9th Cir. Says TCPA Vicarious Liability in Telemarketing Case is a Function of Federal Common Law of Agency

Royal does not challenge whether there is sufficient evidence in the record to create a genuine issue of material fact as to whether AAAP’s telemarketers violated the TCPA and its implementing regulations. Rather, Royal disputes whether it can be held vicariously liable for AAAP’s calls. We have previously clarified that “a defendant may be held vicariously liable for TCPA violations where the plaintiff establishes an agency relationship, as defined by federal common law, between the defendant and a third-party caller.” Gomez v. Campbell-Ewald Co., 768 F.3d 871, 878 (9th Cir. 2014), aff’d sub nom. Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 674 (2016) ( “[U]nder federal common-law principles of agency, there is vicarious liability for TCPA violations.”). “Agency is the 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.” Mavrix Photographs, LLC v. LiveJournal, Inc., 853 F.3d 1020, 1029 (9th Cir. 2017) (quoting Restatement (Third) Of Agency § 1.01 (Am. Law Inst. 2006)). “For an agency relationship to exist, an agent must have authority to act on behalf of the principal and ‘[t]he person represented [must have] a right to control the actions of the agent.’ ” Id. (quoting Restatement (Third) Of Agency § 1.01 cmt. c). One theory of agency, actual authority, “arises through ‘the principal’s assent that the agent take action on the principal’s behalf.’ ”³ Id. (quoting Restatement (Third) Of Agency § 3.01). “An agent acts with actual authority when, at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act.” Restatement (Third) Of Agency § 2.01.  *4 Significantly, “[n]ot all relationships in which one person provides services to another satisfy the definition of agency.” Id. § 1.01. An individual acting as an “independent contractor,” rather than an agent, does not have the traditional agency relationship with the principal necessary for vicarious liability. See United States v. Bonds, 608 F.3d 495, 505–06 (9th Cir. 2010). Generally, a principal is not vicariously liable for the actions of an independent contractor, because the principal does not have sufficient control over an independent contractor. Id.; see also Mavrix Photographs, 853 F.3d at 1030 (citing Hollingsworth v. Perry, — U.S. —, 133 S. Ct. 2652, 2657–58 (2013)); Bonds, 608 F.3d at 505 (holding that, in determining whether an agency relationship exists, “a court will look to the totality of the circumstances, but the ‘essential ingredient … is the extent of control exercised by the employer’ ”). . . Taking these factors into account, it is clear that AAAP’s telemarketers were independent contractors rather than agents. AAAP was its own independent business that sold VSCs for multiple companies without the direct supervision of a Royal employee. AAAP provided its own equipment, set its own hours, and only received payment if one of its telemarketers actually made a sale. Finally, although Royal had some control over AAAP’s telemarketers, it did not specifically control the calls at issue in this case, because the telemarketers never attempted to sell a Royal VSC during those calls. Because AAAP’s telemarketers were independent contractors, rather than Royal’s agents, Royal cannot be held vicariously liable for any calls the telemarketers made in violation of the TCPA.