Background
Robert Hossfeld was placed on Allstate Insurance Company’s internal do-not-call list in July 2020. Beginning that November, he received twelve telemarketing calls advertising Allstate auto insurance products—none of which Allstate placed itself. The calls originated from Atlantic Telemarketing Center, a company retained by Transfer Kings, which in turn had been hired by two independent Allstate insurance agents, Jason Fleming and Daniel Gilmond. Neither Allstate nor its agents knew Atlantic existed until after Hossfeld filed suit. Transfer Kings had not disclosed the subcontract to the agents who hired it.
Hossfeld sued Allstate under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227(c)(5), arguing Allstate bore vicarious liability for Atlantic’s calls under agency law. He also sought class certification on behalf of others similarly called in violation of Allstate’s do-not-call policy. The Northern District of Illinois granted Hossfeld summary judgment on liability—finding Atlantic was Allstate’s subagent and that Allstate’s violations were willful—but denied class certification for lack of numerosity. Both sides appealed.
Notably, Hossfeld had used fake names to appear on lead lists as a self-described investigation into telemarketing practices, never intending to purchase insurance. Allstate, upon learning of the complaints, promptly investigated and ultimately barred its agents from working with Transfer Kings or Atlantic.
The Court’s Holding
The Seventh Circuit reversed the district court’s summary judgment and held Allstate was not vicariously liable for Atlantic’s calls under any theory of agency law. On the core subagency theory, the court held that authority to appoint a subagent must exist at each level of delegation. Even if Allstate’s contracts with Fleming and Gilmond allowed them to engage outside telemarketers, that authority extended only to those direct agents—it could not be bootstrapped into authorization for Transfer Kings, a company Allstate had no relationship with and did not know existed, to further subcontract to Atlantic. Because Hossfeld bore the burden of proving an agency relationship and produced no affirmative evidence that Transfer Kings had Allstate’s actual authority to appoint Atlantic, the chain of vicarious liability was broken before it reached Allstate.
The court also rejected Hossfeld’s apparent authority and ratification arguments. Apparent authority requires a manifestation by the principal toward a third party—Atlantic’s own representations that it was calling “on behalf of Allstate” cannot supply that. Ratification through knowing acceptance of benefits likewise failed: Hossfeld never bought a policy, and Allstate received no specific benefit traceable to the twelve calls at issue. Allstate’s quick investigation and subsequent termination of both Transfer Kings and Atlantic further defeated any ratification-by-inaction theory.
The court additionally clarified that “willful” under the TCPA requires reckless or knowing conduct—not merely volitional action as the district court had held—aligning with the Supreme Court’s Safeco standard and decisions from the Fourth and Eleventh Circuits. The class certification denial was affirmed: Hossfeld identified only thirty-three phone numbers, below the general forty-member benchmark, and offered no argument that joinder of those members would be impracticable.
Key Takeaways
- Vicarious TCPA liability under subagency theory requires actual or apparent authority at each level of the delegation chain; a principal’s contract with its direct agents does not automatically authorize those agents’ subcontractors to further subcontract.
- Apparent authority cannot be established by an agent’s own representations—it must be traceable to a manifestation by the principal itself, and the plaintiff must show reasonable reliance on that manifestation.
- Ratification through “acceptance of benefits” must be tied to the specific violative calls to the plaintiff, not to a company’s telemarketing program generally; prompt investigation and termination of the offending telemarketer undermines any ratification-by-inaction claim.
- “Willful” under the TCPA means reckless or knowing conduct, not simply volitional action—volitional acts alone cannot trigger the statute’s treble-damages provision.
- For TCPA class certification, a plaintiff cannot satisfy the numerosity requirement through speculation about additional members; a class of thirty-three with no impracticability argument falls short.
Why It Matters
This decision meaningfully limits TCPA exposure for companies whose downstream vendors subcontract telemarketing work without authorization or disclosure. By requiring affirmative evidence of authority at every link in a delegation chain, the Seventh Circuit rejects a theory that would expose principals to liability for the unauthorized acts of vendors several steps removed—a result that, as the court noted, would permit “seemingly infinite levels of subagency” and accompanying vicarious liability with no limiting principle. Companies can take some comfort that prompt investigation and termination of rogue telemarketers, combined with clear contractual compliance obligations on direct agents, will weigh against ratification findings.
The court’s holding on willfulness also has practical significance: the TCPA’s treble-damages provision requires more than showing that calls were placed deliberately. Plaintiffs must now demonstrate in the Seventh Circuit that a defendant acted with reckless disregard for its legal obligations—a meaningfully higher bar that aligns the circuit with the Fourth and Eleventh Circuits and with the Supreme Court’s Safeco framework used in consumer-credit statutes.