A federal judge for the District of Utah declined to exercise jurisdiction over the principal of a New York company that is being sued for violating the Telephone Consumer Protection Act (“TCPA”). The lawsuit involves claims by the plaintiff that N&G Capital LLC, M&S Recovery Solutions LLC and their respective principal violated the TCPA and other state and federal statutes in placing debt collection telephone calls to the plaintiff’s cellular telephone. Although both companies responded to the complaint, their principal moved to dismiss the lawsuit. The principal argued that he did not have sufficient contact with the State of Utah as is necessary to be hauled into the State’s courts. We have seen many federal courts deny similar motions with respect to the TCPA. The decision of the Court in the District of Utah in this case may represent a shift in the trend allowing plaintiffs to bring claims in foreign jurisdictions against corporate principals.
In her complaint, the plaintiff alleged that the Court had jurisdiction over the corporate principal because he had “continuous and systematic contacts with the State of Utah including, but not limited to, conducting business in Utah, regularly collecting or attempting to collect debt from Utah consumers, regularly enforcing agreements with Utah consumers, [and] regularly contacting consumers in Utah by telephone, email and other instruments of interstate commerce . . . .” The principal denied such activities and submitted an affidavit, swearing to his near inconsequential contact with the State of Utah (one vacation eight years ago). Although the plaintiff alleged that the principal “acted within the course and scope of his employment and directed, controlled, authorized, ratified, and personally participated in the actions of the other Defendants herein,” the principal denied this allegation, stating that he was the 50% owner of the corporations but did not manage the day to day affairs of either. The Court relied on this representation in declining to exercise jurisdiction over the principal. In doing so, the Court stated that it “cannot find that [the principal] engaged in continuous and systematic local activity in Utah.”
Potential TCPA Impact
The TCPA contains broad language that plaintiffs have used to secure jurisdiction over both defendant corporations and their principals. Many federal courts have allowed plaintiffs to maintain TCPA lawsuits against corporate principals despite lacking any evidence of each such principal’s role in the alleged unlawful activity. As a result, principals often find themselves defending TCPA litigation in foreign states. However, the District of Utah’s ruling in this case may indicate a shift in judicial philosophy, one that requires plaintiffs to demonstrate some substantive evidence of a principal’s role in violating the TCPA before being allowed to proceed against the principal in a foreign jurisdiction.
Defense of TCPA lawsuits, both individual and on a class action basis, can be incredibly costly, time consuming and stressful. These concerns are intensified when a principal finds him or herself named as a defendant in the case. As such, competent and experienced telemarketing counsel should be retained to navigate the procedural intricacies of the TCPA in court.