F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

C H A R L E S A. J O N E S ; J O S H W A T S O N , on behalf of themselves and all similarly situated persons,

Plaintiffs-Appellants
,

v

.

R O Y A L A D M I

N I S T R A T I O N S E R

V I C E S , I N C ., Defendant-Appellee
,

and

A L L A M E R

I C A N A U T O P R

O T E C T I O N , I N C .; H A R

O U T P A M B U C K

C H Y A N ; R A F F I S A D E J

Y A N ; J A S O N G A R

C I A , Defendants. N o. 15-17328

D.C. No. 3:14-cv-00199- L RH-W GC

OPI NI ON

A ppeal from the United States District Court for the District of Nevada L arry R. Hicks, District J udg e, Presiding

Arg ued and Submitted J une 15, 2017 San F rancisco, California

F iled Aug ust 9, 2017J O N E S V

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B efore: Mary

M. Schroeder, D. Michael F isher, * and N. Randy Smith, Circuit J udg es.
Opinion by

J udg e N.R. Smith

SUMMARY * *

Telephone Consum er P r o t ection Act

The panel affirmed the district court’s g rant of summary judg ment in f

avor of the defendant in an action under the Telephone Consumer Protection Act.

The panel held that Roy a l Administration Services, I n c., could not be held vicariously liable under the T C P A for several phone calls made by telemarketers employ ed b y All American Auto Protection, I nc., because the telemarketers

w e r e independent contractors and therefore did not act a s Roy al’s ag ents, as defined by federal common law.

* T h e Ho n o rab le D. Mich ael Fish er, Un ited States Circu it J u d g e f or th e U.S. Co u rt o f

A p p eals f o r th e T h ird Circu i t, sittin g b y d esig n atio n

.

** T h is su m m ary co n stitu

t es n o p art o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.J O N E S V

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COUNSEL

Matthew Rig hetti ( a rg ued), J ohn Glug oski, and Michael Ri g hetti, Rig hetti G lug oski P.C., San F rancisco, California, for Plaintiffs-Appellants.

Richard I

. D reitz er (arg

ued) and Donald P. Paradiso, W ilson Elser Moskowitz Edelman & D icker L L P, L as Veg as, Nevada, for Defendant-Appellee.

OP INION

N.R. SMI TH, Circuit J udg e :

Charles J ones and J osh W atson seek to hold Roy al Administration Services, I nc. (“Roy al”) vicariously liable for several telephone calls made in violation of th e T e l e phone Consumer P rotection A ct (“TCPA”), 47 U.S.C. § 227, b y t elemarketers employ ed by All American Auto Protection
, I nc. (“AAAP”). Roy a l can only be held vicariously liable for these calls if the telemarketers were actin g a s its ag ents, a s defined by f

ederal common law, when the calls were placed. To determine whether the AAAP telemarketers w e re Roy a l’s ag ents o r independent contractors, we apply the ten nonex h austive factors set forth i n the Restatement ( Second) Of A ge n cy § 220(2) (1958). Schmidt v. Burlington N. & S a n t a Fe Ry. Co.
, 6 05 F. 3 d 6 8 6
, 6 9 0 ( 9th Cir. 2010). After an
a s sessment o f these factors, we find AAAP’s telemarkete rs
were acting as independent contractors rather than as Roy a l’s ag ents. Therefore, Roy al cannot be held vicariously liable for these telephone calls. According ly
, the district c ourt properly g ranted summary

judg ment in Roy al’s favor.J O N E S V

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I.

Roy al sells vehicle service contracts (“VSC”). A VSC “ is

a promise to perform ( or pay for) cer t a in repairs or services [ on an automobile] .” Auto Service Contracts a n d W a r r a n t i es , F ed. Trade Comm’n: Consumer I nfo

. , h t t p s : / / w w w

. c o n s u m e r

. f t c

. g o v / a r t i c l e s / 0 0 5 4

- au t o

- s e rv i c e

contracts-and-warranties (last u pdated Aug ust 2012). A V SC is “[ s] ometimes called an ‘ex tended warranty .’” Id. Roy al sells its VSCs throug h aut o m o b ile d ealers and throug h “marketing vendors.” These marketing v endors sell Roy a l’s VSCs “ throug h direct mail or te l em arketing .” Roy al sells VSCs throug h about 20 different marketing vendors.

