Summary
finding that a home security system distributor's "authority to use [a manufacturer's] trade name, trademark, and service mark" did not create apparent authority for it to telemarket on the manufacturer's behalf
Summary of this case from McDermet v. DirecTV, LLCOpinion
Case No. CV-14-1274-GW(AGRx)
05-18-2015
Edward Makaron v. GE Security Manufacturing, Inc., et al.
Attorneys Present for Plaintiffs: Matthew M. Loker Attorneys Present for Defendants: Becca Wahlquist Marek P. Bute
CIVIL MINUTES - GENERAL
Present: The Honorable GEORGE H. WU, UNITED STATES DISTRICT JUDGE Javier Gonzalez
Deputy Clerk Katie Thibodeaux
Court Reporter / Recorder __________
Tape No. Attorneys Present for Plaintiffs: Matthew M. Loker Attorneys Present for Defendants: Becca Wahlquist
Marek P. Bute
PROCEEDINGS: DEFENDANT UTCFSA'S MOTION FOR SUMMARY JUDGMENT PURSUANT TO FED. R. CIV. P. 56 [54]
Court and counsel confer. The Tentative circulated and attached hereto, is adopted as the Court's Final Ruling. Defendant UTCFSA's motion is GRANTED. Counsel for UTCFSA will file a proposed judgment forthwith. The Court, as stated on the record, dismisses Defendant Security One Alarm Systems per Plaintiff's request.
___ : 06
Initials of Preparer JG Tentative Ruling on Defendant UTC Fire & Security Americas Corporation's Motion for Summary Judgment
Plaintiffs Edward Makaron ("Makaron") and Bianca Carter ("Carter") (collectively, "Plaintiffs") bring this putative class action lawsuit under the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, on behalf of all persons within the United States who received automated and/or prerecorded phone calls within the last four years from Defendants UTC Fire & Security Americas Corporation, Inc. ("UTCFSA") and Security One Alarm Systems ("SOAS") (collectively, "Defendants"). See Fourth Amended Complaint ("FAC"), Docket No. 39, ¶¶ 35-36.
Plaintiffs allege that SOAS, acting as an authorized agent of UTCFSA, called Makaron on his cellular phone using an "automated telephone dialing system" and a "prerecorded voice." Id. ¶¶ 12-13, 16. Plaintiffs also allege that UTCFSA contacted Carter on Carter's residential phone number using a prerecorded voice. Id. ¶¶ 22-23, 26. These calls were ostensibly to market a GE home security system. Id. ¶ 12. Plaintiffs seek statutory damages for themselves and the putative class of individuals who received similar calls, as well as injunctive relief. Id. ¶¶ 49-56.
UTCFSA has now filed a motion for summary judgment on the issue of its vicarious liability for the alleged calls. See Defendant UTC Fire & Security Americas Corporation's Motion for Summary Judgment ("MSJ"), Docket No. 54. SOAS has not appeared in this case.
I. Background
UTCFSA manufactures residential and commercial intrusion equipment. See Defendant UTCFSA's Response to Plaintiffs Edward Makaron and Bianca Carter's Statement of Genuine Disputes ("RGD"), Docket No 70, ¶ 3. This intrusion equipment includes Interlogix and GE branded equipment that is used in home security systems. Id. ¶ 3. 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. Id. ¶ 4. 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. Id. ¶ 5. 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. Id. ¶ 16. UTCFSA's profits result from the sale of the security equipment to its distributors and dealers. Id. ¶¶ 18, 20.
