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Jones v. Royal Administration Services, Inc.

United States Court of Appeals, Ninth Circuit

April 4, 2018

Charles A. Jones; Josh Watson, on behalf of themselves and all similarly situated persons, Plaintiffs-Appellants,
v.
Royal Administration Services, Inc., Defendant-Appellee, and All American Auto Protection, Inc.; Harout Pambuckchyan; Raffi Sadejyan; Jason Garcia, Defendants.

          Argued and Submitted June 15, 2017 San Francisco, California

          Appeal from the United States District Court for the District of Nevada D.C. No. 3:14-cv-00199-LRH-WGC Larry R. Hicks, District Judge, Presiding

          Matthew Righetti (argued), John Glugoski, and Michael Righetti, Righetti Glugoski P.C., San Francisco, California, for Plaintiffs-Appellants.

          Richard I. Dreitzer (argued) and Donald P. Paradiso, Wilson Elser Moskowitz Edelman & Dicker LLP, Las Vegas, Nevada, for Defendant-Appellee.

          Before: Mary M. Schroeder, D. Michael Fisher, [*] and N. Randy Smith, Circuit Judges.

         ORDER AND AMENDED OPINION

         SUMMARY [**]

         Telephone Consumer Protection Act

         The panel filed (1) an order amending its opinion and (2) an amended opinion affirming the district court's grant of summary judgment in favor of the defendant in an action under the Telephone Consumer Protection Act.

         The panel held that Royal Administration Services, Inc., could not be held liable under the TCPA for several phone calls made by telemarketers employed by All American Auto Protection, Inc., because the telemarketers did not have actual authority to place the unlawful calls, and Royal exercised insufficient control over the manner and means of the work to establish vicarious liability.

         ORDER

         The prior opinion filed on August 9, 2017, and reported at 866 F.3d 1100 is hereby amended concurrent with the filing of an Amended Opinion today.

         No petition for rehearing or rehearing en banc was filed within the original time period, and that time period has now expired. No subsequent petitions for rehearing or rehearing en banc shall be filed.

          OPINION

          N.R. SMITH, Circuit Judge

         Charles Jones and Josh Watson seek to hold Royal Administration Services, Inc. ("Royal") liable for several telephone calls made in violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, by telemarketers employed by All American Auto Protection, Inc. ("AAAP"). Though a broad range of agency theories may form the basis for a principal's liability for the actions of an agent, Jones and Watson limit their appeal to two theories.

         First, they assert that AAAP telemarketers were Royal's agents acting within their actual authority in placing the unlawful calls. Any claim that AAAP had actual authority to place the calls is precluded by the express language in Royal's contract with AAAP expressly prohibiting telemarketing methods that would violate state or federal law, including laws governing robocalls.

         Second, they assert that Royal had sufficient authority to control the manner and means of AAAP's telemarketing activity that it may be held vicariously liable as if it were the employer of the AAAP telemarketers. We adopt the ten non-exhaustive factors set forth in the Restatement (Second) of Agency § 220(2) (Am. Law Inst. 1958) for determining whether a principal exercises sufficient control over an agent to be held vicariously liable as if it were the agent's employer. Applying these factors here, we conclude that Royal did not exercise the level of control necessary to be subject to vicarious liability for the AAAP telemarketer's placement of the unlawful calls. Because the evidence is insufficient to allow the issue of Royal's liability to go to the jury under either theory, we affirm.

         I.

         Royal sells vehicle service contracts ("VSC"). A VSC "is a promise to perform (or pay for) certain repairs or services [on an automobile]." Auto Service Contracts and Warranties, FTC: Consumer Info., https://www.consumer.ftc.gov/articles/0054-auto-service-contracts-and-warranties (last updated August 2012). A VSC is "[s]ometimes called an 'extended warranty.'" Id. Royal sells its VSCs through automobile dealers and through "marketing vendors." These marketing vendors sell Royal's VSCs "through direct mail or telemarketing." Royal sells VSCs through about 20 different marketing vendors.

         AAAP sold VSCs for many companies like Royal through telemarketing. When an AAAP telemarketer placed a call, he or she would first "sell the concept of . . . a vehicle service contract" to the consumer. Then, during the phone call, the telemarketer would pick a particular service plan from one of their many vendors to sell to the consumer, based on the make, model, and mileage of the consumer's car, and the price and benefits in which the consumer expressed interest.

         In October 2011, Royal entered into a marketing agreement with AAAP.[1] The agreement between Royal and AAAP contained authorized sales and marketing methodologies with which AAAP was required to comply. The agreement "[e]xpressly excluded from these methodologies . . . any act or omission that violates applicable ...


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