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Charvat v. Valente

United States District Court, N.D. Illinois, Eastern Division

June 8, 2015

PHILIP CHARVAT, on behalf of himself and others similarly situated, Plaintiff,
ELIZABETH VALENTE, et al., Defendants.


MARY M. ROWLAND, Magistrate Judge.

The parties seek an order concerning the ambit of relevant discovery. ( See April 17, 2105 Hr'g Tr. 87, 95; May 1, 2015 Hr'g Tr. 40-41). They agree that there are three categories of ESI between each of the Cruise Line Defendants and Resort Marketing Group (RMG)-marketing, nonmarketing business, and personal. (5/1 Tr. 33-35). The parties also agree generally that marketing-related ESI must be produced and that purely personal ESI need not. (Id. 12, 23, 25, 27-29, 33-35). But Plaintiff contends that nonmarketing business ESI is relevant to his vicarious liability claim while the Cruise Line Defendants argue that it is not. (Id. 36-37, 42).

A. Discovery

The Federal Rules of Civil Procedure allow parties to "obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense." Fed.R.Civ.P. 26(b)(1). Nevertheless, "requested discovery must be tied to the particular claims at issue in the case." Sykes v. Target Stores, No. 00 C 5112, 2002 WL 554505, at *3 (N.D. Ill. Apr. 15, 2002); see Bond v. Utreras, 585 F.3d 1061, 1075 (7th Cir. 2009); see also Cannon v. Burge, No. 05 C 2192, 2010 WL 3714991, at *1 (N.D. Ill. Sept. 14, 2010) ("The federal discovery rules are liberal in order to assist in trial preparation and settlement."). "Courts commonly look unfavorably upon significant restrictions placed upon the discovery process" and the "burden rests upon the objecting party to show why a particular discovery request is improper." Kodish v. Oakbrook Terrace Fire Prot. Dist., 235 F.R.D. 447, 450 (N.D. Ill. 2006).

B. Vicarious Liability

Plaintiff's Second Amended Class Action Complaint asserts that Defendants violated the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227(b), which makes it unlawful to telemarket using an automatic telephone dialing system without the prior consent of the called party. Specifically, Plaintiff contends that RMG made pre-recorded telemarketing calls and that the Cruise Line Defendants are vicariously liable for these calls pursuant to principles of federal agency law.

In May 2013, the Federal Communications Commission (FCC) clarified that a seller[1] is not directly liable for a violation of the TCPA unless it "initiates" a call, but that it could "be held vicariously liable under federal common law agency principles for a TCPA violation by a third-party telemarketer." In re Joint Petition Filed By Dish Network, LLC, Declaratory Ruling, 28 FCC Rcd. 6574, 6582-83 ¶¶ 24-26 (May 9, 2013) [hereinafter FCC Ruling ]; accord Toney v. Quality Res., Inc., ___ F.Supp. 3d ___, No. 13 CV 0042, 2014 WL 6757978, at *9 (N.D. Ill.Dec. 1, 2014). The FCC further concluded that a seller is subject to vicarious liability "under a broad range of agency principles, including not only formal agency, but also principles of apparent authority and ratification." FCC Ruling, 28 FCC Rcd. at 6584 ¶ 28. In June 2013, the district court determined that the FCC Ruling clearly applies in this action. (Dkt. 117, 141) (finding that the FCC Ruling makes clear that Plaintiff's claims against the Cruise Line Defendants are cognizable under a vicarious liability theory).

C. Agency

To determine the proper scope of discovery in this matter, the Court finds it necessary to explore federal agency law. In doing so, the Court in no way opines on the merits of Plaintiff's claims or Defendants' defenses. Agency law under federal common law and Illinois law are similar and "both accord with the Restatement of Agency." ABN AMRO, Inc. v. Capital Int'l Ltd., 595 F.Supp.2d 805, 821 (N.D. Ill. 2008); see NECA-IBEW Rockford Local Union 364 Health & Welfare Fund v. A & A Drug Co., 736 F.3d 1054, 1058 (7th Cir. 2013). Agency is a "fiduciary relationship that arises when one person (a principal') manifests assent to another person (an agent') that the agent shall act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents so to act." Restatement (Third) of Agency § 1.01 (2006). "[T]o bind the principal, the agent must have either actual or apparent authority, or the principal must ratify the agent's unauthorized actions." ABN AMRO, 595 F.Supp.2d at 821.

Actual authority may be express or implied. Opp v. Wheaton Van Lines, Inc., 231 F.3d 1060, 1064 (7th Cir. 2000). "Implied authority is actual authority that is implied by facts and circumstances and it may be proved by circumstantial evidence." Id. (citation omitted). "Only the words and conduct of the alleged principal, not the alleged agent, establish the [implied] authority of an agent." C.A.M. Affiliates, Inc. v. First Am. Title Ins. Co., 306 Ill.App.3d 1015, 1021 (1999); accord Opp, 231 F.3d at 1064. Thus, implied actual authority is created "through words or conduct of the principal which, reasonably interpreted, cause... an agent... to believe that the principal consents to have an act done on his behalf." Moriarty v. Hitzeman Funeral Home, Ltd., No. 98 C 3563, 1999 WL 286077, at *7 (N.D. Ill. Apr. 29, 1999).

An alternative way of showing authority is by ratification: "Ratification is the affirmance of a prior act done by another, whereby the act is given effect as if done by an agent acting with actual authority." Restatement (Third) of Agency § 4.01(1) (2006). A principal can ratify an act by conduct that justifies a reasonable assumption that the person so consents. Id. § 4.01(2). A principal, however, "is not bound by a ratification made without knowledge of material facts about the agent's act unless the principal chose to ratify with awareness that such knowledge was lacking." Id. § 4.01 cmt. b. The FCC Ruling, quoting the Restatement, found that: "a seller may be bound by the unauthorized conduct of a telemarketer if the seller is aware of ongoing conduct... by [the telemarketer]' and the seller fail[s] to terminate, ' or, in some circumstances, promot[es] or celebrat[es]' the telemarketer." FCC Ruling, 28 F.C.C. Rcd. 6574, 6594 ¶ 34 n.104 (quoting Restatement (Third) of Agency § 401 cmt. d).

D. Discussion

Plaintiff argues that the depth and extent of the overall business relationship between each of the Cruise Line Defendants and RMG is relevant to the agency analysis. (4/17 Tr. 60, 67). Defendants contend that RMG interacts with the Cruise Line Defendants "concerning a myriad of issues" and assert that these other subjects are not relevant to the "telemarketing endeavors at issue in this Lawsuit." (Dkt. 327 at 9 n.4; see 4/17 Tr. 66). Instead, the Cruise Line Defendants argue that the agency analysis is limited to the their relationships with RMG only with regards to telemarketing calls. (4/17 Tr. 68, 79). After careful consideration of the parties' arguments, including two lengthy hearings on the issue, the Court disagrees.

Discovery is broad, and Plaintiff is entitled to any evidence that a factfinder could evaluate to determine whether an agency relationship existed. Regardless of whether Plaintiff is ultimately successful at proving his vicarious ...

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