To print this article, all you need is to be registered or login on Mondaq.com.
A lead generator must indemnify a Telephone Consumer Protection
Act (TCPA) codefendant after an Illinois federal court granted
summary judgment in favor of the codefendant.
Torchlight Technology Group, a provider of marketing services to
companies in the insurance and specialty finance industries, hired
Call Centrix to transfer consumer leads who had provided valid
written consent to receive telemarketing calls about insurance and
financial products. Call Centrix then outsourced its services to
vendors that provided telemarketing agents.
Torchlight and Call Centrix signed an agreement that included
multiple representations and warranties. Specifically, Call Centrix
represented that all consumers whose calls it transferred to
Torchlight gave valid express written consent to receive
telemarketing calls about insurance and financial products, as
required by the TCPA and National Do Not Call Registry
requirements.
Call Centrix also promised to monitor and control its vendors,
which were similarly required to comply with the agreement, to
obtain comprehensive insurance coverage and name Torchlight as an
additional insured, and “to indemnify, defend, and hold
Torchlight harmless from any and all claims arising from any actual
or alleged breach of the express representations or warranties Call
Centrix made under the Agreement.”
On March 21, 2021, Call Centrix, through one of its vendors,
placed a call to George Moore and transferred the call to
Torchlight. Moore filed a putative class action alleging violations
of the TCPA against Torchlight and Call Centrix in response.
Torchlight sent a demand letter to Call Centrix, requesting
indemnification. Call Centrix refused. Torchlight filed a
cross-claim and moved for summary judgment.
U.S. District Court Judge Lindsay C. Jenkins granted the
motion.
“The record here contains countless concessions by Call
Centrix such that reasonable minds could not disagree: there is no
genuine issue of material fact that Torchlight was injured as a
proximate cause of Call Centrix’s breach,” the court
said.
Call Centrix conceded that it materially breached the agreement
in multiple ways: by failing to obtain liability insurance, failing
to ensure vendor compliance, failing to maintain and produce
records regarding consumer consent to receive telemarketing calls
and failing to indemnify Torchlight against Moore’s claims.
“It is difficult to imagine how these breaches could not
have caused Torchlight’s harm,” the court wrote.
“Indeed, Call Centrix’s failure to ensure vendor
compliance with the TCPA resulted in this very lawsuit by
Moore.”
Torchlight satisfied the requirements of the agreement by
promptly notifying Call Centrix in writing of the nature of the
claim and the identity of the persons involved. Despite Call
Centrix’s argument to the contrary, the agreement did not
require Torchlight to expressly demand that Call Centrix assume the
defense to trigger the indemnification requirement, the court
said.
The court also rejected Call Centrix’s contention that the
issue wasn’t ripe for adjudication, as the indemnity issue was
neither abstract nor remote and could be decided as a matter of
law.
To read the memorandum opinion and order in Moore v.
Torchlight Technology Group, LLC, click here.
Why it matters
Torchlight had little difficulty convincing the court to grant
its motion for summary judgment on the indemnification issue given
Call Centrix’s undisputed list of material breaches of the
parties’ agreement, including the failure to monitor its
vendors and ensure compliance with the TCPA.
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.
POPULAR ARTICLES ON: Insurance from United States