Although Plaintiffs dispute UTCFSA's proffered fact that it sells its equipment only to other businesses and does not sell to end-users such as consumers, see RGD ¶ 4, they cite only to UTCFSA's 2009 Distribution Agreement with Tri-ED, one of its distributors in support. See Exh. C to Declaration of Angela Gomez ("Gomez Decl."), Docket No. 63. Plaintiffs do not explain why this Distribution Agreement supports their opposing view. The Distribution Agreement is only between UTCFSA and its distributors; it does not establish a relationship between UTCFSA and any end-user consumer. Given the lack of other evidence Plaintiffs offer in support of their dispute of this fact, and given that Plaintiffs do not dispute, for instance, that consumers cannot purchase directly from UTCFSA, see RGD ¶ 6, or that "the consumer end-user does not become a customer of UTCFSA, and . . . has no dealings with UTCFSA," see RGD ¶ 19, the Court will take the fact that UTCFSA only sells its equipment to other businesses as undisputed.
Plaintiffs dispute this fact, seeming to argue that, because UTCFSA gives awards and discounts to its resellers who purchase more volume from UTCFSA, that fact indicates that UTCFSA receives profits from the sales that the resellers make. This does not make sense; the logical conclusion to draw from the aforementioned evidence is that UTCFSA makes profits from the sales of its equipment to resellers - and the more volume resellers buy, the more profit UTCFSA makes. The Court will thus treat this fact as undisputed.
Thousands of downstream, independent businesses sell UTCFSA's security equipment. Id. ¶ 7. These resellers may sell UTCFSA's equipment alongside competitor brands, such as Honeywell. Id. 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. Id. ¶¶ 12-13.
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. Id. ¶ 22. UTCFSA does not market or promote its security equipment to consumer end-users. Id. ¶ 23. UTCFSA does not approve, write, or review sales or telemarketing scripts used by dealers prior to the dealers their own marketing or sales. Id. ¶ 27. UTCFSA requires its distributors and dealers to comply with all local, state, and federal laws in their marketing, promotion, and resale of UTCFSA-made security equipment. Id. ¶ 29.
The exception to this seems to be one particular script, sent to UTCFSA for review in the context of litigation between ADT and Security One. UTCFSA was asked to review the script for the purpose of verifying it used the GE brand in a way that did not violate the GE licensing agreement. See Gomez Depo., Docket No. 54-4, at 58:23-59:21. Plaintiffs use this example as evidence that UTCFSA reviews scripts, but this does not contradict the fact that UTCFSA does not review scripts for the purpose of approving them for use in dealers' marketing and sales.
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. Id. ¶ 31. 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." Id. ¶ 34. 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. Id. ¶ 35. Authorized dealers are not permitted to market as or "on behalf of" GE or Interlogix. Id. ¶ 36.
Plaintiffs' evidence in dispute of this fact is not relevant to this aspect of the fact stated; therefore the Court will treat it as undisputed.
SOAS is a home security dealer and retailer that installs home security systems and provides monitoring services to consumer end-users. Id. ¶ 40. SOAS carries and sells UTCFSA and Honeywell equipment. Id. ¶ 41. On or about January 7, 2010, SOAS entered into a Dealer Agreement with UTCFSA as a GE "Security Authorized Dealer" and non-exclusive reseller of security equipment to end-users (the "Dealer Agreement"). Id. ¶ 42, During the relevant period, SOAS did not make any direct purchases of equipment from UTCFSA but bought its products from other distributors. Id. ¶ 44. Section 2(A) of the Dealer Agreement provides that: "Dealer [SOAS] acknowledges and agrees that it is not a spokesperson for GE Security and that Dealer shall not take any actions, or fail to take any reasonable actions, that indicate to any third parties that Dealer is authorized to speak on behalf of GE Security." As for the calls Plaintiffs allege they received, UTCFSA did not initiate any of the purported calls nor do they know whether SOAS made or authorized the calls. Id. ¶ 39.
While UTCFSA has provided evidence that it did not direct or authorize SOAS to initiate the telephone calls alleged by the Plaintiffs, Plaintiffs - while attempting to dispute that fact - have not cited to any evidence that actually rebuts it. See "Moving Party's Response" in ¶ 38 of the RGD, Docket No. 70 at pages 30-31 of 52.
