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Krakauer v. Dish Network L.L.C.

United States District Court, M.D. North Carolina

June 6, 2017

THOMAS H. KRAKAUER, Plaintiff,
v.
DISH NETWORK L.L.C., Defendant.

          MEMORANDUM OPINION AND ORDER

          Catherine C. Eagles, District Judge.

         In January 2017, after a six-day trial, a jury returned a verdict finding that the defendant Dish Network violated the Telephone Consumer Protection Act. Through its agent, Satellite Systems Network, Dish made over 51, 000 telephone solicitations to a class of plaintiffs on the National Do Not Call Registry, in violation of the Act. Dish moves for judgment as a matter of law, contending that there was insufficient evidence SSN acted as Dish's agent, that the plaintiffs' expert was unreliable, and that the plaintiffs lacked standing. In the alternative, Dish moves for a new trial, contending that the jury's verdict is against the weight of the evidence and is a miscarriage of justice. Because the evidence fully supports the jury's verdict and Dish received a fair trial, the Court will deny the motions.

         I. PROCEDURAL BACKGROUND

         The plaintiff, Dr. Thomas Krakauer, filed suit in 2014 alleging that Dish violated the Telephone Consumer Protection Act, 47 U.S.C. § 227(c)(5), when its agent called thousands of numbers on the National Do Not Call Registry between 2009 and 2011. See Doc. 32 at ¶¶ 25, 47, 54.[1] The Court certified the class, covering the period from May 2010 to August 2011, Doc. 111 at 4, 34, and largely denied summary judgment. See Docs. 113, 118, 169.

         Trial on class issues began on January 10, 2017. Minute Entry 01/10/2017.[2] On January 19, the jury returned a verdict in favor of the plaintiffs. Doc. 292. The jury found that SSN was Dish's agent and that, for every class member, SSN made “at least two telephone solicitations to a residential number” on the Registry. See Id. at ¶¶ 1-2. The jury awarded $400 per call. Id. at ¶ 3.[3] Dish filed motions for judgment as a matter of law under Rule 50(b) and for a new trial under Rule 59(a)(1)(A). Docs. 318, 320.[4]Briefing is now complete.

         II. FACTS

         In deciding a motion for judgment as a matter of law, the Court “view[s] the evidence in a light most favorable to the non-moving party and draw[s] every legitimate inference in that party's favor.” Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142, 147 (4th Cir. 2008) (citation omitted). In deciding a motion for a new trial, the Court is permitted to weigh the evidence and consider the credibility of witnesses. Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 301 (4th Cir. 1998).

         The evidence at trial showed that Dish had broad contractual rights to control SSN's telemarketing practices; that it promised forty-six state attorneys general that it would monitor and control the telemarketing practices of its marketers, including SSN; that it was aware SSN had a long history of non-compliance with the TCPA; that it learned just before the class period began that SSN was soliciting people on the Do Not Call Registry and yet it took no action to prevent SSN from making those calls on Dish's behalf; and that during the class period SSN made thousands of phone calls to residential numbers on the Registry attempting to sell Dish products.

         The Court further incorporates facts in its May 22, 2017, opinion, which found that Dish's violations of the TCPA were willful and knowing. Doc. 338 at 3-20. The Court will discuss additional facts as necessary.

         III. JUDGMENT AS A MATTER OF LAW

         “A court may award judgment as a matter of law only if there is no legally sufficient evidentiary basis for a reasonable jury to find for the non-moving party.” Saunders, 526 F.3d at 147 (citing Fed.R.Civ.P. 50(a)). Judgment as a matter of law is appropriate only when “the court determines that the only conclusion a reasonable jury could have reached is one in favor of the moving party.” Id. at 147 (citation omitted).

