Federal common law agencies control TCPA in the 9th circuit


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The Tsar previously wrote on the Ninth Circuit blog Henderson decision and the apparently harsh consequences it has for vicarious liability of creditors. See Henderson v. United Student Aid Funds, Inc.., 918 F.3d 1068 (9th Cir. 2019). Well, the Ninth Circuit has just dismissed the defendant’s motion for a new bench hearing and, in the process, has clarified the law applicable to vicarious liability under the TCPA somewhat.

As a reminder, the problem in Henderson was whether a creditor is vicariously liable for a debt collector’s TCPA violations. The Ninth Circuit court first ruled that a creditor is not in itself responsible for the acts of a debt collector. But then he went on to argue that the creditor in this particular case could be held liable under a ratification theory because the creditor discovered the alleged violations of the TCPA during the audits, but still accepted the payments made. to the debt collectors who committed them.

But even accepting the basic premise of the court, there was a major complicating factor. And the accused clung to it to ask for a new hearing or a new hearing in bench (that is, where the 987 judges of the Ninth Circuit hear an appeal collectively).

The complicating factor was that the Ninth Circuit had previously ruled that ratification requires an underlying principal-agent relationship under California law. See Batzel v. Smith, 333 F.3d 1018 (9th Cir. 2003). But as two judges pointed out in dismissing the new hearing, it is California law and the TCPA is federal. And under the FCC’s primary vicarious liability notice, federal common law and Agency Restatement (Third), not state law, control. See Joint petition filed by Dish Network, LLC, 28 FCC Rcd. 6574, 6574 (2013). The judges further ruled that under the Restatement, ratification is an independent basis on which to find the agency.

The application of federal common law to the TCPA is, of course, logical. The TCPA is a federal law and (in theory) should have the same meaning in all 50 states rather than depending on the main state legal bodies. This is why federal courts regularly incorporate federal common law principles into the TCPA; in fact, the Second Circuit relied heavily on the Restatement of Contracts in good-Reyes. But the uniformity of federal law rings a little hollow coming from the Ninth Circuit, which broke with the Third Circuit in Brands and created a divided circuit on the even more fundamental question of the definition of an ATDS.

And as the Tsar pointed out in our previous coverage, the Henderson the reasoning of the panel is open to criticism even under federal common law principles. The evidence the court accepted that could create a question of fact was weak and the plaintiffs themselves committed wrongdoing by not paying their bills. So, even accepting the Ninth Circuit legal proposal, the case was still a strong candidate for summary judgment.

The result is that the Henderson The panel’s decision that creditors are not automatically liable for TCPA debt collection violations is safe. The downside, however, is that the broad interpretation of vicarious liability also remains in place. As this part of the decision is case and fact specific, it will hopefully be limited or corrected in subsequent decisions.

© Copyright 2021 Squire Patton Boggs (US) LLPRevue nationale de droit, volume IX, number 126

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