to ISI
Alarms and said, “You stated you can provide documentation confirming you are no longer
using the marketing firm in question. Please provide this information asap.”
The email also contained a copy of a prior email from Honeywell’s legal counsel
stating “We really need to nail this company down. You said that they would give us written
documentation that would prove that they are no longer working with this company. I
understand that they claim that VMS may be using their name, not sure if they are aware
of this website, but if not you should share with them AT THE SAME TIME AS YOU TELL
THEM WE MUST HAVE PROOF THAT THEY ARE NOT WORKING WITH THIS
COMPANY ANY LONGER.”
These emails indicate that there were prior communications which may not be
reflected in the exhibits provided to the Court.
On September 14, 2012, a Honeywell representative again emailed ISI asking “could
you please provide feedback on the two requests listed below?
A statement that you are no longer using Robo calls companies. We would
also need the name of the Robo call company that you previously used.
And provide feedback on your internal investigation of this phone #: 425-6588968 which is linked to your company.”
These emails were marked “high importance.”
In fact, it appears that the offending calls made using Honeywell’s name were made
not by ISI, but by a company retained by ISI known as Data Guru.
With respect to UTC, there is little documentation of calls that violate the TCPA, but
several emails reference additional training to be provided by UTC to its authorized dealers
called “telemarketing ethics” and “telemarketing standards for dealers.”
This Court also does not believe that the plaintiffs should receive additional time to
conduct discovery. It would appear that the plaintiffs have been dilatory in failing to pursue
the further deposition of UTC they now claim they need. See, e.g., Patrick v. PHH Mortg.
Corp., 998 F.Supp.2d 478, 484–85 (N.D. W.Va. 2014) (denying Rule 56(d) request where
discovery had been open for 18 months, nonmovants were granted an additional extension
to respond to movants’ motion for summary judgment, and yet they failed to take necessary
There appears to be no issue that all documents and written discovery requested
by plaintiffs were provided by the movants. Plaintiffs appear to have made no attempt to
reschedule the additional 30(b)(6) deposition that they now claim is necessary, despite
having over three months to do so between June 8, 2016, when the stay was lifted [Doc.
660], and the date their Opposition was due. Plaintiffs did not ask for an additional 30(b)(6)
deposition after UTC indicated in its June 2016 brief on the Spokeo matter that it would
seek leave to file this Motion, or after July 26, 2016, when the Court ordered summary
judgment briefing on the issue of vicarious liability. And even after plaintiffs requested (and
received) additional time to file their Opposition to UTC’s Motion [Doc. 728], they failed to
mention the need for further discovery.
Thus, plaintiffs’ own actions show that the
deposition was not and is not critical, particularly when they fail to articulate any evidence
that would be sought that could create a genuine issue of material fact.
For the reasons stated above, Defendant UTC Fire & Security Americas
Corporation, Inc.’s Motion for Summary Judgment [Doc. 735] and Defendant Honeywell’s
Motion for Summary Judgment [Doc. 761] are GRANTED. Defendants UTC Fire &
Security Americas Corporation, Inc. and Honeywell International, Inc. are DISMISSED from
It is so ORDERED.
The Clerk is directed to transmit copies of this Order to all counsel of record herein.
DATED: December 22, 2016.
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