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.