Folks – here’s an interesting companion decision to Petrina McDaniel's post on the enforceability of arbitration provisions involving two TCPA defendants who are in privity with one another.
In Reo v. Palmer Admin. Servs., 2019 U.S. App. LEXIS 16119 (6th Cir. May 30, 2019), the defendant allegedly placed telemarketing calls to the plaintiff’s landline. But the plaintiff’s son (and roommate) had previously settled his own TCPA claims against the defendant for similar calls. The son’s settlement agreement did not include his plaintiff father, but it did contain an arbitration provision with the defendant and, over the plaintiff’s objection, the district court compelled arbitration of the plaintiff’s TCPA claims based on the son’s prior arbitration agreement. The Sixth Circuit affirmed, holding that the plaintiff’s privity with his son required arbitration of plaintiff’s TCPA claims.
Of importance to TCPAWorld, this case demonstrates that privity, for arbitration purposes, goes both ways! And, though the opinion is unpublished, the panel’s decision drives home the importance of utilizing arbitration provisions at every juncture in TCPAWorld.
Within the first few paragraphs, it’s evident that Reo was a thorn in the court’s side. Bryan Reo, an attorney (look out!), shared a home with his father, Anthony Reo. In 2016, Bryan threatened Palmer Administrative Services, Inc. (“Palmer”) with a TCPA complaint regarding alleged “unauthorized telemarketing calls” received through a landline located at his and his father’s abode. Palmer was successful in fending off any litigation and, instead, settled the matter with a settlement agreement that “waived any of Bryan’s claims against Palmer up until the day of execution . . . , and provided that any future disputes would be submitted to arbitration.”
End of that, right? . . . Never mind, as regular readers of TCPAWorld know, professional plaintiffs rarely give up without a fight. And this case was no different. Bryan (as attorney for his father, Anthony) later brought a TCPA action against Palmer in 2018. This time, however, Bryan sought damages and injunctive relief on behalf of Anthony rather than himself.
In response, Palmer – remembering its 2016 encounter with Bryan – moved to compel arbitration under the 2016 settlement agreement. Palmer’s theory of enforceability was based in contractual privity. “[B]ecause Bryan and his father live at the same address and utilize the same landline telephone number,” Palmer argued, “Anthony was in contractual privity with Bryan for the purposes of the pending [TCPA] claims.”
The district court, in a stinging rebuke of Bryan and his father’s antics, agreed with Palmer. But not before chiding the Reos’ for “utilizing enough of the resources of [the] federal courts in the Northern District of Ohio with their TCPA cases – not to mention the resources of the Lake County Common Pleas Court.”
According to the district court, arbitration was required because: (1) Bryan and Palmer “agreed to resolve any and all future disputes and claims arising between them . . . by submitting such dispute to binding arbitration before a single arbitrator . . . [;]” (2) “the claims asserted [by Anthony] fall within the scope of the . . . Agreement because they involve telemarketing calls made to the same landline at the same address in overlapping periods of time[;]” and (3) “Congress has not stated that TCPA claims are nonarbitrable.” Accordingly, the district court granted Palmer’s motion to enforce arbitration and dismissed the case.
On appeal, the Sixth Circuit was no more sympathetic to Bryan’s attempt to anoint himself a deputy enforcer of the TCPA. Noting the “strong federal policy in favor of arbitration,” and the presumption that “any ambiguities . . . or doubts as to the parties’ intentions should be resolved in favor of arbitration,” the appellate court affirmed. The primary issue for resolution: How could Bryan’s prior agreement to arbitrate with Palmer be enforceable as against his father, Anthony? According to the Sixth Circuit, state law concepts of contractual privity controlled (here, Ohio law).
Under Ohio law, the Sixth Circuit explained that privity “does not require a contractual relationship”; instead, the relevant inquiry was “[t]he connection or relation between [the] two parties [Bryan and Anthony], each having a legally recognized interest in the same subject matter” and the “mutuality of [that] interest.” Bryan and Anthony argued that their interests were not mutual because, in 2016, Bryan wanted to recover “financial compensation for the alleged harassing calls he received” from the shared landline, whilst Anthony now wished “to receive financial compensation for the harassing calls he received” at the same landline.
The Sixth Circuit was having none of it.
According to the court, “Anthony and Bryan both sought relief for an alleged injury stemming from calls to the same shared residential landline” and “Anthony’s complaint requests not only damages, but also injunctive relief, just as Bryan’s 2016 proposed complaint sought.” For privity to apply, Ohio law requires only that “the interests of one party adequately represent the interests of another.” Thus, because the relief sought “would benefit Bryan and Anthony equally and in the same way, and Bryan’s interests can be said to [have] ‘adequately represent[ed]’ those of Anthony,” the court affirmed the district court’s order compelling arbitration.
Short shrift, but an important example for TCPAWorld and a stern warning for would-be professional plaintiffs. The upshot: arbitration agreements are an effective tool – not just in the context of an initial or continuing contractual arrangement, but in settlements as well – to limit future litigation before the opposition shows their whole hand.
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