Background
Robert Hossfeld received twelve telemarketing calls between November 2020 and February 2021 advertising Allstate Insurance products. Hossfeld’s number had been on Allstate’s internal do-not-call list since July 2020. Allstate did not place the calls itself. Instead, two independent Allstate insurance agents — Jason Fleming and Daniel Gilmond — hired a telemarketing company called Transfer Kings, which without the agents’ knowledge subcontracted the actual calling work to yet another company, Atlantic Telemarketing Center. Neither Allstate nor its agents knew Atlantic existed until after Hossfeld filed suit.
Hossfeld sued Allstate under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227(c)(5), which permits consumers to sue entities that call them after a do-not-call request has been made. He argued Allstate was vicariously liable for Atlantic’s calls under agency law — specifically under theories of subagency (actual authority), apparent authority, and ratification. He also moved for class certification on behalf of similarly situated call recipients.
The Northern District of Illinois granted summary judgment in Hossfeld’s favor on TCPA liability, finding Allstate vicariously liable through a chain of agency from its agents to Transfer Kings to Atlantic, and further found the violations willful, triggering treble damages. The district court denied class certification for failure to demonstrate numerosity. Both sides appealed.
The Court’s Holding
The Seventh Circuit (St. Eve, J., joined by Rovner and Sykes, JJ.) reversed the summary judgment on liability and affirmed the denial of class certification. On the subagency theory, the court held that Hossfeld failed to produce evidence that Transfer Kings had actual authority — express or implied — to appoint Atlantic as a sub-subagent on Allstate’s behalf. The court emphasized that agency authority must exist at each level of delegation and is not presumed; the contract language Allstate used with its direct agents (referencing “external suppliers”) was directed at those agents, not at Transfer Kings, and could not form the basis for Transfer Kings to reasonably believe Allstate had authorized it to hire further subcontractors.
The court also rejected Hossfeld’s apparent authority and ratification theories. Apparent authority failed because Allstate never made any manifestation to Hossfeld that Atlantic was authorized to act on its behalf — Atlantic’s own representations that it was calling for Allstate are legally irrelevant since only the principal’s conduct can create apparent authority. Ratification failed because Hossfeld never purchased Allstate’s services (so Allstate retained no benefit from the specific calls to him), and Allstate’s response upon learning of the problem — promptly investigating and then banning its agents from working with both Transfer Kings and Atlantic — was the opposite of the acquiescence that ratification requires.
On the willfulness standard, the court held that the district court applied too lenient a test when it found willfulness satisfied by mere volitional action. The Seventh Circuit adopted the Safeco standard, holding that a TCPA violation is willful only when the defendant acted with actual knowledge of the violation or with reckless disregard for whether its conduct was violative — consistent with the Fourth and Eleventh Circuits. The court affirmed the class certification denial, finding Hossfeld’s 33-number class fell below the general 40-member benchmark and that he had offered only speculation, not evidence, as to additional class members or the impracticability of joinder.
Key Takeaways
- Vicarious TCPA liability through subagency requires proof of appointing authority at every link in the chain — a principal’s contract language directed at its direct agents does not automatically authorize those agents’ subcontractors to appoint further subcontractors.
- Apparent authority under the TCPA cannot be established by an alleged subagent’s own statements that it is calling on the principal’s behalf; the authority must be traceable to a manifestation by the principal itself.
- The Seventh Circuit formally adopts the Safeco “knowing or reckless” standard for TCPA willfulness, rejecting the lower “volitional act” standard and aligning with the Fourth and Eleventh Circuits; mere voluntary action is insufficient to trigger treble damages.
- A principal that promptly investigates complaints about unauthorized telemarketing and terminates relationships with the offending vendors does not ratify those calls through inaction.
- Class certification numerosity requires affirmative evidence — not speculation — that a class exceeds manageable joinder size; 33 identified members without impracticability argument is insufficient.
Why It Matters
This decision significantly limits TCPA exposure for businesses whose downstream marketing partners subcontract calling work without authorization or disclosure. By requiring affirmative evidence of appointing authority at each subagency level, the Seventh Circuit prevents plaintiffs from bootstrapping vicarious liability up an arbitrarily long chain of telemarketing vendors simply because the ultimate seller’s name was used in the calls. The ruling gives insurers and other companies that use independent agents some protection when those agents secretly subcontract their telemarketing to unknown third parties — provided the company had no knowledge and took corrective action upon learning of the problem.
The court’s adoption of the Safeco recklessness standard for TCPA willfulness is also significant: it raises the bar for treble damages and aligns the Seventh Circuit with the emerging consensus that punitive multipliers require more than showing a defendant voluntarily placed calls. Defense counsel handling TCPA matters in the circuit can now point to this decision both to defeat vicarious liability claims arising from multi-party marketing arrangements and to resist treble-damages exposure absent evidence of knowing or reckless disregard for the statute’s requirements.