         a. Agency

         To prevail at trial on agency, the plaintiffs had to prove two things by the greater weight of the evidence: first, that SSN was Dish's agent; and second, that SSN acted in the course and scope of that agency when it made the calls at issue. Doc. 293 at 4-5. The Court instructed the jury on actual authority, including implied actual authority by consent or acquiescence. Id. at 5, 6-7.[5] Dish contends that the evidence was insufficient to support the jury's finding that SSN was Dish's agent and insufficient to support the jury's finding that SSN acted within the scope of that agency.

         i. Actual authority

         For agency to exist, the principal must have the power to direct and control the agent's actions. Hollingsworth v. Perry, 133 S.Ct. 2652, 2666 (2013); Restatement (Third) of Agency § 1.01 & cmt. c (2006). An agent acts with actual authority when, at the time of the action, the agent reasonably believes, based on the principal's words or conduct, that the principal wishes the agent to so act. See Ashland Facility Operations, LLC v. NLRB, 701 F.3d 983, 990 (4th Cir. 2012). In most cases, “the existence and scope of agency relationships are factual matters.” Metco Prods., Inc. v. NLRB, 884 F.2d 156, 159 (4th Cir. 1989).

         The plaintiffs offered substantial evidence that SSN had actual authority to act as Dish's agent when it made telemarketing calls. As set forth in more detail in the Court's opinion on the willful and knowing issue, the SSN-Dish contract gave Dish substantial control over SSN's marketing and gave Dish unilateral power to impose additional requirements about telemarketing on SSN. Doc. 338 at 8-9. Dish periodically imposed requirements on SSN and other OE retailers-i.e., marketers-about telemarketing. These included a requirement that the marketers use PossibleNow, a service that scrubbed phone lists against the Registry, and a requirement that marketers keep records of calls made. DX 2; DX 5.[6] Less than a year before the class period began, Dish represented to forty-six state attorneys general in an Assurance of Voluntary Compliance (the Compliance Agreement) that it had the authority to and would monitor compliance of all its marketers, including SSN, with telemarketing laws. Doc. 338 at 14-15. Dish sent SSN a copy of that Compliance Agreement. See Trial Tr. Jan. 11, 2017, Doc. 302 at 73:25-74:10 (testimony by Amir Ahmed). Dish had the power to control and direct SSN's telemarketing activities, it had manifested that intent to and did exercise that power over SSN, and it had given SSN reasonable grounds to believe that Dish wished SSN to act as its agent in its telemarketing activities. See Doc. 293 at 6.

         Dish points to the SSN-Dish contracts, written communications with SSN, and the testimony of Dish employees, all of which stated that SSN was an independent contractor. Doc. 319 at 7-8. Dish also contends that it lacked control over SSN's telemarketing. Id. at 9-10. That the contract between Dish and SSN explicitly characterized the relationship as one of independent contractor, JX 1 at ¶ 11, is not binding on third parties. See, e.g., City of Chicago v. Matchmaker Real Estate Sales Ctr., Inc., 982 F.2d 1086, 1097-98 (7th Cir. 1992). As discussed supra, there was substantial evidence to the contrary that, if accepted by the jury, showed that SSN acted as Dish's agent. The jury was not required to accept Dish's evidence, and it resolved conflicts in the evidence in favor of the plaintiffs, as was its privilege. See, e.g., Dimick v. Schiedt, 293 U.S. 474, 486 (1935) (stating that the jury has the power to determine the facts).

