Antitrust Law Daily Wrap Up, PRIVACY—D.N.J.: Consumer’s TCPA claims proceed against auto warranty company, (Sep 5, 2014)

By Greg Hammond, J.D.

A Texas corporation that sells automobile financial products and services was unable to evade a class action lawsuit, alleging violations of the Telephone Consumer Protection Act (TCPA) for phone calls purportedly made to consumers on the national Do Not Call Registry. In denying the company’s motion to dismiss, the federal district court in Newark determined that the consumer sufficiently alleged the company was vicariously liable and that New Jersey law does not apply to the TCPA class action claim (Dobkin v. Enterprise Financial Group, Inc., September 3, 2014, Walls, W.).

Background. Michael Dobkin has a landline telephone number that is registered with the national Do Not Call Registry. Enterprise Financial Group, Inc. (EFG) is a company that sells automobile financial products and services, like auto warranties, and Precise Enterprises LLC is a company that markets and sells EFG’s products and services to consumers. Beginning in February 2014, Dobkin alleges that he began receiving telephone calls from Precise without his consent. After various requests that Precise stop calling, Dobkin filed suit, bringing individual and putative class action claims against both EFG and Precise, alleging violations of the TCPA. EFG moved to dismiss, arguing: (1) the complaint fails to plausibly claim EFG is directly or vicariously liable for the calls Dobkin received; and (2) the TCPA’s private right of action incorporates New Jersey state law, which prohibits class action claims under the TCPA.

TCPA Liability. The court first considered EFG’s direct liability argument, finding that EFG could not be directly liable for telephone calls Precise made. Under the TCPA, it is unlawful for a company to “initiate” a telemarketing call to a number on the national Do Not Call Registry. The term “initiate” was clarified by the Federal Communications Commission to mean taking “the steps necessary to physically place a telephone call.” Because Dobkin’s complaint only alleges that Precise, not EFG, placed the unlawful phone calls, EFG could not be directly liable.

However, the court did find that Dobkin sufficiently pleaded that EFG was vicariously liable for Precise’s unlawful telemarketing calls, under a theory that Precise was EFG’s agent. Specifically, it determined that Dobkin laid out facts demonstrating an outsourcing arrangement between EFG and Precise, in which precise had actual authority to sell EFG’s products through telemarketing calls. Coupled with assertions that Precise was acting under EFG’s control and direction, the court concluded that the factual allegations made it plausible that EFG could be vicariously liable for Precise’s purported violations of the TCPA.

Private right of action. EFG’s second argument—that the TCPA’s private right of action incorporates New Jersey state law, which prohibits TCPA class actions—was also unavailing. Although the TCPA’s private right of action clause states that a person “may, if otherwise permitted by the laws or rules of court of a State bring in an appropriate court of that State” an action for an injunction and monetary damages, the Supreme Court has interpreted the “if otherwise permitted” language as giving states discretion over their own state court TCPA enforcement, not federal court TCPA enforcement. Because the instant case was filed in the federal district court of Newark, the court concluded that federal law governs the TCPA class action, not New Jersey law. The motion to dismiss was thus denied.

The case number is 2:14-cv-01989 (WHW) (CLW).

Attorneys: Stefan Louis Coleman for Michael Dobkin. Michael R. McDonald (Gibbons, PC) for Enterprise Financial Group, Inc.

Companies: Enterprise Financial Group, Inc.; Precise Enterprises LLC

Cases: Privacy NewJerseyNews