Five Big Insurance Companies Sued in Putative TCPA Class Action Lawsuit

TelecommunicationsOn October 4, 2013, five insurance companies, including Geico, Statefarm, Nationwide and Farmers, were named in a TCPA class action lawsuit filed in Illinois Federal Court, along with the third party marketer that placed calls on their behalf to consumers’ mobile phones.

The TCPA Class Action Complaint

Four plaintiffs  seek to represent a class of consumers nationwide who received a telephone call to their cell phones through the use of an automatic telephone dialing system or an artificial or prerecorded voice transmitted by a marketing company, Variable Marketing LLC (“Variable”), allegedly acting on behalf of five insurance companies  (defendants American Automobile Association, Inc., Farmers Group, Inc. d/b/a Farmers Underwriters Association, Government Employees Insurance Company d/b/a Geico, Nationwide Mutual Insurance Company, and State Farm Mutual Automobile Insurance Company).

Each TCPA class action plaintiff alleges that he received a call to his mobile, or cellular, telephone without giving prior express consent – in violation of the TCPA.  According to the Class Action Complaint, plaintiffs allege “on information and belief” that an automatic dialing system, or autodialer, was used “given Variable’s practice of calling thousands (or more)” telephone numbers.  Each plaintiff was called by a telephone number with an area code that appeared to be coming from his home state (e.g., Ohio or Pennsylvania).  Three of the named TCPA class action plaintiffs received a voicemail that contained a pre-recorded message informing him of an opportunity to receive an insurance quote. One of the plaintiffs answered the call and heard a similar pre-recorded message.

The Complaint alleges that Variable is a lead provider – a marketing company that contacts consumers to gather information to determine whether they are interested in certain products or services (here, insurance quotes).  Once Variable gathers the consumers’ information, it provides that information (the lead) to the insurance companies or their agents.

The Complaint specifically relies on an FCC Declaratory Ruling issued in May 2013 to allege that the insurance companies are liable for violating the TCPA (based upon Variable’s acts) because they gave Variable: (i) actual authority (i.e., pursuant to contract); and (ii) apparent authority (i.e., through Variable’s use of the insurance companies’ trade names for the ultimate benefit of the companies) to place the telemarketing calls on their behalf. The Complaint further alleges that the insurance companies ratified Variable’s “illegal marketing scheme” by knowingly accepting the benefits of such scheme when they accepted leads from Variable.  Plaintiffs seek statutory damages on behalf of themselves and each member of the purported class ($500 for each call that is found to violate the TCPA), which they seek to treble to $1500 per call for the alleged “knowing and willful violation” of the TCPA.  They also seek injunctive relief and attorneys’ fees and costs.

Status of the TCPA Class Action and Further Considerations

As this action was just filed, none of the defendants has yet appeared.  However, simultaneously with the filing of the Class Action Complaint, Plaintiffs filed a motion for class certification.  As we previously reported, class action plaintiffs generally file this motion early in the action to prevent the defendant from attempting a “buy off” to moot their claims.

As we also have reported, TCPA actions, which are usually brought as class actions, are flooding the courts.  Due to recent changes in the law, the most significant of which are going into effect next week on October 16, 2013, TCPA actions will undoubtedly increase significantly in the near future.

If you are a company that uses third party marketers to place telephone calls or send text messages (or faxes) to consumers, you may be sued if you are alleged to have violated the TCPA, which allegations usually arise from the failure to obtain express consent (which soon will be express written consent) to do so.  Bear in mind that the TCPA is not the only law that may apply to your marketing practices.

The bottom line is that if you are conducting any marketing to mobile or landline telephones in house or through third parties, you should be knowledgeable of all applicable laws and work with experienced counsel to ensure that if an action is ever filed against you, you can successfully defend it.

If you are interested in learning more about this topic or need to review your marketing practices, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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