Antitrust Law Daily Wrap Up, PRIVACY—N.D. Ill.: Consumer states sufficient TCPA claims after “Budget Savers” calls, (Dec 2, 2014)

By Greg Hammond, J.D.

A telemarketing company could not avoid claims that it violated the Telephone Consumer Protection Act (TCPA) after calling a consumer and attempting to sell a Budget Savers membership. On a motion to dismiss, the federal district court in Chicago determined that the consumer’s allegations sufficiently put the company on notice of the consumer’s claims and the grounds upon which they rest (Toney v. Quality Resources, Inc., December 1, 2014, St. Eve, A.).

Background. While purchasing three pairs of children’s slippers from Stompeez.com, Sarah Toney provided her cellular telephone number “for questions about the order.” However, she later received four telephone calls from Quality Resources, Inc., a telemarketing company. After Toney answered the fourth call, Quality verified Toney’s information for her Stompeez purchase, and then attempted to sell Toney a membership in the “Budget Savers” program. Toney filed suit against Quality, Budget Savers website operator Sempris, LLC, and defunct corporation Provell, Inc. alleging violations of the TCPA.

Quality moved to dismiss for failure to state a claim, and in the alternative for summary judgment. Similarly, Sempris, and Provell filed a separate motion to dismiss.

Quality. In support of its motion to dismiss, Quality first argued that Toney failed to state a claim for violations of the TCPA because her allegations were conclusory and inadequate. However, the court determined that Quality simply ignored 16 pages of Toney’s allegations, which sufficiently described her theories of liability and each of the defendants’ alleged roles in the TCPA violations. Consequently, the court found that Toney’s allegations put Quality on notice of her claims and the grounds upon which they rested.

Quality also asserted a consent defense, arguing that Toney admitted she provided her phone number to Stompeez “for questions about the order.” The court rejected this argument, noting that the FCC would deem Quality’s call a sales call.

Lastly, Quality maintained that it was permitted to market or upsell a third party’s services after verifying and completing Toney’s order. The court once again rejected Quality’s argument, finding that there was no evidence Toney’s Stompeez order was “incomplete” before Quality’s call. The court noted that an upsell is a separate telemarketing transaction, not a continuation of an initial transaction. Quality’s motion to dismiss was therefore denied.

Provell and Sempris. In support of its motion to dismiss, Provell submitted a Certificate of Dissolution that demonstrated the company was dissolved prior to the alleged acts that violated the TCPA. The court took judicial notice of the certificate and partially granted the second motion, dismissing Provell with prejudice.

However, the court also partially denied the second motion to dismiss, finding that Toney could proceed against Sempris under a vicarious liability theory. Toney’s theories of direct liability, apparent authority, and ratification failed, however, because: (1) she either conceded or failed to argue outright a claim under a direct liability theory; (2) she did not communicate directly or indirectly with Sempris, and therefore failed to plead a plausible basis for holding Sempris liable under an apparent authority theory; and (3) she failed to allege, under a ratification theory, that Sempris or Provell accepted any benefit that stemmed from Quality’s telemarketing calls to Toney.

The case number is 13 CV 42.

Attorneys: Alexander Holmes Burke (Burke Law Offices, LLC) for Sarah Toney. Jeffrey Backman and Richard W. Epstein (Greenspoon Marder, PA) for Quality Resources, Inc. Craig Christopher Martin (Jenner & Block LLP) for Sempris, LLC.

Companies: Quality Resources, Inc.; Provell, Inc.; Sempris, LLC

Cases: Privacy IllinoisNews