AAAP sold VSCs for m any companies like Roy a l throug h telemarketing

. W hen an AAAP telemarketer placed a call, he

or she would first “sell the conc e p t o f

. . . a vehicle service contract” to the c onsumer. Then, during the phone c a l l
, the telemarketer would pick a particular service plan from o ne o f their many v endors to sell to the consumer , based on the

m a k e, model, and mileag e of the consumer’s car, and t h e price a nd benefits in which the consumer ex pressed interest.

I n October 2011, Roy al entered into a marketing ag reement with AAAP. 1 The ag reement between Roy al and A A A P c o n t a i n e d a u t h o r i z e d s a l e s a n d m ar k e t i n g methodolog ies with which A AAP w as required to c omply

. T h e a g r e e m e n t “ [ e ] x p r e s s l y e x c l u d e d f r o m t h e s e methodolog ies

. . . a

n y a ct or omissio n t h at violates applicable state or F ederal law, inclu d ing but not limited to ‘robo-calling .’”

1 A t th e tim e A A A P w as o p eratin g as P recise En terp rises, L L C.J O N E S V

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Roy al assig ned Clay

to n C h u r chill to be the “ag e nt o f

r e c o rd” for the AAAP account. Churchill provided traini n g to AAAP’s employ ees a t AAAP’s call center in Az u sa, California. During this training
, he provided information about Roy al’s VSCs, claim structure, coverag e, pricing
, a nd customer service. Roy al’s president, Richa rd McCabe, visited the call center with Churchill about a doz e n t imes from 2011 to 2014. During t hese visits, AAAP’s officials (Harout Pambuchchy an, Raffi Sadejy an, and J ason G arcia) 2 provided ass u rances that the telemarketers were “dialing customers one a t a t ime” and that they were “compl[ y ing ] with the Do Not Call list.”

Appellants are individuals living in Reno, Nevada, whose cellular telephone numbers are reg istered on the national donot-call reg istry . J ones asserts that he received four calls on his cellular telephone from AAAP i n M arch 2 014. During

one of these c alls, J ones spoke to Charlie F ort, who offered to sell J ones a VSC called the “Diamond New Car” protection plan. J ones was then transferred to Samuel Mor r i s , w ho confirmed that he was calling from AAAP. W at s o n asserts that he received four calls to his ce l l u l a r telephone from AAAP in April and May of 2014. J ones and W atson believe AAAP p laced the calls using an “automatic telephone dialing sy stem.”

I n A pril 2014, J ones filed a cl as s

- a c tion law suit ag ainst AAAP, Pambuckchy an, Sadejy an, and Garcia, asserting one claim for violation of the TCPA. AAAP w as orig inally represented by counsel and f i l e d a n answer and a motion to

2 It is n o t clear f

ro m th e reco rd w

h at p o sitio n s th ese th ree in d iv id u als h eld at A A A P

. T h ey h av e b een called o f f icers, directo rs, em

plo y ees, an d p rin cip als in

b oth th e reco rd an d b rief

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dismiss. However, AAAP’s attorney s all moved to withdraw

a f t e r AAAP terminated “its attorney s due to an anticipat e d bankruptcy action by [ AAAP] .” The district court g r anted the

mo t i o n s to withdraw. On J anuary 8, 2015, after the district court and AAAP’s former attorney s h ad repeatedly advi s ed the company that it was “oblig at[ ed] to defend this action throug h licensed c o unsel,” the d istrict court entered default ag ainst AAAP, because it ha d fa i led to “otherwise defend” this action.

Thereafter, the district c o u rt g ranted J ones leave to file an amended complaint. I n the F irst Amended Complaint, J ones added W atson as a plaintiff and Roy al a s a de f e n d a n t

. The F irst Amended Complaint a sserted that Roy al was vicarious l y liable for AAAP’s calls that were made in v i o l a t i on of the TCPA and the federal reg ula t i o n s implementing the TCPA. On J une 1 7
, 2 0 15, Roy al filed a motion for summary judg ment. O n November 24, 2015, the district court g ranted the motion and entered judg ment in favor of Roy al. This appeal followed.