II. Legal Standard
Summary judgment is proper where a movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). In other words, summary judgment should be entered 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." Parth v. Pomona Valley Hosp. Med. Ctr., 630 F.3d 794, 798-99 (9th Cir. 2010).
To satisfy its burden at summary judgment, a moving party without the burden of persuasion "must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir. 2000). With respect to a moving party with the burden of persuasion, "to prevail on summary judgment it must show that the evidence is so powerful that no reasonable jury would be free to disbelieve it." Shakur v. Schriro, 514 F.3d 878, 890 (9th Cir. 2008) (internal quotation marks omitted).
"If the party moving for summary judgment meets its initial burden," the nonmoving party must, "by affidavit or as otherwise provided in Rule 56," affirmatively identify "specific facts showing that there is a genuine issue for trial." T.W. Elec. Serv., Inc., v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (internal citations and quotation marks omitted). Establishing a genuine issue for trial means doing "more than simply show[ing] 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). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Id. at 587.
With that said, courts do not weigh conflicting evidence or adjudge credibility at the summary judgment stage, and must view all evidence and draw all inferences in the light most favorable to the non-moving party. See T.W. Elec. Serv., 809 F.2d at 630-31 (citing Matsushita Elec. Indus. Co., 475 U.S. at 587); Hrdlicka v. Reniff, 631 F.3d 1044 (9th Cir. 2011); Motley v. Parks, 432 F.3d 1072, 1075 & n.1 (9th Cir. 2005).
III. Analysis
Plaintiffs' claims are premised on section 227(b)(1) of the TCPA, which provides that it is "unlawful for any person . . . to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a . . . cellular telephone service . . . ." 47 U.S.C. § 227(b)(1)(A)(iii). There are three elements to this claim: "(1) the defendant called a cellular telephone number; (2) using an automatic dialing system; (3) without the recipient's prior express consent." Meyer v. Portfolio Recovery Assn., LLC, 707 F.3d 1036, 1043 (9th Cir. 2012). Plaintiffs seek statutory damages under section 227(b)(3)(C) of the TCPA, which provides for a private right of action based on a violation of section 227(b), and which provides for actual or statutory damages. 47 U.S.C. § 227(b)(3).
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). See Opposition ("Opp."), Docket No 64, at 2:11-15. 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, et al., 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 controlling. See MSJ at 16:3-8; Opp. at 7:7-17.
A. UTCFSA's Liability as a "Seller" Turns on Agency Principles
UTCFSA first argues that it is not a "seller" on whose behalf the telemarketing calls were made, and thus it cannot be liable under the TCPA. Instead, it argues, based on the FCC's 2013 declaratory ruling in Dish Network, it is a manufacturer rather a seller, and only sellers may be held vicariously liable for telemarketing calls in violation of the TCPA.
The FCC's implementing regulations for the TCPA provide for liability for both sellers and telemarketers. A seller is defined 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). A telemarketer is defined as "the person or entity that initiates 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)(11). The FCC has explained that the policy reason for imposing vicarious liability on the seller as well as direct liability on the telemarketer is that "the seller is in the best position to monitor and police TCPA compliance by third-party telemarketers." Dish Network, 28 F.C.C. Rcd. at 6588.
The definition of a "seller" is not entirely clear, even in the context of the FCC's implementing regulations. At a minimum, a "seller" must be engaged in the business of selling or renting some sort of property, good or service. However, a "seller" must also be the person or entity "on whose behalf a telephone call or message is initiated" for the purpose of encouraging a sale for that person or entity. 47 C.F.R. § 64.1200(f)(9). What "on behalf of" means in the context of this definition is not clear.
The FCC limited its declaratory ruling to answering two questions, both relating to what kind of liability applies to sellers. See Dish Network, 28 F.C.C. Rcd. at 6578-79. The ruling did not discuss the definition of a "seller" itself, save for one paragraph discussing a hypothetical situation. This paragraph did indicate that in certain circumstances, the FCC believed that an entity could be considered a "manufacturer" rather than a seller, indicating that, the context of a retail store selling goods it had purchased from a manufacturer: "to the extent that such a store is selling on its own account - i.e., it has purchased goods from a manufacturer and is re-selling them - the manufacturer would not be a seller at all." Id. at 6592. This statement, however, is dicta, as it was written in the context of a hypothetical scenario posed by DISH Network involving a big box retail store selling goods it had purchased from a manufacturer.
