The FTC filed a complaint in 2019 against Day Pacer LCC for calling numbers on the federal Do-Not-Call List in violation of its Telemarketing Sales Rule. After the owner of the company died, the commission filed a motion to substitute the owner’s daughter, who is the administrator of his estate, in his place as the defendant.
09/12/2023 2:35 P.M.
3 minute read
On Sept. 1, 2023, the Federal Trade Commission amended a 2019 complaint (PDF) against telemarketing company Day Pacer LLC when one of its owners died. The FTC named the owner’s daughter, who is the administrator of his estate, in his place as the defendant in the action. The district court judge granted the FTC’s motion for substitution in part and denied it in part.
Background
In March 2019, the FTC filed a consumer protection action (PDF) against Day Pacer, which makes calls to generate consumer leads to sell to for-profit education companies. The commission also brought suit against Day Pacer’s successor in interest, EduTrek LLC, and its former president Ian Fitzgerald, managing member Raymond Fitzgerald, and partial owner and manager David Cumming (defendants).
The FTC alleged the defendants “initiated or caused others to initiate telephone calls to phone numbers on the federal Do Not Call List in violation of the FTC’s Telemarketing Sales Rule (TSR), which is promulgated under the Telemarketing Act.” 15 U.S.C Sections 6101-6108.
The allegations are based on two counts: 1) that there were calls initiated by the LLC defendants and calls initiated by “other telemarketers that were allegedly acting as the LLC [d]efendants’ agents (the IBT Partners)” and 2) that the defendants violated 16 C.F.R. Section 310.3(b) by “providing substantial assistance and support to the IBT Partners even though [the d]efendants knew or consciously avoided knowing that those telemarketers were calling numbers on the Do Not Call List in violation of the TSR.”
The FTC moved for summary judgment against all the defendants, who opposed the summary judgment and cross-moved for summary judgment against the FTC. Defendant David Cumming filed a separate opposition to summary judgment and also cross-moved for summary judgment. The two sets of defendants also adopted one another’s summary judgment arguments.
Shortly after the summary judgment briefing concluded, Cumming passed away, and the commission filed a motion to substitute the personal representative of Cumming’s estate—his daughter—as a defendant in this action. The estate opposed this motion.
Decision
The district court judge granted the FTC’s motion for substitution in part and denied it in part.
The court found that the FTC demonstrated as a matter of law that “[the d]efendants are liable for violating the TSR because the LLC [d]efendants placed calls to phone numbers on the Do Not Call List.” However, the court found the FTC did not demonstrate as a matter of law that the defendants were liable for calls initiated by the IBT Partners acting as the defendants’ agents.
The FTC also moved for summary judgment on its alternative claim on its second count, which alleged the defendants “provided substantial assistance and support to at least one other telemarketer while knowing that the telemarketer was calling numbers on the Do Not Call List.”
Since the FTC was only granted judgment on one of its two alternative theories, the defendants were granted summary judgment on the first count to the extent it’s based on calls initiated by the IBT Partners.
Additionally, given the age of the summary motions and the substitution for the deceased defendant, the court requires further input from the parties before deciding a proper remedy to the complaint.
ACA’s Take
ACA members should take care to familiarize themselves with the FTC’s Telemarketing Sales Rule and consult with counsel when determining if there is a violation of the rule.
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