II.

The Ninth Circuit reviews d e n o vo a district court’s g rant

o f s ummary judg ment. Pavoni v. Chrysler Grp., LLC
, 789 F .3d 1095, 1098 (9th Cir. 2015). I n analy z ing a motion f or summary judg ment, the panel must “must dete rm i n e whether there are any g enuine issues o f materia l fact a nd whether the district court correctly a pplied the relevant substantive law.” Id. (quoting Matsushita Elec. Indus. Co. v

. Zenith Radio Corp. , 475 U.S. 574, 587 ( 1986)). W ithin this analy sis, the panel must “[ v] iew[ ] the evi d ence ‘as a whole’ and ‘in the lig ht most f

a v o r a b l e to the party opposing the motion.’” Id. (quoting M a t sushita
, 475 U.S. at 587). “AnJ O N E S V

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issue of material fa c t is g enuine ‘if the evidence is such that

a reasonable jury c ould return a verdict for the nonmovi ng party .’” Id. (qu oting Anderson v

. Liberty Lobby, Inc.
, 477 U.S. 242, 248 (1986)).

III.

The TCPA makes it unlawful for a person,

to make an y call (other than a call made for

em e r g e ncy purposes or made with the p r ior

ex p ress consent of the c alled party ) using any automatic telepho n e dialing sy stem or an artificial or prerecorded voice

. . .

to any telephone number assig ned t o a

. . . cellular teleph o ne service

. . . or any service for w hich th e called party is c harg ed for the call . . . .

47 U.S.C. § 227(b)(1)(A)(ii i ). O ne of the parties to the c all (either the caller or the recipient) must be “within the United States.” § 2 27(b)(1). The TCPA a lso directed the F ederal Com m u n ications Commission (“F CC”) to “prescribe reg ulations to implement methods and procedures for pr o t e c ting the privacy rig hts [ of consumers] .” § 227(c)(2). The T CPA g ives consumers “who ha[ v e] received more than

one telephone ca l l w i t hin any 12-month period by or on behalf of the sam e e n tity in violation of the[ se] reg ulations”

a private rig h t of action. § 227(c)(5). The reg ulations implementing the TCPA prohibit, among other thing s, a “person or entity ” f

r o m “ i n i tiat[ ing ] any telephone solicitationJ O N E S V

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to

. . . [ a] residential telephone subscriber who has reg istered his or h er t e l e p h one number o n the national do-not-call reg istry .” 47 C.F .R. § 64.1200(c)(2).

Roy al does no t challeng e w hether there is sufficient evidence in the record to create a g e nuine issue o f m a t e r i al fact as to whether AAAP’s telemarketers violated the TCPA and its implementing reg ula t i ons. Rather, Roy al disputes whether it can be held vicariously liable for AAAP’s calls.

W e have p reviously clarified that “ a d e f endant may be held vicariously liable for TCPA violations w h e r e the p l a intiff e stablishes an a g ency relationship, as defined b y federal common law, between the d efendant and a third-party caller.” Gomez v. Campbell

- E wald Co.
, 768 F

. 3d 871, 878 (9th Cir. 2014), aff’d sub n o m

. Campbell-Ewald Co. v

. G o m ez , 136 S. Ct. 6 63, 674 (2016) (“[ U] nder fede ra l common-law principles of ag ency , there is vicarious liability for TCPA violations.”). “Ag ency is the fiduciary relationship that arises w hen one p erson (a ‘principal’) manifests assent to another person (an ‘ag ent’) that the ag ent shall act on the principal’s b ehalf and subject to th e principal’s control, a nd the ag ent manifests a ssent o r o t h erwise consents so to act.” Mavrix Photographs, LLC v. L i v e Jo urnal, Inc.
, 8 53 F .3d 1020, 1 029 (9th Cir. 2017) (quoting Restatement (Third) Of Ag ency § 1 .01 (Am. L aw I nst. 2006)). “ Fo r an ag ency relationship to ex ist, an ag ent must have authority to act on behalf of the p r i n c i pal and ‘[ t] he person represented [ must have] a r ig h t to control the actions of the ag ent.’” Id. (quoting Restatement (Third) Of Ag ency § 1.01 cmt. c ). One theory of ag ency , ac t u a l authority
, “arises throug h ‘the principal’s a ssent that the ag ent take action on the principal’sJ O N E S V

