Worsham v. Nationwide Insurance

ADKINS, Judge. This is a tale of two telephone calls. Michael C. Worsham, appellant, asks us to reverse the trial court’s grant of summary judgment on his claims that Nationwide Insurance Company, appellee, violated the Telephone Consumer Protection Act of 1991 (“TCPA”), 47 U.S.C. § 227 . We conclude that summary judgment was warranted on the counts relating to the first call, but was prematurely granted on the counts relating to the second call.

FACTS AND LEGAL PROCEEDINGS Because we must view the evidence, and the inferences from it, in the light most favorable to the party opposing summary ⁴⁹⁰ judgment, we look first to the affidavit that Worsham relied on to oppose the motion. See Heat & Power Corp. v. Air Prods. & Chemicals, Inc., 320 Md. 584, 591 , 578 A.2d 1202 (1990). Worsham does not have a Nationwide insurance policy and has never inquired about Nationwide services or products. On April 22, 1999, he received a telephone call “from a woman identifying herself by her first name only, possibly as Lisa, and who said she was calling for Nationwide” (“the First Call”).

She asked him three questions — who his current insurance company was, when that insurance was due for renewal, and whether he would like to save up to 15 percent on his insurance. Worsham told her he was not interested, and requested that she “place [his] telephone number on the do-not-call list.”She replied, “okay,” and hung up without stating her full name, or providing “a telephone number or address of Nationwide Insurance.” Worsham could tell from his caller identification box, however, that the call came from a telephone number assigned to Rick Gerety & Associates (“Gerety”). The caller “did not make any mention that she was calling on behalf of [Gerety] or anyone else other than Nationwide.” On May 18,1999, Worsham received a second telephone call soliciting him in a similar manner (the “Second Call”). The caller identified herself as “Charlotte,” and “said she was calling for Nationwide.” She asked him substantially the same three questions that he had been asked in the First Call.

Worsham said he was not interested, and asked that his number be placed on the do-not-call list. He also requested a copy of the telemarketer’s “do-not-call” policy. The woman agreed to both requests, but hung up without giving her full name, telephone number, or address. She “never mentioned that she was calling on behalf of anyone else other than Nationwide.” Worsham’s caller identification box did not provide any telephone number or identifying information regarding the source of the call.

He never received a copy of the do-not-call policy. On September 10, 1999, Worsham filed a complaint in the Circuit Court for Harford County, alleging that both phone ⁴⁹¹ calls were made by Nationwide in “knowing and willful” violation of the TCPA. He sought $500 in compensatory damages, plus treble damages, for each separate violation of the TCPA, which he itemized in separate counts. First Call Violations: 1.

Failure to train personnel; 2. Failure to record a do-not-call request; 3. Failure to provide proper identification; 4. Failure to maintain a record of a do-not-call request; Second Call Violations: 5.

Failure to train personnel; 6. Failure to provide proper identification; 7. Failure to provide a do-not-call policy on demand. Nationwide moved to dismiss the complaint, and later amended its motion to include an alternative motion for summary judgment.

Nationwide supported its motion with an “Agency Agreement” and the affidavit of Rick Gerety, president of Rick Gerety & Associates. Gerety’s company is a Nationwide insurance agency doing business in Harford County. Mr. Gerety stated that “Kelly,” one of the company’s telephone solicitors, placed the First Call to Worsham. Kelly and Gerety complied with Worsham’s request to put his name and phone number on its do-not-call list.

Gerety did not make the Second Call and had no employee named Charlotte. After a hearing, the trial court issued a written memorandum and order granting summary judgment on all counts. Relying on the handful of reported decisions interpreting the TCPA, the court held that the TCPA did not provide Worsham any remedy as a result of the first telephone call from Gerety. [T]he purpose of the TCPA is to prevent telephone solicitations to a person who requested the telemarketer not to call. A person’s private right of action accrues only if he received a call more than once in a twelve-month period after he informed the telemarketer that he did not want to be called. ⁴⁹² Therefore, the second call is the violation of the TCPA and triggers a person’s private right of action.

