Seventh Circuit Tightens TCPA Vicarious Liability: Subagency Requires Authority at Each Delegation Level; Treble Damages Require Knowing or Reckless Violations

I. Introduction

Parties. Robert Hossfeld (plaintiff) sued Allstate Insurance Company (defendant) under the Telephone Consumer Protection Act (“TCPA”) after a telemarketer, Atlantic, placed twelve marketing calls to him advertising Allstate auto insurance. The calls were made after Hossfeld’s number had already been on Allstate’s internal do-not-call list.

How the calls happened. Two Allstate agents, Jason Fleming and Daniel Gilmond, hired a “Non-Contracted Telemarketer,” Transfer Kings. Transfer Kings then subcontracted calling to Atlantic without telling the agents; neither Allstate nor its agents knew Atlantic was involved until after suit.

Key issues on appeal. The Seventh Circuit addressed (1) whether Allstate could be held vicariously liable for Atlantic’s calls under federal common-law agency doctrines (subagency/actual authority, apparent authority, ratification), (2) the proper “willful or knowing” standard for TCPA treble damages under 47 U.S.C. § 227(c)(5), and (3) whether the denial of class certification for lack of numerosity under Fed. R. Civ. P. 23(a)(1) was an abuse of discretion.

II. Summary of the Opinion

The Seventh Circuit affirmed denial of class certification and reversed summary judgment for Hossfeld on TCPA liability. It held Hossfeld failed to produce evidence that Allstate was vicariously liable for Atlantic’s calls under any agency theory. The panel directed entry of judgment for Allstate.

The court also clarified that TCPA treble damages require a knowing or reckless violation, rejecting the district court’s view that “willful” means merely “volitional.”

III. Analysis

A. Precedents Cited

1. Standards of review and summary judgment framework

  • Brown v. Osmundson and Christensen v. Weiss supplied the basic summary judgment framework: de novo review, and a dispute is “genuine” only if a reasonable jury could find for the nonmovant.

2. Agency law as the governing lens for TCPA vicarious liability

  • Opp v. Wheaton Van Lines, Inc. anchored the court’s use of the Restatement as reflecting the federal common law of agency.
  • Campbell-Ewald Co. v. Gomez (citing In re Joint Petition Filed by Dish Network, LLC) confirmed that traditional agency principles may support TCPA vicarious liability.
  • The Seventh Circuit’s own TCPA vicarious-liability decisions—Warciak v. Subway Rests., Inc. and Bridgeview Health Care Ctr., Ltd. v. Clark—were central: they require proof of actual authority, apparent authority, or ratification, and they strictly tie apparent authority to the principal’s manifestations.
  • Bilek v. Fed. Ins. Co. supplied the Restatement-based definition of actual authority: what the agent reasonably believes the principal wants, based on the principal’s manifestations.
  • United States v. Dish Network L.L.C. reinforced the limiting principle that acts outside an agent’s authority do not create principal liability.

3. Burden of proof and evidentiary sufficiency for agency

  • Valenti v. Qualex, Inc. placed the burden on the party alleging agency to prove it.
  • Bank of Com. v. Hoffman was invoked to reject the district court’s reasoning that authority could be inferred from a lack of evidence forbidding delegation; the plaintiff must offer affirmative evidence of authority.

4. Waiver, appellate briefing, and deciding issues not reached below

  • Crothersville Lighthouse Tabernacle Church, Inc. v. Church Mut. Ins. Co. supported the holding that Hossfeld waived any direct-liability argument not pressed below.
  • Bradley v. Village of University Park, Bennett v. Tucker, and United States v. Brown were used to reject waiver of Allstate’s arguments where the district court had not addressed the alternative theories and Allstate responded in reply.
  • Otto v. Variable Annuity Life Ins. Co. justified deciding apparent authority and ratification without remand because the record was developed and the correct result was clear.

5. Ratification in TCPA-like contexts

  • Hodgin v. UTC Fire & Sec. Americas Corp. was cited to illustrate that prompt investigation and termination of problematic telemarketing relationships cuts against ratification.