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behalf.’” 3 I

d

. (quoting Restatement (T h ird) Of Ag ency § 3.01). “An ag ent acts with actu a l au t h o r ity when, at the time of taking action t h a t has leg al consequences for the pr i n cipal, the ag ent reasonably believes, in accordance with the principal’s manifestations to the ag ent, that the principal wishes the ag ent so to act.” Restatement (Third) Of Ag ency § 2.01.

Sig nificantly
, “[ n] ot all relationships in which one person provides services to another satisfy the definition of ag ency

. ” Id. § 1.01. An individual ac t ing as an “ independent contractor,” rather than an ag ent, does not have the traditional ag ency relationship with the principal necessary for vicarious liability

. S

e e U n i ted States v

. Bonds
, 608 F .3d 495, 505–06 (9th Cir. 2010). Generally
, a p rincipal is not vicariously liable for the actions of an independent contractor, because the principal does not h ave suffi ci e n t control o ver an independent contractor. Id. ; see also M a v r i x Photographs
, 853 F .3d at 1030 (citing Hollingsworth v. Perry
, — U.S. —, 133 S. Ct. 2 652, 2657–58 (2013)); Bonds
, 608 F

. 3d at 505 (holding that, in determining whether an ag ency relationship

ex ists, “a court will look to the totality of the circumstances, but the ‘ essential ing redie n t

. . . is the ex tent of control

ex e r cised by

the employ er’”).

Keepingin mind that the “ex tent of control ex ercised by the [ principal] ” is the “essential ing redient,” Bonds
, 608 F .3d at 505, we a dopt the following ten factors as relevant to the

3 T h e d istrict co u rt an aly zed w h eth er Ro y al co u ld b e v icario u sly liab le

u n d er th ree d if

f eren t ag en cy th eo ries: actu al au th o rity
, ap p aren t au th o rity
, an d ratif icatio n

. On ap p eal, A

p p ellan ts assert th at th ey are o n l y p u rsu in g
an actu al au th ority th eo ry , an d h av e w aiv ed an y arg u m en t u n d er th e o th er tw o th eo ries. A cco rd i n g ly , w e ad d ress o n ly actu al au th o rity

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determination of whether an individual providing services for a principal is an ag e nt or an independent contractor:

1) t h e control e x erted by the employ er, 2 ) w hether the one employ ed is eng ag e d in a distinct occupation, 3) whet h e r the work is normally done under the supervisio n o f an employ er, 4) the skill required, 5) whether the employ er supplies tools and instrumentalities [ and the place of work]
, 6 ) the leng th of time employ ed, 7) whether p a y ment is by time o r b y the job, 8 ) whether the work is i n t h e reg ular business o f t he employ er, 9) the

s u b j e c tive inte n t o f t h e p a r t i es , a n d 10) whe t h er the employ er is or is not in business.

Id. at 504 (citing Restatement (Second) Of Ag ency § 220(2) (1958)). T hese factors are not ex haustive, but they g uide our analy sis here. See Cmty. for Creative Non-Violence v. Reid
, 490 U .S. 730, 751 (1989) (citing Restatement ( S ec o n d ) Of Ag ency § 220(2) and listing additional factors, none o f which “is determinative,” that should be considering in deciding “whether a h ired party is an employ ee under the g eneral

c o m mon law of ag ency ”). Apply ing these factors, we find AAAP and it s t e lemarketers were not acting as Roy a l’s ag ents when they

placed the calls at issue in this case.