         b. Scope of authority

         A principal is not bound by the act of an agent unless that act falls within the scope of actual authority granted by the principal to the agent. Restatement (Third) of Agency § 7.04 (2006). Actions taken against the principal's interest are generally not within the scope of the agent's authority. United States v. Hilton, 701 F.3d 959, 970 (4th Cir. 2012); cf. Tobacco Tech., Inc. v. Taiga Int'l N.V., 388 F. App'x 362, 373 (4th Cir. 2010) (unpublished) (agent's knowledge not imputed to principal if agent is acting adversely to principal's interests). If the principal consents or acquiesces in a course of conduct, the agent may reasonably conclude that the conduct is in the principal's best interests. See Commodity Futures Trading Comm'n v. Gibraltar Monetary Corp., Inc., 575 F.3d 1180, 1189 (11th Cir. 2009) (per curiam); Restatement (Third) of Agency § 2.02 cmt. d (2006) (“questions of interpretation that determine whether an agent acted with actual authority have a temporal focus that moves through time as the agent decides how to act”); id. at cmt. e (“[a]n agent's understanding of the principal's interests and objectives is an element of the agent's reasonable interpretation of the principal's conduct.”). To decide that the principal acquiesced or consented, there must be evidence that the principal knew of earlier similar activities by the agent and consented or did not object to them. See Id. (“[i]n determining whether an agent's action reflected a reasonable understanding of the principal's manifestations of consent, it is relevant whether the principal knew of prior similar actions by the agent and acquiesced in them.”)

         The plaintiffs presented substantial evidence that SSN acted within the scope of its authority when it made the telemarketing calls at issue. Obviously Dish benefitted, and SSN knew that Dish benefitted, when SSN made sales on Dish's behalf. Dish knew that government lawsuits and consumer complaints, including a complaint from Dr. Krakauer just a year before the class period began, had demonstrated problems with SSN's compliance with the do-not-call laws. PX 15 at 8060-62; Doc. 338 at 10-17. Dish knew that DirecTV, its primary competitor, had terminated SSN as a marketer. See PX 15 at 8002; Trial Tr. Jan. 12, Doc. 303 at 52:13-:21, 55:6-:8 (testimony of Reji Musso). SSN had told Dish that SSN was using a telemarketing list that contained people on the Registry. See PX 15 at 7980-81. Dish knew that SSN was not following Dish's instruction to maintain call records or its instruction to use a third-party vendor, Possible Now, to scrub call lists against the Registry. See Doc. 338 at 12-14, 16-17.

         Despite these red flags, Dish never took disciplinary action against SSN and never threatened to terminate SSN. See Trial Tr. Jan. 12, Doc. 303 at 20:11-21:12, 22:4-:21 (Musso testimony). It never investigated whether SSN's conduct violated telemarketing laws. See Id. at 41:12-42:7, 73:12-74:9, 78:4-:23 (Musso testimony). SSN was aware of the complaints and Dish's lack of monitoring and enforcement; by inference, SSN knew Dish was not going to terminate or discipline SSN for these violations, knew that Dish's compliance requirements were empty words, and knew that Dish placed the financial gains from making sales ahead of TCPA compliance.

         Under these circumstances, and based on Dish's words, conduct, and inaction, SSN could reasonably believe that Dish acquiesced or consented to SSN's telemarketing violations, and SSN could reasonably conclude that its telemarketing conduct was in Dish's best interests, because it could result in sales to Dish. See Doc. 293 at 6-7. The evidence was well sufficient to support the jury's finding that SSN's actions were within its scope of authority.

         Dish maintains that SSN's telemarketing calls to persons on the Registry were beyond its scope of authority. Dish presented evidence that it told SSN not to contact any person on the Registry and to scrub its lists with PossibleNow, and Dish contends that it is not responsible for calls SSN made thereafter to persons on the Registry. Doc. 319 at 13-14.[7] Dish asserts that it never acquiesced to SSN's conduct because it objected to every violation of which it was aware. Id. at 14-20. Dish also contends that calls to people on the Registry were outside any scope of authority because those calls were adverse to Dish's interests. Id. at 20.

