Really interesting one for you today.

As most folks know, Texas has a registration requirement that requires telemarketers making calls in the state to register with the state in many instances.

In what appears to be a first-in-the-state result, the Court in Salaiz v. VSC Operations, 2024 WL 3405601 (W.D. Tex. July 10, 2024) a court just held a product provider can be held liable for a telemarketer’s failure to register and that’s just weird.

In Salaiz the defendant is an administrator of vehicle warranty products. The warranties were allegedly sold by a third-party telemarketer who was not named in the suit. Yet the defendant was sued for the marketers failure to register with the state.

The Defendant moved to dismiss arguing that it did not have to register so how could it be liable for the third-party’s failure to register?

The Court applied basic vicarious liability principles, however, to find Defendant had to face the heat for its “agent’s” failure to register:

“GSP’s telephone solicitations on VSC’s behalf may [] be imputed to VSC, making VSC a “seller” that must “hold[ ] a registration certificate for the business location from which the telephone solicitation is made” to avoid liability. Tex. Bus. & Com. Code § 302.101(a). Plaintiff alleges that although VSC “was registered at one point in time,” its registration “is now suspended.” Compl. ¶¶ 62, 64. Plaintiff has therefore plausibly alleged that VSC violated section 302.101 and VSC’s Motion is denied as to that claim.

Wow.

This is really bad news for folks working with call centers, BPOs and marketers who are not licensed in Texas. Very important to keep an eye on registration requirements folks.