F irst, we acknowledg e that Roy al ex e rcised some amount of control over AAAP. AAAP w as required to keep records of its interactions wit h consumers who purchased Roy al VSCs, g ive Roy al weekly reports on VSC sales, and provide

no tice of requests to c ancel Roy al V SCs. AAAP was also required to implement security measures to protect consumerJ O N E S V

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information, collect pay

ments on b ehalf of Roy al, and obtain Roy al’s approval before using sales literature to assist in the sale of Roy al VSCs. Moreover, AAAP was only permitted to

use the “scripts and ma t e r i a l s” Roy al approved a nd had to comply with the “g uidelines and p rocedures” Roy al provided when selling Roy al p r oducts. These g uidel i n es a nd procedures g enerally required AAAP to “operat e in accordance with laws and reg u lations” and refrain from making “false and misleading ” representations. I n fact, Roy al suspended its relationship with A AAP on one occasion a fter it suspected AAAP telemarketers were violatin g Roy a l’s standards and procedures. However, Roy al did not have the rig ht to control the hours the telemarketers worked nor did it set q u otas for the number of c alls or sales the telemarketers had to make. See N.L.R.B. v. United Ins. Co. of Am.
, 3 90 U.S. 254, 258 (1968) (finding the f act that individuals “perform their work primarily away from the company ’s offices and fix their o wn hours of work and work day s ” s h owed principal had less control and supported independent contractor status). T hus, Roy al h ad only limited control of A AAP ’s telemarketers.

Sig nificantly
, Roy al d id not have any control o f a telemarketer’s call until the telemarketer decided to pitch a Roy al VSC to the consumer. AAAP sold VSCs for multiple companies ( all of who m , p resumably
, had their own standards and procedures AAAP telemarketers were required to comply with). W hen an AAAP telemark e t e r r eached a consumer, they first had to sell the consumer on the idea o f a V S C. Roy al d id n o t have control over this s a l e s p i t ch. O nly a fter the consumer was sold on the idea o f a VSC, would an AAAP telemarketer pitch a specific VSC. I f this specific VSC was
a R o y al VSC, then Roy al controlled the “scripts a nd materials” t h e t elemarketer was permitted to use in the sale.J O N E S V

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An AAAP telemarketer pitched a VSC to Appellants during only one call at issu e in this case. During that call, a telemarketer a ttempted to sell a “Diamond New Car” protection plan—a plan not sold b y Roy al throug h AAAP. Thus, there is no e vidence that A AAP telemarketers e ver tried to sell Roy al VSCs to Appellants. According ly
, Roy al never specifically

controlled any part o f any of the calls at issue in this case.

S e c o nd, AAAP was an independent busine s s , s e p a r a t e a n d apart from Roy al, see id. at 258–59 (finding relevant whether individuals “operate[ d] their own independent businesses” o r “perform[ ed] functions that are an essential part of the company ’s normal operati o n s ” )
, and it was eng ag ed in the “distinct occupation” of selling VSCs throug h telemarketing
, as demonstrated by the fact that it “had many different c lients and o ffered [ the same] services to o t hers during the same period,” see Bonds
, 608 F .3d at 505.; cf. Alexander v. FedEx Ground Package Sys., Inc.
, 765 F .3d 981, 995 ( 9th Cir. 2 014) (apply ing California law, which c onsid e rs nearly identical factors). Thus, th i s factor strong ly sug g ests AAAP’s telemarketers were independent c ontractors rather than employ e es.
Third, the c alls made by AAAP’s telemarketers were not

norm a l l y d one u nder the supervision of Roy al. Churchill provided some training and oversig ht at AAAP’s Az usa call center, and Richard McCabe, Ro y a l ’s president, v isited the call center about a doz e n times over the course of three y ears. However, as e videnced above, a Roy al employ ee d i d not directly supervise AAAP’s calls

. Th erefore, this factor also favors finding AAAP’s telemarketers were independe nt contractors.J O N E S V

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As to the fourth factor, the record does n o t c ontain any evidence reg arding the skill required to place the calls or sell

a VSC. Therefore, we do not consider this f act o r i n o u r analy sis.