         The evidence to the contrary, however, was significant, and while a jury could have accepted Dish's evidence and contentions, it was not required to do so. See, e.g., Dimick, 293 U.S. at 486. Communications between Dish and SSN in response to numerous complaints show that Dish acquiesced to SSN's marketing practices. When SSN twice told Dish that it was, in fact, not scrubbing all its lists with PossibleNow, Dish's only response was to ask SSN to stop calling the specific person who had complained. See PX 15 at 7980-81, 8005; PX 52; PX 899 at 1. Dish did nothing to monitor SSN's compliance with these requests or with the telemarketing laws generally. See Trial Tr. Jan. 12, Doc. 303 at 41:12-42:7 (Musso testimony). The evidence of Dish's silence about scrubbing other numbers on the Registry from SSN's call lists and its failure to monitor in the face of its promises to the state attorneys general, about which SSN knew, were sufficient to support an inference that Dish acquiesced to SSN's practices. For the same reasons, SSN could reasonably assume from Dish's knowledge and failure to object that calls to numbers on the Registry were in Dish's best interests- at least as long as the recipients did not complain, as most did not. See Id. at 150:16-152:15 (Musso testimony); Restatement (Third) of Agency § 2.02 cmt. e (2006) (in determining consent, “it is relevant whether the principal knew of prior similar actions by the agent and acquiesced in them”).

         Dish also contends that it instructed SSN not to call Dr. Krakauer again and that SSN disobeyed this instruction. Doc. 319 at 11-13. Contrary to Dish's suggestion, a reasonable jury could find that SSN's later calls to Dr. Krakauer in 2010 and 2011 were within the scope of the agency relationship. The instructions to stop calling Dr. Krakauer came in communications from Dish's compliance department. PX 15 at 7980-81, 8005. SSN knew from experience that instructions from the compliance department were window dressing that SSN could safely ignore. See Doc. 338 at 17-18, 24-26. Furthermore, SSN had, in response to the 2009 complaint from Dr. Krakauer, indicated to Dish that it was using a call list that was last scrubbed in 2003. See Trial Tr. Jan. 12, Doc. 303 at 35:3-36:7, 38:16-39:17 (Musso testimony). This suggests that anyone Dish had told SSN not to call in the intervening six years was still on SSN's call lists in 2009, and that Dish acquiesced to this practice by not objecting to it. Dish did nothing to monitor or check on whether SSN complied with its instructions about scrubbing, even though it knew SSN had ignored such instructions in the past. SSN could reasonably assume that Dish was just going through the motions and that its words meant nothing, so that calling Dr. Krakauer again was still within the scope of SSN's actual authority.

         c. Plaintiffs' expert

         Dish maintains that there was insufficient evidence that the calls at issue violated the TCPA, because the plaintiffs' expert, Anya Verkhovskaya, gave unreliable testimony that was “wildly speculative.” Doc. 319 at 20-22. Specifically, Dish challenges Ms. Verkhovskaya's testimony that the class members' phone numbers were on the Registry at the time of the calls and that they were residential numbers.

         Ms. Verkhovskaya testified that she had worked for eighteen years at a data analysis organization that manages data for class action lawsuits. Trial Tr. Jan. 12, Doc. 303 at 166:21-167:9, 172:4-:25. She has worked on more than a thousand class actions, Trial Tr. Jan. 13, Doc. 304 at 21:13-:15, including several large international cases. Trial Tr. Jan. 12, Doc. 303 at 171:2-:25. She testified that her analysis of the call data was based on her experience in the data industry and her understanding of the practices of several data vendors on whose data she regularly relies. See, e.g., id. at 179:18-180:18, 182:2-:22.

         Ms. Verkhovskaya began her analysis with an examination of call records for the class period from Five9, a software service used by SSN to make calls and connect them with SSN's call center. See Id. at 167:15-168:4; Dep. Tr. of David Hill, Doc. 332 at 15:25-16:5.[8] These call records, which Ms. Verkhovskaya received in electronic form, showed the number called, date, time, length of the call, and other information. Trial Tr. Jan. 12, Doc. 303 at 174:3-:13, 176:13-:21. After downloading the records into a database, she determined that SSN made 1.6 million calls during the class period. Id. at 175:11-:14.

