Among the many unusual aspects of 2021 is that the same insurance company was before a federal appellate court on two separate but contemporaneous cases - one in which the insurer was asserting a lack of insurance coverage based on TCPA and TCPA-inspired policy exclusions, and the other in which the same insurer was actually a defendant in a lawsuit asserting TCPA and certain other causes of action. The juxtaposition of the two raises the question of whether there are any limits to insurer unwillingness to provide insurance coverage for claims alleging unsolicited marketing communications.
The class action complaint in
Viewed on its own,
But there is an unexpected twist that is potentially far more interesting. At the very same time that Federal was before the Seventh Circuit in
The consumer in Bilek allegedly received unauthorized "robocalls" from a Federal telemarketing campaign seeking to advertise Federal's health insurance and solicit new customers. The calls allegedly came from lead generators who had been hired by
The district court granted Federal's motion, finding that Bilek did not plausibly allege an agency relationship between the lead generators and Federal. The Seventh Circuit reversed, finding instead that Bilek had "state[d] a plausible claim for relief under his actual authority theory of agency liability."6
In his complaint, Bilek alleged that the lead generators were agents acting with actual authority because Federal "authorized the lead generators to use its approved scripts, tradename, and proprietary information in making these calls."7 Bilek further alleged that one of the lead generators provided him with a quote for Federal's health insurance, that the lead generators "were paired with these quotes in real time by [HII]," and that "[HII] then emailed quotes to call recipients and permitted the lead generators to enter information into its system."8 The Seventh Circuit held that these allegations supported the inference that, in making these calls, the lead generators were Federal agents acting with actual authority such that the complaint could survive a motion to dismiss.
In so holding, the Seventh Circuit rejected as "unsupported" the district court's conclusion that Bilek's allegations were implausible. The district court had held that Bilek's complaint did not meet the Rule 12(b)(6) pleading standard because it lacked "allegations that [Federal] controlled the timing, quantity, and geographic location of the lead generators' robocalls."9 The Seventh Circuit disagreed, stating that "allegations of minute details of the parties' business relationship are not required to allege a plausible agency claim."10
Although the Seventh Circuit ruled that Bilek's complaint was sufficient to survive a motion to dismiss, the court was clear that it "express[ed] no view on whether Bilek will ultimately succeed in proving an agency relationship between the lead generators and [Federal]."11 The court also indicated that a "barebones contractual relationship," without more, would be insufficient to establish an agency relationship.
To support its argument that Bilek's complaint should be dismissed, Federal pointed to Warciak v.
The Seventh Circuit found Bilek's claims to be distinguishable from the claims in Warciak. The court explained that Warciak's allegations that T-Mobile promoted Subway's products through its own channels "is a common advertising arrangement" and "in no way suggests agency," while Bilek's specific allegations, as outlined above, "support the inference that the lead generators acted as
The past years have seen a parade of "new and improved" TCPA and TCPA-inspired insurance policy exclusions, each purporting to be broader in its exclusionary scope than the last. (Those few insurers that are still willing to provide some level of coverage for TCPA and related claims have done so only with high retentions, smaller limits and at a significant cost to the policyholder.) Before the courts, insurers such as Federal have increasingly advocated for the broadest possible construction of these exclusions -
Irony aside, the juxtaposition of
There may be fair questions as to whether claims premised on Bilek-inspired theories of TCPA liability are barred by the TCPA and TCPA-inspired policy exclusions currently in use in the market. But it is also a fair question whether there is (or ought to be) a logical limit to the ever-increasing expansion of those exclusions. Commercial general liability insurers routinely provide coverage for claims asserted in class actions, including for alleged privacy violations, as well as where the loss results from vicarious liability or from what amounts to a policyholder's alleged negligence. Should the result be any different in the context of the TCPA?
Footnotes
1 994 F.3d 865 (7th Cir. 2021)
2 Id. at 867.
3 Id. at 869.
4 8 F.4th 581 (7th Cir. 2021) [hereinafter Bilek II].
5 Bilek v. Fed. Ins. Co., No. 19-8389, 2020 WL 3960445 (
6 Bilek II, 8 F.4th at 587. Bilek asserted agency claims based on actual authority, apparent authority, and ratification. However, the Seventh Circuit did not reach Bilek's apparent authority and ratification arguments because the court's finding that Bilek stated a plausible claim based on actual authority gave the court a sufficient basis to overturn the dismissal. Id. Accordingly, this article will also focus on actual authority.
7 Id. at 587.
8 Id. at 587-88.
9 Id. at 588.
10 Id.
11 Id. at 584.
12 949 F.3d 354 (7th Cir. 2020).
13 Bilek II, 8 F.4th at 588.
14 Id. at 589. Bilek also sought to hold HII liable for the lead generators' statutory violations and asserted the same agency theories to argue that the court could exercise personal jurisdiction over HII. Although the District Court granted HII's motion to dismiss for lack of personal jurisdiction, the Seventh Circuit overturned that decision, finding that the lead generators were HII's agents, such that their conduct within could be attributed to HII for the purposes of establishing personal jurisdiction. Id. at 591.
15
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Ms
Jenner & Block
Suite 3600
CA 90071-2054
Tel: 202639 6000
Fax: 202639 6066
E-mail: JSchiappacasse@jenner.com
URL: www.jenner.com
© Mondaq Ltd, 2022 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source