The second call, however, does not create compensability for the first phone call. The court granted summary judgment on Counts 1 through 4 of the complaint because they related solely to the April 22, 1999 call. In addition, the court held that Worsham had no claim against Nationwide based on the Second Call. It concluded that Nationwide could not be held liable under the TCPA because it had an independent contractor relationship with the first caller, Gerety. [Nationwide] submitted an Agent’s Agreement, the intent of which is to define the business relationship between Nationwide ... and Nationwide Insurance Agents---- [T]he Agreement ... provides that “[a]s an independent contractor, [the agent has] the right to exercise independent judgment as to time, place, and manner of soliciting insurance ... and otherwise carrying out provisions of the Agreement.” After a review of the Agent’s Agreement, it is clear to this [c]ourt that [Nationwide] does not retain control or the right to control over its agents in the performance of the agent’s service____ Because [Gerety] is an independent contractor of [Nationwide,] the Plaintiff has no cause of action against [Nationwide] for the second telephone call.

In addition, the court found that Nationwide could not be liable for the Second Call because no reasonable consumer would expect that a do-not-call request to one Nationwide insurance agent would “cover” all other insurance agents operating as independent contractors of Nationwide. [A] reasonable consumer would not expect Nationwide ... to be included in [Worsham’s] do-not-call request [to Gerety]. Rick Gerety & Associates is one of eighteen Nationwide insurance agents in Harford County. It is entirely reasonable for the Plaintiff to expect that he would no longer receive telephone solicitations from [Gerety] for the prescribed twelve-month period. It is wholly unreasonable, ⁴⁹³ however, for the Plaintiff to expect that his do-not-call request applied to Nationwide Insurance Company as a whole.... [A] reasonable consumer would not expect the Plaintiffs do-not-call request, documented by [Gerety], to apply to every individual Nationwide insurance agent.

The court granted summary judgment on Counts 5, 6, and 7 relating to the May 18, 1999 call. Worsham filed this timely appeal. DISCUSSION Worsham complains that the court erred when it concluded that Nationwide could not be held responsible for either of the two telephone calls. He argues that the court predicated its decision on an erroneous construction of the TCPA, on an erroneous finding that the first caller was an independent contractor, and on an erroneous assumption that Nationwide could not be held liable for TCPA violations committed by an independent contractor.

In addition, he contends that given the nature of the relationship between Nationwide and individual Nationwide insurance agencies, Nationwide is responsible for the calls as a matter of law. We disagree with Worsham’s attempt to expand the TCPA, but agree that the evidence before the court at the time of the motion created a dispute regarding whether the calls were made “on behalf of’ Nationwide. I. The Telephone Consumer Protection Act In 1991, Congress enacted the Telephone Consumer Protection Act, Pub.L. No. 102-243 (1991) (codified at 47 U.S.C. § 227 ), “to protect the privacy rights of citizens by restricting the use of the telephone network for unsolicited advertising.” In the Matter of Consumer.Net v. AT & T Corp., 15 F.C.C.R. 281, 282, 1999 WL 1256282 (1999). In doing so, it created a private right of action for unwanted telephone solicitations.

A person who has received more than one telephone call within any 12 month period by or on behalf of the same ⁴⁹⁴ entity in violation of the regulations prescribed under [the TCPA]. may, if otherwise permitted by the laws or rules of court of a State bring in an appropriate court of that State ... an action ... to receive up to $500 in damages for each such violation.... It shall be an affirmative defense ... that the defendant has established and implemented, with due care, reasonable practices and procedures to effectively prevent telephone solicitations in violation of the regulations prescribed under this subsection. If the court finds that the defendant willfully or knowingly violated the regulations prescribed under this subsection, the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under subparagraph (B) of this paragraph. 47 U.S.C. § 227 (c)(5) (emphasis added). Congress also permitted states to impose more restrictive intrastate requirements for telephone solicitations, id. at § 227(e)(1)(D), and established alternative enforcement remedies by state officials.