6. “Willful” or “knowing” treble-damages standard

  • Redman v. RadioShack Corp. (quoting Farmer v. Brennan, and citing Slade v. Bd. of Sch. Dirs.) provided the Seventh Circuit’s general civil-law understanding of “willful” as reckless disregard—an unjustifiably high, obvious or known risk.
  • Safeco Ins. Co. of America v. Burr supplied the Supreme Court’s key clarification: “willful” includes both knowing and reckless statutory violations.
  • Persinger v. Sw. Credit Sys., L.P. and Redman v. RadioShack Corp. showed the Seventh Circuit already applies Safeco’s knowing-or-reckless test in other federal statutory schemes, supporting uniformity for TCPA treble damages.
  • Other circuits’ TCPA treble-damages decisions—Krakauer v. Dish Network, L.L.C. and Lary v. Trinity Physician Fin. & Ins. Servs.—were used to confirm a consensus that negligence or mere volition is insufficient.

7. Class certification and numerosity

  • The abuse-of-discretion standard came from Howard v. Cook Cnty. Sheriff’s Off..
  • Anderson v. Weinert Enters., Inc. supplied the Seventh Circuit’s practical, evidence-based numerosity approach and the admonition that speculation about class size is not enough.
  • Chi. Tchrs. Union, Local No. 1 v. Bd. of Educ. supported the “preponderance of the evidence” burden for Rule 23 requirements.
  • Orr v. Shicker and Mulvania v. Sheriff of Rock Island Cnty. supplied the oft-cited (but non-dispositive) forty-member benchmark.
  • United States v. Dunkel supported the principle that courts need not craft arguments for parties—used here where Hossfeld failed to argue impracticability of joinder.

B. Legal Reasoning

1. The court’s central move: “Chain-of-delegation” discipline in subagency

Hossfeld’s main theory—adopted by the district court—was a “subagency” chain: Allstate → (agents Fleming/Gilmond) → Transfer Kings → Atlantic. If Atlantic were a validly appointed subagent (or “sub-subagent”), then its conduct could “flow up” to Allstate.

The Seventh Circuit rejected this by insisting on a strict requirement: authority must support each layer of delegation. It was not enough that Allstate’s contracts with its agents contemplated “external provider[s]” and “Non-Contracted Telemarketers.” The dispositive question was whether Transfer Kings had actual (or apparent) authority, traceable to Allstate’s manifestations to Transfer Kings, to appoint Atlantic.

On this record, it did not:

  • No express actual authority: there were no communications from Allstate to Transfer Kings authorizing it to appoint a further caller; indeed, Allstate did not even know Transfer Kings existed until suit.
  • No implied actual authority: Hossfeld offered no evidence of industry custom or necessity showing that subcontracting to additional telemarketers was “necessary, usual, and proper” to accomplish a delegated task.
  • No “negative inference” authority: the court rejected the district court’s logic that authority could be inferred because nothing in the record forbade it. The plaintiff bears the burden to affirmatively prove authority.

A salient policy concern was explicit: Hossfeld’s reading would permit “seemingly infinite levels of subagency” and “unending chain[s] of vicarious liability” without any manifestation of assent by Allstate.

2. Apparent authority: principal-to-third-party manifestation and reasonable reliance

The court then disposed of apparent authority on two independent grounds, consistent with Bridgeview Health Care Ctr., Ltd. v. Clark and Warciak v. Subway Rests., Inc.:

  • No Allstate manifestation to Hossfeld: Atlantic’s statements that it was calling “on behalf of” Allstate could not create apparent authority because “only the words or conduct of the alleged principal” matter; the agent’s own statements are insufficient.
  • No reasonable reliance: Hossfeld did not show he relied on any supposed authority to his detriment. He never bought insurance, and he admitted he was using aliases and feigning interest “to investigate.”

3. Ratification: benefit must be tied to the plaintiff’s calls and knowingly retained

Ratification failed for two principal reasons:

  • Overbreadth: Hossfeld argued Allstate benefited from telemarketing generally (quotes and policies). The court held the TCPA private action under 47 U.S.C. § 227(c)(5) requires focus on calls to the plaintiff—so ratification must be tied to benefits from Atlantic’s calls to Hossfeld specifically.
  • No knowing retention or ratifying silence: Hossfeld never purchased anything; any “benefit” was speculative. And even assuming knowledge, Allstate investigated, traced calls, and later prohibited agents from contracting with Transfer Kings or Atlantic—conduct inconsistent with ratification, as illustrated by Hodgin v. UTC Fire & Sec. Americas Corp..

