Moore v. Torchlight Tech. Grp.
| Docket Number | 21 CV 2403 |
| Decision Date | 07 June 2023 |
| Parties | George Moore, on behalf of himself and others similarly situated. Plaintiff, v. Torchlight Technology Group, LLC, Call Centrix, LLC, and Carol Stitz Defendants Torchlight Technology Group, LLC Cross-Claim Plaintiff, v. Call Centrix, LLC, |
| Court | U.S. District Court — Northern District of Illinois |
In his amended complaint, Plaintiff George Moore (“Moore”) alleges violations of the Telephone Consumer Protection Act (“TCPA”) against Defendants Torchlight Technology Group LLC (“Torchlight”), Call Centrix LLC (“Call Centrix”), and Carol Stitz (collectively “Defendants”). [Dkt. No. 32.] In turn, Torchlight filed six cross-claims against Call Centrix. [Dkt. No. 63.] Before the Court is Torchlight's partial summary judgment motion as to Cross-Claims One and Three. [Dkt. No. 79.] For the reasons stated below, the motion is granted. [Id.]
Torchlight “is a provider of marketing services to companies in the insurance and specialty finance industries.” [ Call Centrix provides “‘compliant lead generation' call center services.” [Id. at ¶ 2.] More simply, Call Centrix provides telemarketing services to companies selling and advertising products and services and helps connect them with potentially interested consumers. [Response Statement to Additional Facts (“RSoAF”) at ¶ 1.] Carol Stitz is the owner, Chief Executive Officer, and operator of Call Centrix. [RSoF at ¶ 2.]
Torchlight hired Call Centrix to transfer telephone calls, or “consumer leads,” from consumers who had provided valid written consent to receive telemarketing calls about insurance and specialty financial products. [Dkt. No. 80 at 1; RSoF at ¶¶ 1, 14.] Call Centrix thereafter outsourced its telemarketing services to vendors who provided telemarketing agents to perform “prequalification,” or verification that callers had consented to receive telemarketing phone calls. [RSoF at ¶¶ 29-30; RSoAF at ¶ 1.] Call Centrix hired two vendors-Wolf BPO, a company located in Pakistan, and Call Centrix, Inc., an entity located in the Philippines. [RSoF at ¶¶ 19, 30.]
To memorialize the terms of their agreement to work together, Torchlight and Call Centrix signed an Insertion Order with accompanying Terms and Conditions (collectively, “the Agreement”). [Id. at ¶ 3.] The Agreement is explicitly governed by Pennsylvania state law. [Id.] Torchlight agreed to pay Call Centrix approximately nine hundred thousand dollars in exchange for Call Centrix's telemarketing services. [Id. at ¶ 45.] In the Agreement, Call Centrix made certain representations and warranties, four of which are pertinent to this matter. [Id. at ¶ 11.]
First, Call Centrix represented that all the consumers whose calls it transferred to Torchlight gave express written consent to receive telemarketing calls about insurance as required by the TCPA and Do Not Call List requirements.[3] [Id. at ¶¶ 14-15.] Call Centrix warranted that consumers' prior consent would be validated by third-party software. [Id. at ¶ 16.] Call Centrix additionally agreed to preserve records of all calls made for five years and provide those records within five business days on request. [Id. at ¶¶ 14, 24.] Call Centrix concedes that it understood that it was required to comply with the TCPA and its regulations in these warranties and that it understood that Torchlight relied on its assurances to that effect. [Id. at ¶¶ 12-13.] Second, Call Centrix warranted that it would monitor and control its vendors, who were similarly required to comply with the Agreement. [Id. at ¶¶ 28, 30, 32, 36.]
Call Centrix agreed that if it used vendors, it would “be liable for any breach by such [vendor].” [Id. at ¶ 28.] Third, Call Centrix agreed to obtain comprehensive insurance coverage for its actions under the Agreement and name Torchlight as an additional insured. [Id. at ¶¶ 42-44.]
Finally, Call Centrix “agreed 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.” [Id. at ¶ 48; Dkt. No. 81-2 at 11.] Call Centrix concedes that if it failed to promptly assume the defense of such a claim, then Torchlight was contractually allowed to participate in the defense against such a claim with its own counsel at Call Centrix's expense. [RSoF at ¶ 49.]
The parties agreed that some of these terms would survive termination of the contract. [Id. at ¶ 46.] This included Call Centrix's obligation to maintain and produce evidence of consent, duty to obtain insurance coverage, duty of indemnification, and “the payment, audit, or any other provisions that by their own nature should survive termination.” [Id.]