On the other hand, the FCC's declaratory ruling could be read to be extremely relevant to interpreting the term "seller." One of the two issues explicitly addressed by the ruling was:
What should determine whether a telemarketing call is made "on behalf of" a seller, thus triggering liability for the seller under the TCPA? Should federal common law agency principles apply? What, if any, other principles could be used to define "on behalf of" liability for a seller under the TCPA?Id. at 6578-79. In its ruling, the FCC discussed how to interpret "on behalf of" in the context of section 227(c)(5) of the TCPA, and stated that even though section 228(b)(3) did not include the same language, the same common law agency principles that provided for seller liability under section 227(c)(5) would also apply to impose seller liability for violations of section 227(b). Id. at 6590 (concluding that "the absence of the phrase 'on behalf of' in section 227(b)(3) does not foreclose the application of baseline federal common law agency principles - which typically apply to federal tort statutes - to impose vicarious liability on the seller for third-party violations of section 227(b)."). 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 declaratory ruling.
The language of section 227(c)(5), which provides for a private right of action for do-not-call violations, is slightly different from the language of section 227(b)(3), which provides for a private right of action for prerecorded call violations.
Section 227(c)(5) provides:
A person who has received more than one telephone call within any 12-month period by or on behalf of the same entity in violation of the regulations prescribed under this subsection may . . . bring . . . an action based on a violation of the regulations prescribed under this subsection to enjoin such violation47 U.S.C. § 227(c)(5).
In contrast, section 227(b)(3) provides:
A person or entity may . . . bring . . . an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation47 U.S.C. § 227(b)(3).
B. UTCFSA's Liability under Agency Principles
The FCC has held that sellers can be vicariously liable for TCPA violations under a broad range of agency principles, including not only formal agency, but also principles of apparent authority and ratification. Id. at 6584; see also Gomez, 768 F.3d at 878. "Agency is 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, and the agent manifests assent or otherwise consents so to act." Restatement (Third) Of Agency § 1.01 (2006); see also Sarei v. Rio Tinto, PLC, 487 F.3d 1193, 1202 (9th Cir. 2007), on reh'g en banc, 550 F.3d 822 (9th Cir. 2008) (citing Moriarty v. Glueckert Funeral Home, Ltd., 155 F.3d 859, 866 n.15 (7th Cir.1998) for the principle that federal common law of agency is derived from the Restatement of Agency); Sun Microsystems Inc. v. Hynix Semiconductor Inc., 622 F.Supp.2d 890, 899 (N.D. Cal. 2009) ("Federal common law is in turn guided by those principles set forth in the Restatement of Agency."). Agency can be established expressly, via a showing of actual authority, or it can be inferred, by finding apparent authority or ratification. Id. §§ 2.01, 2.03, 4.01. UTCFSA argues that there is no evidence that it is liable under any agency theory - formal agency, apparent authority, or ratification.
1. Actual Authority
"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." Id. § 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, 622 F.Supp.2d at 899 (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., No. CV 13-07632, 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. RGD ¶ 34-36. Authorized dealers cannot market "as" or "on behalf of" GE or Interlogix. RGD ¶ 36. 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.