F ifth, R o y al p rovided AAAP with some “tools a nd ins t r u mentalities” necessary to c omplete the sales. F o r
ex a mple, Roy al provided the c ontracts that were to be sold and g ave AAAP acc e s s to their “on-line Contract quote manag er.” Roy al also trained the AAAP telemarketers in how to sell Roy al contracts. On the other hand, AAAP provided far more tool s and instrumentalities, including its

own p hones, c omputers, furniture, and office space. I n addition, if A AAP wanted any “brochures [ or] other sales l iterature,” it had to develop and manufacture them it s e l f. T h u s , A A A P s u p p l i e d m o s t o f t h e “ t o o l s a n d i n s t r u m e n t a l i t i e s , ” f

u r t h e r s u p p o r t i n g a f i n d i n g o f independent contractor status. See Reid , 490 U.S. at 752.

Six th, the o rig inal contract was in e ffect for only one y ear, with each party r etaining the ability to cancel the contract at

an y t i m e o n 30 day s notice. Ultimately
, AAAP sold VSCs for Roy al f

o r three y ears, from Oct o ber 2011 until October 2014. Three y ears is not a particularly short p eriod of time, but the limited nature of the orig inal contract shows there was
a “contempla t e d e n d to the

. . . r elationship.” See Ruiz v

. Affinity Logistics Corp.
, 754 F

. 3d 1093, 1105 (9th Cir. 2014). The desig nated impermanency of the relationship supports a finding of in d e p e ndent contractor status. See N.L.R.B.
, 390 U.S. at 259 (finding relevant that individual s had “a permanent working arrang ement with the c ompany under which they may continue as long as their performance is satisfactory

”); Bartels v

. Birmingham
, 332 U.S. 126, 130 (1947).J O N E S V

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Seventh, AAAP was paid a c ommission for each sale, rather than for the time the telemarketers worked. T h is is a strong indicator that the telemarketers were independent contractors. See Ruiz
, 754 F .3d at 1104–05; Bonds
, 608 F .3d at 505.

Eig hth, Roy al specifically contracted out a ll its direct sales to many different vendors and c ar dealerships instead o f hiring its own employ ees to sell its VSCs. Howev e r , Roy al is in the business of selling VSCs; according ly
, AAAP’s sales

are a reg ular part of Roy al’s business. Thus, this factor tends to favor finding an age n c y relationship. See Ruiz
, 754 F .3d at 1105.

As to the ninth factor
, t h e r ecord does not clearly evidence the s u b

j ec t ive intent o f the parties. Nevertheless, t h e fact that AAAP sold VSCs f or multiple compan i e s indicates that AAAP’s intent was to h ave i t s telemarketers

o perate as independent contractors for many different companies. See Dumas v. Gommerman
, 865 F .2d 1093, 1105 (9th Cir. 1989) (finding r elevant “whether the artist works for several buy e rs at a time, or ex clusively for one”).

Tenth, and finally
, Roy al is a business, which favors finding an ag ency

relationship.

Taking these factors into account, it is clear that AAAP’s telemarketers were independent c ontractors rather than ag ents. AAAP wa s its own independent business that sold VSCs for multiple companies without the direct supervision of a Roy a l employ ee. AAAP provided its own equipment, set its own h ours, and only receiv ed p a y ment if one of its telemarketers a ctually made a sale. Fi n ally
, althoug h Roy al had some control over AAAP’s telemarketers, i t d i d notJ O N E S V

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specifically control the calls at issue in this case, because the telemarketers never attempted to sell a Roy al VSC during those calls. B ecause AAAP’s telemarketers were independent contractors, rather than Roy al’s ag ents, R oy al cannot be held vicariously liable for any cal l s the telemarketers made in violation of the TCPA.

IV.

The district court correctly applied the releva n t substantive law to the undisputed facts when it concluded that the A AAP telemarke t e r s were not acting as Roy al’s ag ents when they placed the calls a nd, a ccording ly
, that Roy al could not be held vicariously liable for the calls. B ecause Roy al cannot be held vicariously liable for t h e c a lls, it was proper for the district court to g rant Roy al’s mo t i o n f or summary judg ment.

AF F IRMED.