Under Section 227(f), [w]henever the attorney general of a State, or an official or agency designated by a State, has reason to believe that any person has engaged or is engaging in a pattern or practice of telephone calls ... in violation of [the TCPA] or the regulations prescribed under [the TCPA], the State may bring a civil action on behalf of its residents to enjoin such calls, an action to recover for actual monetary loss or receive $500 in damages for each violation, or both such actions. 47 U.S.C. § 227 (f)(1)! Pursuant to the TCPA, the Federal Communications Commission (“FCC” or “Commission”) promulgated regulations designed to balance these privacy concerns “against the continued viability of the telemarketing industry.” In the Matter of Conmmer.Net, 15 F.C.C.R. at 282, 1999 WL 1256282 . In its initial rulemaking proposal, the FCC “note[d] that unsolicited sales call generated $435,000,000,000 in sales in 1990 — a more than four-fold increase since 1984. Thus, many consum ⁴⁹⁵ ers find such contacts beneficial and actually purchase the goods and services offered.

The Commission tentatively conclude[d] that it is not in the public interest to eliminate this option for consumers.” In the Matter of the Telephone Consumer Protection Act of 1991, 7 F.C.C.R. 2736, 2740, 1992 WL 695438 (1992). The Commission also declined to create do-not-call databases on a national or industry-wide basis. See In the Matter of Consumer.Net, 15 F.C.C.R. at 282-83, 1999 WL 1256282 . Instead, it concluded that “company-specific do-not-call lists would be the most effective, least costly, and most easily implemented means of curbing unwanted telephone solicitations.” June 11, 1996 Letter of G. Matise, Chief, Network Services Division, FCC Common Carrier Bureau, to J. Parker, Ass’t Att’y Gen., Chicago Consumer Fraud Bureau (citing In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, 7 F.C.C.R. 8752, 8763-65 (1992)).

The FCC required telephone solicitors to establish “procedures for maintaining a list of persons who do not wish to receive telephone solicitations made by or on behalf of that person or entity.” 47 C.F.R. § 64.1200 (e)(2). At a minimum, telephone solicitors must comply with the following requirements. • “Written policy. Persons or entities making telephone solicitations must have a written policy, available upon demand, for maintaining a do-not-call list.” Id. at § 64.1200(e)(2)(i). • “Training of personnel engaged in telephone solicitation. Personnel engaged in any aspect of telephone solicitation must be informed and trained in the existence and use of the do-not-call list.” Id. at § 64.1200(e)(2)(ii). • “Recording, disclosure of do-not-call requests.

If a person or entity making a telephone solicitation (or on whose behalf a solicitation is made) receives a request from a residential telephone subscriber not to receive calls from that person or entity, the person or entity must record the ⁴⁹⁶ request and place the subscriber’s name and telephone number on the do-nob-call list at the time the request is made. If such requests are recorded or maintained by a party other than the person or entity on whose behalf the solicitation is made, the person or entity on whose behalf the solicitation is made will be liable for any failures to honor the do-not-call request. In order to protect the consumer’s privacy, persons or entities must obtain a consumer’s prior express consent to share or forward the consumer’s request not to be called to a party other than the person or entity on whose behalf a solicitation is made or an affiliated entity.” Id. at § 62.1200(e)(2)(iii) (emphasis added). • “Identification of telephone solicitor. A person or entity making a telephone solicitation must provide the called party with the name of the individual caller, the name of the person or entity on whose behalf the call is beiny made, and a telephone number or address at which the person or entity may be contacted.” Id. at § 62.1200(e)(2)(iv) (emphasis added). • “Affiliated persons or entities.

In the absence of a specific request by the subscriber to the contrary, a residential subscriber’s do-not-call request shall apply to the particular business entity making the call (or on whose behalf a call is made), and will not apply to affiliated entities unless the consumer reasonably would expect them to be included given the identification of the caller and the product being advertised.” Id. at § 64.1200(e)(2)(v) (emphasis added). • “Maintenance of do not call lists. A person or entity making telephone solicitations must maintain a record of a caller’s request not to receive future telephone solicitations.” Id. at § 64.1200(e)(2)(vi). “In the absence of a [s]tate statute declining to exercise the jurisdiction authorized by the [TCPA], a [s]tate court has jurisdiction over TCPA claims.” Kaplan v. Democrat & Chronicle, 266 A.D.2d 848 , 698 N.Y.S.2d 799, 800 (N.Y.App. ⁴⁹⁷ Div.1999); see Int’l Science & Tech. Inst. v. Inacom Communications, 106 F.3d 1146, 1158 (4th Cir.1997). Thus far, Maryland has not refused to exercise such jurisdiction.

