A recent federal court ruling resulted in the Berkshire Hathaway TCPA class action dismissal, where a lawsuit filed under the Telephone Consumer Protection Act (TCPA) was thrown out. The case, Usanovic v. Americana, L.L.C., involved a plaintiff who alleged she received numerous unsolicited telemarketing calls from agents affiliated with Berkshire Hathaway HomeServices Nevada Properties (“Berkshire Hathaway”) after her home listing had expired—even though her phone number had been registered on the National Do Not Call (DNC) Registry since 2005. While Berkshire Hathaway neither placed nor authorized the calls, the plaintiff sought to hold the company liable under the legal doctrine of vicarious liability for the alleged TCPA violations.
The Three Basic Theories of Vicarious Liability
Vicarious liability is a legal doctrine that holds one party responsible for the wrongful actions or negligence of another, even if the responsible party did not directly commit the act. In the context of the TCPA, plaintiffs generally rely on three vicarious liability theories to support a claim of liability for calls placed by a third-party agent, such as a lead generator or independent insurance agency.
- Actual Authority: Actual authority applies when a company authorizes a third party to act on its behalf. This can come in the form of express authority, whereby the company issues direct instructions, such as mandating agents to use specific call scripts or approved lead lists, or implied authority, which arises when agents reasonably interpret the company’s actions (e.g., providing resources like training or access to customer data) as permission to act.
- Apparent Authority: A company can be liable under an apparent authority theory if it creates the impression that a third party is authorized to act for it, leading a consumer to reasonably believe the caller represents the company. Apparent authority requires actions by the company itself (e.g., providing sales materials, publicly endorsing the agent, etc.) not just claims by the agent.
- Ratification: A company can be held liable if it accepts or benefits from unauthorized TCPA violations after they occur. To successfully hold a company liable under a ratification theory, the plaintiff must demonstrate that the company knew about (or turned a blind eye to) the violations by continuing to work with agents after receiving complaints about them, or otherwise failed to repudiate the misconduct.
In short, to hold a company liable under the TCPA for calls made by others, there must be clear evidence that the company either controlled the calls, made it seem like it controlled the calls, or accepted the calls despite knowing that they violated the law.
Vague Agency Claims Won’t Stick
In assessing whether Berkshire Hathaway could be held liable for the acts of its agents, the Usanovic court examined all three common theories of vicarious liability.
With respect to actual authority, the court ruled that activities such as providing training seminars, suggesting call scripts, or referring vendors did not amount to control over independent contractors who independently decide whom to call, when, and how. The complaint lacked any factual claims that Berkshire Hathaway directed these agents to call numbers on the National DNC or required the use of third-party lead lists. Without evidence of control or direction, liability could not be imposed.
Regarding apparent authority, the court found that the plaintiff relied too heavily on the agents’ own statements. As previously discussed, the mere mention of a company’s name is not enough to establish apparent authority under the TCPA. Instead, it must be supported by representations from the alleged principal (in this case, Berkshire Hathaway) that would lead a reasonable person to believe the caller was authorized.
As for ratification, the court emphasized that liability requires the principal to have knowledge of, or at least willful ignorance toward, the unlawful calls. The complaint did not allege that Berkshire Hathaway knew calls were being made to DNC-listed numbers or that it benefited from or ignored such conduct. Without these allegations, ratification could not be established.
After multiple attempts to amend the complaint with no success in showing a plausible agency relationship, the court dismissed the case with prejudice.
This ruling underscores that in TCPA lawsuits, vague references to training or brand association are insufficient. Plaintiffs must demonstrate actual control, clear authorization, or explicit acceptance of wrongdoing to hold a defendant liable.
