An insurance company is on the hook for calls made by its agents after a decision from a federal court in Illinois.

Two Allstate agents in Texas, Jason Fleming and Daniel Gilmond, hired Transfer Kings to place calls on behalf of their agencies. Transfer Kings subcontracted with Atlantic Telemarketing, which placed calls to Robert Hossfeld.

Hossfeld sued Allstate under the TCPA, accusing the insurance company of being responsible for the 12 calls he received while his phone number was on the company’s internal Do Not Call list. He also alleges that he asked for the calls to stop seven times.

Allstate moved for summary judgment, arguing that Hossfeld consented to receiving the calls at issue and lacked statutory and Article III standing to sue. Allstate further argued that it could not be vicariously liable for the calls made at the behest of its agents.

U.S. District Court Judge Joan B. Gottschall denied the motion, declining to find that Hossfeld consented to or invited the calls at issue, even where he prolonged the calls, feigned interest in insurance quotes and gave false names. Hossfeld claimed that he did so in an effort to gather sufficient information to cause the calls to stop—given that purpose, this conduct did not evince his consent to further the calls or transform his injury into a self-inflicted one, the court said. The court further wrote that, “[r]ather, the injury to Hossfeld was complete when Allstate placed each call to his phone number, thereby intruding upon his peace and diverting his attention and, as the regulation states, failing to honor his request not to be called by Allstate.”

Having found that Hossfeld did not consent and had standing to sue, Judge Gottschall also determined that Allstate could be liable for the calls at issue on a vicarious liability theory.

Allstate did not dispute that its contractual relationships with the individual agents, Fleming and Gilmond, created a principal-agent relationship in law. It was also undisputed that Allstate authorized its agents to engage outside telemarketing vendors and exercised control over their decisions, even maintaining a list of telemarketing vendors its agents are prohibited from using.

The Court found that these facts were sufficient to show that Fleming and Gilmond were authorized agents of Allstate. For Allstate to be liable for the calls placed by Transfer Kings and its appointed subagent, Plaintiff needed to show that Fleming and Gilmond hired Transfer Kings and appointed that entity as their subagent. The Court found the evidence clearly supported this fact.

“Undisputed evidence in the record shows that Fleming and Gilmond paid for a certain number of leads, that they specified the target market (Texas), that they had the right to approve the script used, and that they specified the criteria used to screen (referred to as filters) callers, e.g., age, number of drivers in the family and no accidents in the past three years,” the court wrote. “These undisputed facts demonstrate sufficient control to find a subagency relationship as a matter of law.”

No party argued that Gilmond or Fleming expressly or impliedly prohibited Transfer Kings from appointing a subagent, that any Allstate policy or practice forbade Transfer Kings from subcontracting or that the practice in the industry was not to permit a vendor such as Transfer Kings from appointing subagents.

Finally, Judge Gottschall concluded that Hossfeld had presented sufficient evidence that Allstate’s violations of the statute were knowing and willful, rejecting the insurer’s good faith defense. The Court found that willful and knowing violations did not require Plaintiff to prove that Allstate knew its agents were violating the statute. Instead, the showing simply required an intentional act by Allstate and its agents that led to the alleged violation.

“[T]he undisputed summary judgment evidence establishes that Fleming and Gilmond intentionally and volitionally hired Transfer Kings to place calls to sell Allstate services and that calls were deliberately placed to Hossfeld’s phone number,” the court said, granting summary judgment in favor of the plaintiff on liability and for knowing and willful violations.

To read the memorandum opinion and order in Hossfeld v. Allstate Insurance Co., click here.

Why it matters:

The Court’s vicarious liability analysis should give pause to any company utilizing independent agents or brokers to conduct telephonic sales. Businesses utilizing such a model should be aware that they may be liable for the conduct of third-party marketers hired by their independent agents or brokers, or even additional downstream entities retained by these third-party marketers to place calls.

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