From November 11, 2020 to November 11, 2021, Call Centrix transferred consumer calls to Torchlight, per the parties' Agreement. [Id. at ¶ 5; Dkt. No. 81-2 at 2.] As relevant to this case, on March 22, 2021, Call Centrix, through Wolf BPO, placed a call to Plaintiff George Moore, and thereafter transferred that call to Torchlight. [RSoF at ¶ 6.] Sometime thereafter, Torchlight discovered that Call Centrix had materially breached the express representations and warranties promised in the Agreement, including its promises to receive express written consent from consumers, monitor and control telemarketing vendors, and obtain insurance coverage. [Id. at ¶ 46.] Call Centrix concedes that these breaches were material. [Id.] As a result, Torchlight terminated the Agreement and withheld its final payment to Call Centrix. [Id.]
On December 2, 2021, Moore filed a First Amended Complaint (“FAC”)-the operative complaint in this matter-against Torchlight, Call Centrix, and Stitz. [Dkt. No. 32.] In the FAC, Moore alleges that he received the March 22, 2021 call from Torchlight in violation of the TCPA, 47 U.S.C. § 227, et seq. and its appended regulations. [Dkt. No. 32 at ¶¶ 31-35; RSoF at ¶¶ 7-8.] Torchlight and Call Centrix thereafter filed answers. [Dkt. No. 39-40.]
On March 23, 2022, Torchlight sent a demand letter to Call Centrix, requesting that, per the Agreement, Call Centrix indemnify Torchlight against Moore's claim. [Dkt. No. 81-7 at 1-3.] Specifically, Torchlight sought to “remind [Call Centrix] of [its] obligations,” specifically “to comply with the indemnification rules set forth in subsection 11.2 of the Agreement by making a demand for indemnification.” [Id. at 2; RSoAF at ¶ 4; Dkt. No. 81-7 at 2.]
At the outset, Call Centrix refused to indemnify Torchlight for its losses, costs, and damages incurred by Torchlight in connection with the present case. [RSoF at ¶ 56.] Call Centrix explained that it did not need to indemnify Torchlight because there was “only one call to Mr. Moore under the Agreement and because Call Centrix's vendor Wolf BPO is the one to blame.” [Id. at ¶ 57.] As a result, Torchlight continued to litigate this case with separate legal counsel. [Dkt. No. 81-2 at 11.] Torchlight thereafter amended its answer to Moore's complaint to include six cross-claims against Call Centrix for contractual indemnity (Cross-Claim One), indemnity by operation of law (Cross-Claim Two), breach of contract (Cross-Claim Three), breach of covenant of good faith and fair dealing (Cross-Claim Four), fraudulent inducement (Cross-Claim Five), and fraud (Cross-Claim Six). [Dkt. No. 63 at ¶¶ 46-119.]
During discovery regarding Moore's underlying claims and Torchlight's cross-claims, the parties discovered undisputed evidence that Call Centrix failed to uphold many of its Agreement obligations. Call Centrix concedes these failures constitute breaches of the Agreement. [RSoF at ¶ 55.]
As to Call Centrix's obligation to maintain and produce evidence of consumer consent, Call Centrix concedes that Moore did not consent to receive telemarketing calls. [Id. at ¶¶ 17-23.] Initially, Call Centrix provided what purported to be Moore's consent to receive telemarketing calls generated from “FindQualityInsurance.com,” based on a document that Wolf BPO provided to Call Centrix. [Id. at ¶ 19.] In truth, this document was “fabricated.” [Id. at ¶¶ 22.] Moore denied having visited this website and the website itself confirmed that it had no record of Moore's consent. [Id. at ¶¶ 20-21.] As such, Call Centrix concedes that it does not have any evidence of valid written express consent to initiate telemarketing calls to Moore and thus, Moore did not consent to receive such calls.[4] [Id. at ¶¶ 17-18, 23, 41.] Call Centrix further conceded that it otherwise did not have a written recordkeeping policy during the relevant period or otherwise ensure that its vendors had one. [Id. at ¶¶ 25-26.] Indeed, Call Centrix produced no call records from Wolf BPO during discovery. [Id. at ¶ 27.]
As to Call Centrix's obligation to ensure vendor compliance Call Centrix concedes that it had no written policies relevant to the selection and monitoring of its vendors. [Id. at ¶ 31.] While Call Centrix initially represented that all of its consumer “leads” came with independently verified consumer consent through the use of certain third-party programs like TrustedForm or Jornaya, Call Centrix produced no documents establishing that it had instructed its vendors to call only consumers who gave verified consent. [Id. at ¶ 33.] As it turns out, Call Centrix had no written contracts with its vendors, produced no information about vendors' compliance procedures, and never completed an audit or review of Wolf BPO or any other vendor to ensure that vendors were receiving the requisite consumer consent to initiate telemarketing...
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