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DON’T CALL ME MAYBE: Court Hangs Up on TCPA Suit Against Mortgage Company
Thursday, September 12, 2024

Greetings TCPAWorld!

A recent court ruling dealt a blow to consumers who receive unsolicited telemarketing calls on their Do-Not-Call registered phone numbers. In Paul Sapan v. Shore Cap. Corp.et al., No. 8:23-CV-01974-FWS-JDE, 2024 WL 4002622 (C.D. Cal. Aug. 23, 2024), the U.S. District Court for the Central District of California dismissed a putative class action lawsuit alleging that a mortgage company and its affiliates violated the TCPA.

The Plaintiff claimed he received three unwanted sales calls pitching mortgage refinancing services on his home phone number on the National Do-Not-Call Registry. During the first call, the Plaintiff’s notes indicated he was “playing along” while speaking with Kevin from American Financial, who transferred him to Adam, allegedly with Shore Capital Mortgage. Plaintiff then stated he wasn’t interested and hung up, only to receive two more calls. It seems the telemarketers couldn’t take a hint—maybe they thought the third time would be the charm!

Despite Plaintiff’s belief that Shore Capital Mortgage was actually Shore Capital Corporation, the court found he failed to adequately allege Shore Capital Corporation’s liability for the calls under any agency theory—employment, apparent authority, ratification, or actual authority. The court wasn’t convinced! The court reasoned that the Complaint did not include enough facts to infer that the callers were Shore Capital’s employees or agents or that Shore Capital controlled them. Allegations that the callers said they were with Shore Capital Mortgage weren’t going to cut it.

In reaching this conclusion, the court relied on the following key cases:

  • Gomez v. Campbell-Ewald Co., 768 F.3d 871 (9th Cir. 2014), aff’d, 577 U.S. 153 (2016), which held that vicarious liability in TCPA cases requires the plaintiff to allege facts plausibly supporting “an agency relationship, as defined by federal common law, between the defendant and a third-party caller.”
  • Jones v. Royal Admin. Servs., 887 F.3d 443 (9th Cir. 2018), identifying actual authority, apparent authority, ratification, and employment (respondeat superior) as potential bases for vicarious liability.
  • Henderson v. United Student Aid Funds, Inc., 918 F.3d 1068 (9th Cir. 2019), explaining that the plaintiff bears the burden of demonstrating an agency relationship and that courts must assess “the facts of the relationship” rather than “how the parties define their relationship.”

Applying these precedents, the court found Plaintiff’s allegations insufficient to plausibly establish Shore Capital’s vicarious liability under any recognized agency theory. Translation: Nice try, but there is not enough evidence to keep this case alive. As a result, the court dismissed the case without leave to amend, finding that giving the Plaintiff another chance to revise his complaint would be futile. This was Plaintiff’s second attempt, and he could not cure the deficiencies the court previously identified. Ouch.

The Sapan ruling demonstrated plaintiffs’ challenges in TCPA cases when the defendant company did not place the calls directly. Even when a plaintiff engages (or, as here, “plays along”) with the caller and alleges the caller claimed to represent the defendant, courts demand specific facts supporting an agency relationship to advance past the pleadings stage.

While this is a victory for Shore Capital, the fight against illegal robocalls continues. But haven’t you heard? I mean, you had to hear there’s hope on the horizon unless your notifications are on silent or on a vacay on a remote island. The board of Responsible Enterprises Against Consumer Harassment (R.E.A.C.H.) has just adopted Standards V. 2.0—a bold move to ensure lead generators respect consumer privacy beyond what the law requires. It’s important to note that the court’s dismissal here does not condone the conduct the Plaintiff complained of—if true, those calls likely violated the TCPA. But plaintiffs need compelling facts connecting the dots between the caller and the company ultimately sued. Careful investigation and detailed pleading are non-negotiable.

Keep it legal, keep it smart, and stay ahead of the game.

Talk soon!

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