UTCFSA cites to various decisions from other courts that it argues supports the conclusion that a distributor or reseller in similar circumstances is not an agent of the manufacturer from which it purchases its goods. See MSJ at 20:23-21:28; Reply at 7:27-8:23. The Court finds these cases persuasive. For example, in Thomas v. Taco Bell Corp., 879 F.Supp.2d 1079 (C.D.Cal.2012), aff'd, 582 Fed. App'x 678 (9th Cir. July 2, 2014), the court held that Taco Bell was not in an agency relationship with the Chicago Area Taco Bell Local Owners Advertising Association (comprised of Taco Bell and local Taco Bell franchise owners), which had sent text messages as part of an advertising campaign. Although Taco Bell knew of the campaign, approved it via its minority vote on the Advertising Association's board, and funded the campaign, the court held that this was not enough to prove actual agency, reasoning that these facts did not establish that Taco Bell controlled the campaign. Id. at 1086 (holding that "knowledge, approval, and fund administration do not amount to controlling the manner and means of the text message campaign"). This case has far less support for an agency relationship than Taco Bell. There is no evidence that UTCFSA controlled or directed the marketing campaigns of its authorized dealers, much less the specific marketing campaigns that targeted Plaintiffs in this case. In fact, it would be unreasonable to hold that UTCFSA controlled how its authorized dealers sold their products, given that the authorized dealers could and did sell security products from other brands and manufacturers. RGD ¶ 7.
Although UTCFSA does give authorized dealers a limited license to use the GE and Interlogix marks and logos, this fact alone does not support a finding that an authorized dealer is an actual agent of UTCFSA. See Leon v. Caterpillar Indus., Inc., 69 F.3d 1326, 1336 (7th Cir. 1995) ("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."). Furthermore, the contracts between UTCFSA and its authorized dealers indicate that the parties agree that the authorized dealers are independent contractors, and that the dealers "shall have no right or authority to assume or create any obligation or responsibility, express or implied, on behalf of, on account of, or in the name of GE Security, or to legally bind GE Security in any manner whatsoever." Exh. H to Declaration of Angela Gomez ("Gomez Decl."), Docket No. 63, § 2(A). Taking all of the facts into consideration, no reasonable trier of fact could conclude that SOAS or any other authorized dealer had actual authority to act on UTCFSA's behalf as to the phone calls alleged herein.
2. Apparent Authority
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. RGD ¶¶ 4-15, 19, 23. 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 UTCFSA's behalf.
Plaintiffs have conceded that "UTCFSA has no information as to whether the telephone calls alleged by Plaintiffs were placed by or on behalf of [SOAS], other than [SOAS]'s statement to UTCFSA that it was not the source of the complained-of call." RGD ¶ 39. Obviously, had the telephonic contacts been authorized (or even envisioned) by UTCFSA, the latter would have some information about them. Plaintiffs have supplied no evidence that UTCFSA gave SOAS any apparent authority in this area. Compare, Thomas, 879 F.Supp.2d 1079.
Additionally, with one exception, Plaintiffs have provided no evidence as to the actual contents of any of the purported calls that they received, i.e. what exactly was said or what representations were made. Though the FAC includes allegations of what was said in one of the calls, see FAC ¶ 12, it is noted that the alleged call did not include a statement that SOAS was an "Authorized GE Security Dealer," a representative or agent of UTCFSA, or any other language that would lead the listener to reasonably believe that the caller was acting on behalf of UTCFSA. As observed in Lushe v. Verengo, Inc., Case No. CV-13-7632, 2015 U.S. Dist. LEXIS 16961 * 8-9 (C.D. Cal. Feb. 2, 2015):
Plaintiffs allege that the content of the call was the following:
Thank you for calling us back. We called you regarding a special offer in your area for a GE home security system. One of our representatives has your information and will try to call you again soon. We are sorry if our call caused you any inconvenience. GE, we bring good things to life. If you would like to be placed on our do not call list, please press "1." Note that it can take up to 30 days for your number to be removed from all of our lists.FAC ¶ 12.
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.