4. Willfulness for treble damages: rejecting “volitional” and adopting knowing-or-reckless

Although the court reversed liability outright (making damages academic here), it corrected the district court’s treble-damages standard. It held “willful” in the civil TCPA context requires knowing or reckless violation—not mere volitional conduct—drawing from Redman v. RadioShack Corp. and Safeco Ins. Co. of America v. Burr, and aligning with Krakauer v. Dish Network, L.L.C. and Lary v. Trinity Physician Fin. & Ins. Servs..

5. Class certification: numerosity requires evidence and an impracticability argument

The Seventh Circuit affirmed denial of certification because Hossfeld produced evidence of only thirty-three unique numbers and offered speculation (not proof) that more existed. He also failed to argue why joinder would be impracticable—an omission the district court was not required to cure. The court also rejected an appellate “changed landscape” request, emphasizing Rule 23(c)(1)(C) modification is for district courts before final judgment, which had already entered.

C. Impact

1. A meaningful constraint on TCPA “up-the-chain” liability

The decision strengthens a defendant’s ability to resist TCPA liability when unlawful calls are made by unknown downstream subcontractors. Plaintiffs must now focus discovery and proof on principal-to-intermediary manifestations and whether each intermediary had authority to further delegate. Contract language with first-level agents that anticipates third-party telemarketing will not, without more, establish authority for indefinite downstream subcontracting.

2. Practical compliance consequences for brands and agents

While the opinion limits vicarious liability absent proof of authority, it implicitly encourages companies to: (a) tighten contractual controls on subcontracting, (b) require disclosure of all downstream vendors, and (c) audit lead sources and do-not-call compliance—because liability could still attach where manifestations, ratification, or reliance can be proved.

3. Treble damages: higher bar, clearer framing

The explicit rejection of “volitional” as the willfulness standard will likely reduce treble-damages exposure in close cases. Plaintiffs seeking treble damages must marshal evidence of knowledge or recklessness (conscious disregard of an obvious risk), not simply that the defendant intended to place calls.

4. Class actions: numerosity demands proof, not inference

On certification, the opinion reinforces that TCPA classes cannot rest on “there must be more” assumptions. Plaintiffs should be prepared with call data, vendor logs, or statistically grounded proof, and must brief impracticability of joinder rather than relying on headcounts alone.

IV. Complex Concepts Simplified

  • Internal do-not-call list (47 C.F.R. § 64.1200(d)): a company-specific list of people who told that company “do not call me,” which the company (and callers acting “on behalf of” it) must honor through documented procedures.
  • Vicarious liability: holding a principal legally responsible for another’s acts (e.g., a telemarketer), but only when agency rules justify attributing the conduct upward.
  • Actual authority: the agent reasonably believes it is authorized because of what the principal said or did to the agent.
  • Apparent authority: the third party reasonably believes the actor is authorized because of what the principal said or did to the third party (the agent’s own claims do not suffice).
  • Subagent / sub-subagent: a delegate appointed by an agent to perform tasks for the principal; each level requires authority to appoint the next level.
  • Ratification: the principal later adopts an unauthorized act—typically by knowingly accepting its benefits or by silence when it has knowledge and others would infer assent.
  • Willful (civil) / reckless: more than a mistake—conduct that knowingly violates the law or disregards an obvious, avoidable, high risk of violation.
  • Numerosity (Rule 23(a)(1)): not just “how many,” but whether it would be extremely difficult or inconvenient to join everyone individually; plaintiffs must prove this with evidence and argument.

V. Conclusion

This decision establishes two clarifying rules with broad TCPA consequences in the Seventh Circuit: (1) Subagency-based vicarious liability requires proof of authority at each delegation layer, and plaintiffs cannot bridge gaps in the chain with speculation or general contract language aimed at someone else; and (2) TCPA treble damages require knowing or reckless violations, not merely intentional (volitional) calling. Coupled with its insistence on evidentiary numerosity for class actions, the opinion meaningfully raises the proof burden for TCPA plaintiffs —especially where telemarketing is executed through multi-layer vendor ecosystems.