         Ms. Verkhovskaya testified that she first removed inbound calls and calls that were not connected. Id. at 177:3-178:5. This left approximately 230, 000 connected, outbound calls. Id. at 178:6-:8. She then removed calls to numbers that SSN called only once, since a TCPA violation requires more than one call. Id. at 178:11-:17; 47 U.S.C. § 227(c)(5). This left approximately 164, 500 calls to 58, 150 numbers. Trial Tr. Jan. 12, Doc. 303 at 178:21-179:3.

         Next, she removed calls to numbers that were not on the Registry as of 30 days before the class period began, or April 1, 2010. Trial Tr. Jan. 13, Doc. 304 at 30:15-:21. She obtained information about what numbers were on the Registry from Nexxa, which she testified was an “industry standard.” Trial Tr. Jan. 12, Doc. 303 at 179:18-180:6.[9]She also testified that the data from Nexxa would indicate if a number had later come off the Registry. Trial Tr. Jan. 13, Doc. 304 at 32:1-33:21. After comparing the numbers, she removed 34, 526 numbers that were not on the Registry, Trial Tr. Jan. 12, Doc. 303 at 179:14-:17, leaving 66, 468 calls to 23, 625 numbers. See PX 2008; Trial Tr. Jan. 13, Doc. 304 at 31:7-:11.

         Ms. Verkhovskaya then took several steps to remove any numbers from the list that were not residential. She testified that she used data from LexisNexis and from the call records to determine whether the numbers called were residential.[10] She removed all numbers that the Five9 call records themselves marked as “business.” Trial Tr. Jan. 12, Doc. 303 at 181:10-182:1. She also used the LexisNexis database to remove additional business and government numbers from the class. See Id. at 191:2-:9.

         Ms. Verkhovskaya testified that based on her experience, once business and government numbers were eliminated, the remaining numbers must be residential. See, e.g., Id. at 190:25-191:6.[11] She also considered that SSN was focused on selling Dish to residences, which suggested that most of their calls would be to residential numbers. E.g., Trial Tr. Jan. 13, Doc. 304 at 13:22-14:5. As a result of this review, she removed 1, 393 business numbers, leaving calls to 22, 232 numbers that she concluded were residential numbers. Trial Tr. Jan. 12, Doc. 303 at 181:10-:17, 183:8-:10. Finally, she removed numbers that the Five9 data identified as existing Dish customers, leaving 57, 900 calls to 20, 450 numbers.[12] Id. at 183:11-:23.

         Ms. Verkhovskaya provided clear, cogent testimony explaining her methodology and the bases for her opinions. To the extent there was conflicting evidence that questioned the validity, credibility, and weight of Ms. Verkhovskaya's opinions, the jury weighed that evidence and rejected Dish's evidence.[13]

         Dish contends that Ms. Verkhovskaya's analysis was flawed because she did not check to see if class members' numbers were on the Registry on the actual date that SSN called. Doc. 319 at 21. Dish suggests that some of the numbers could have come off the Registry between April 1, 2010, and the date of the call. However, Dish points to no evidence that any identified phone number actually did come off the Registry after April 1, and Ms. Verkhovskaya testified that Nexxa would have removed those numbers from the list it provided her. Trial Tr. Jan. 13, Doc. 304 at 32:1-33:21. This evidence was sufficient to support the jury's finding that the numbers of the class members were on the Registry at the time the calls were made.

         Dish asserts that Ms. Verkhovskaya was speculating when she testified that the class numbers were residential. Doc. 319 at 21-22. As Dish points out, Ms. Verkhovskaya could not identify all of the sources of data LexisNexis uses to classify numbers as residential or business. Trial Tr. Jan. 13, Doc. 304 at 71:10-:23; see Trial Tr. Jan. 17, Doc. 305 at 39:9-:22 (testimony of Dr. Debra Aron that LexisNexis uses many sources in a proprietary process). That, however, is not the test. See Fed. R. Evid. 702. Moreover, Ms. Verkhovskaya considered the Five9 records and SSN's telemarketing goals along with the LexisNexis data to conclude that the numbers were residential, as discussed supra ...


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