Plaintiff’s Agency Claims Insufficient, Resulting in Dismissal

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Granting dismissal of a Telephone Consumer Protection Act (TCPA) suit against a health insurance company, a Tennessee federal court determined that the company was neither directly nor vicariously liable for the calls received by the plaintiff.

In his putative class action complaint, Craig Cunningham alleged that third-party agents of AXIS Insurance Company called his cellphone to try to sell him health insurance. The calls began in October 2016 and continued through February 2017, totaling more than 100.

Cunningham further claimed that the calls featured a prerecorded message from the “National Health Insurance Enrollment Center.” While that name did not connect to AXIS or the third-party agents Cunningham included as defendants, the calls mentioned AXIS’ products.

The insurer moved to dismiss. Cunningham failed to allege sufficient facts to establish either direct or vicarious liability, AXIS told the court.

U.S. District Court Judge William L. Campbell Jr. agreed.

To establish direct liability, Cunningham needed to show that AXIS initiated or physically placed the allegedly unlawful phone calls. But the complaint “contains no specific factual allegations that could plausibly demonstrate that AXIS initiated any call to Cunningham,” Campbell wrote.

Turning to vicarious liability, the court found that the complaint was unable to demonstrate any of the three theories of agency.

The complaint neglected to identify a principal for the alleged web of agents, Campbell said.

“An agency relationship cannot exist without a principal,” he wrote. “Although Cunningham does not have to allege facts completely within defendants’ knowledge at this stage, he does have to allege at least some facts to support an inference of an agency relationship. Cunningham’s allegations of universal agency among defendants lack that factual predicate.”

As for apparent authority, “Cunningham has not alleged any statements by AXIS, as apparent principal, that would manifest that other defendants, ‘Insurance Sales Agents’ or any other relevant person was its agent for the purpose of the calls,” Campbell said.

Finally, Cunningham could not establish ratification.

Campbell noted that a seller’s liability for the activities of a third-party robocaller must be tied into some identifiable agency principle, as no strict liability exists merely because the unlawful calls were made on behalf of the seller.

Although Cunningham claimed that each and every defendant ratified the illegal actions of the other defendants by knowingly accepting the benefits of their activities by accepting applications and customers from each other, these “threadbare recitals of the elements of a cause of action and conclusory statements” did not persuade the court.

The complaint “lacks that factual predicate[,] and Cunningham’s broad and sweeping ratification allegations fail to move the alleged misconduct across the line between ‘sheer possibility’ and plausibility,” Campbell wrote, granting AXIS’ motion to dismiss.

To read the memorandum in Cunningham v. Health Plan Intermediaries Holdings, LLC, click here.

Why it matters: This case joins an expanding body of authority finding that conclusory allegations are insufficient to permit a claim based on vicarious liability to proceed past the pleadings stage. Plaintiffs must plead facts in support of their vicarious liability theories, and their failure to do so can provide grounds for dismissal in the early stages of a case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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