Plaintiffs refer the Court to language in the Restatement (Third) of Agency, which states that the manifestation by the principal need not be directly to the third party, and that "an indirect route of communication between a principal and a third party may suffice, especially when it is consistent with practice in the relevant industry." Restatement (Third) of Agency § 3.03. However, the example the Restatement gives of such a situation is where parties have been in negotiations for a contract, and one party schedules a meeting to finalize terms and asks the second party to send a representative with the authority to act on its behalf, the person that the second party sends has apparent authority. This situation is not analogous to this case, where Plaintiffs' only information stems from the contents of brief telemarketing calls that do not directly or indirectly refer to UTCFSA. The Restatement also states that the principal may "make a manifestation by placing the agent in a defined position in an organization or by placing an agent in charge of a transaction or situation." Id. Here, UTCFSA did not employ its distributors or dealers in any way, and it did not place them in charge of marketing for UTCFSA. UTCFSA did engage in marketing - directly to distributors and dealers. Once the distributors and dealers purchased UTCFSA's products, those distributors and dealers were responsible themselves for packaging and promoting their goods for sale for their own profit. Although arguably UTCFSA placed authorized dealers "in a defined position" as an authorized dealer of GE Security or Interlogix products, this "defined position" was not within UTCFSA's own hierarchy. Just because an entity sells a particular brand of products does not mean that that entity has apparent authority to speak or act for that brand.
The FCC also provided examples of evidence that might be relevant in finding apparent authority: (1) access to detailed information regarding the nature and pricing of the seller's products and services or to the seller's customer information, (2) the ability by the outside sales entity to enter consumer information into the seller's sales or customer systems, (3) the authority to use the seller's trade name, trademark and service mark, (4) that the seller approved, wrote or reviewed the outside entity's telemarketing scripts, and (5) if the seller knew (or reasonably should have known) that the telemarketer was violating the TCPA on the seller's behalf and the seller failed to take effective steps within its power to force the telemarketer to cease that conduct. Dish Network, 28 F.C.C. Rcd. at 6592. Here, Plaintiffs argue that one of the relevant factors is present: the authority to use the seller's trade name, trademark, and service mark. However, as Defendants point out, none of the other factors is present. The Court is disinclined to conclude that a reasonable juror could or would find not only that an end user believed SOAS, for instance, was acting on behalf of UTCFSA, but further that that belief was based on a manifestation by UTCFSA. At most, an end user could reasonably believe that SOAS was authorized to sell GE Security products, for instance, but not that GE Security authorized SOAS to send marketing materials on behalf of GE Security (rather than on behalf of SOAS itself).
Plaintiffs cite to one case, Mey v. Monotronics Intern., Inc., 959 F.Supp.2d 927 (N.D.W. Va. 2013), in support of their argument that summary judgment should be denied. As an initial matter, the Court notes that a Northern District of West Virginia decision has no binding effect on a decision of this Court. In Mey, the plaintiff brought a putative class action against, among other defendants, UTCFSA and Monotronics International, Inc. ("Monotronics"), alleging that they were vicariously liable under section 227(c) for telemarketing calls made by VMS that marketed UTCFSA and Monotronics' products. Id. at 929. The Northern District of West Virginia held that the fact that UTCFSA and Monotronics had agreements with VMS that allowed VMS to hold itself out as an authorized dealer of UTCFSA and Monotronics' products was sufficient to allow a reasonable trier of fact to conclude that VMS had apparent authority to act on behalf of UTCFSA and Monotronics. Id. at 932. Although the district court's order in that case did not include any of the factual background and context of the plaintiffs' claims, this Court would disagree generally from the conclusion reached by the court in Mey. Furthermore, since Mey does not contain details of the specific facts in that case, the Court would not be inclined to give it much weight in comparing it to this case.
3. Ratification
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.
Additionally, there is absolutely no evidence presented that UTCFSA ever ratified any action by SOAS regarding telephonic communications with end-user consumers. Indeed, as already noted above, UTCFSA has no information of telephone calls being placed by or on behalf of SOAS and, hence, could not have ratified those calls.
IV. Conclusion
For the reasons stated above, the Court would find that there are no material issues of fact in dispute and that UTCFSA is entitled to summary judgment in its favor.