Accordingly, our state courts are faced with the extraordinary situation of having exclusive jurisdiction over a private right of action brought under federal law. See, e.g., Murphey v. Lanier, 204 F.3d 911, 915 (9th Cir.2000) (joining Second, Third, Fourth, Fifth, and Eleventh Circuits in “ ‘the somewhat unusual conclusion that state courts have exclusive jurisdiction over a cause of action created by a federal statute, the Telephone Consumer Protection Act of 1991’ ”) (citations omitted). State courts must interpret and apply the substance of this federal law with minimal guidance from federal courts. In doing so, there is a risk of interpreting the TCPA and FCC regulations in a manner that creates variations between each state.

See generally S. Kolnicki, The Telephone Consumer Protection Act and Its Burden On Small Business: An Evaluation of the Law and Its Ramifications on Telecommunications Advances, 28 Cap. U.L.Rev. 223, 239 (1999). Although it appears that Congress intended to permit such variations, we appreciate the legitimate concerns that inconsistent interpretations may create for telephone subscribers and solicitors alike. Accordingly, in an effort to seek consistency, we shall give substantial weight to persuasive interpretations of the TCPA by both the FCC and our sister states.

II

First Call Violations The trial court granted summary judgment on counts 1 through 4, alleging violations of FCC regulations during the First Call, on the grounds that the TCPA does not provide a remedy for such “first call” violations. Worsham argues that this was error, contending that once the second call is made in violation of a previous do-not-call request, the solicitor then can be held liable for any and all violations that occurred ⁴⁹⁸ during either the First or the Second Call. In support of his position, he relies on the following language of the TCPA: “[A] person who has received more than one telephone call within any 12 month period by or on behalf of the same entity in violation of the regulations prescribed under this subsection ____ [has the right to bring a private action] based on a violation of the regulations prescribed under this subsection. ... to recover for actual monetary loss from such a violation, or to receive up to $500 in damages for each such violation.... ” 47 U.S.C. § 227 (e)(5) (emphasis added). Worsham contends that the highlighted phrases indicate Congress intended to provide a private remedy that effectively “relates back” to any and all violations of FCC regulations that might have occurred during the first telephone solicitation, i.e., the predicate call.

We disagree with Worsham’s interpretation of the TCPA, and conclude that the TCPA provides a private remedy only for a repeat telephone solicitation. Following established rules of statutory construction, we look to the language of the TCPA. See Int’l Science, 106 F.3d at 1151 . By its explicit terms, section 227(c) addresses “the need to protect residential telephone subscribers’ privacy rights to avoid receiving telephone solicitations to which they object.” Congress authorized the FCC to promulgate regulations designed to protect subscriber privacy.

See § 227(c)(2). Although we agree with Worsham that the FCC’s regulations apply during all telephone solicitations, including predicate calls, and that these regulations are a valid exercise of the Commission’s authority to implement the TCPA, we do not agree that the TCPA creates a private right of action in state court for every violation of these regulations. We find no ambiguity in section 227(c)(5). It authorizes a private right of action only for a repeat call, by limiting standing to “person[s] who [have] received more than one telephone call____” 47 U.S.C. § 227 (c)(5).

This language makes it clear that Congress intended to limit claims in state ⁴⁹⁹ court to those alleging unwanted repeat telephone solicitations. If Congress had otherwise intended to provide a private remedy for any and all violations of the FCC regulations, it easily could have created a remedy for “any person who has received a telephone call ... in violation of the regulations prescribed under this section.” We shall not rewrite the TCPA by ignoring the plain words in it. See generally Int'l Science, 106