NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS APR 5 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
JOHN MCCURLEY; DAN DEFOREST, No. 21-55099 individually and on behalf of all others similarly situated, D.C. No. 3:17-cv-00986-BAS-AGS Plaintiffs-Appellants,
v. MEMORANDUM*
ROYAL SEAS CRUISES, INC.,
Defendant-Appellee.
Appeal from the United States District Court for the Southern District of California Cynthia A. Bashant, District Judge, Presiding
Argued and Submitted March 8, 2022 Pasadena, California
Before: WARDLAW and HURWITZ, Circuit Judges, and ROSENTHAL,** District Judge.
Royal Seas Cruises, Inc., hired Prospects DM, Inc., to generate leads and
initiate telephone calls to prospective consumers for cruise packages. The issue for
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Lee H. Rosenthal, Chief United States District Judge for the Southern District of Texas, sitting by designation. decision is whether Royal Seas is liable under the Telephone Consumer Protection
Act (“TCPA”) for prerecorded voice calls made by Prospects to those, including
plaintiffs John McCurley and Dan Deforest, who had not given prior express consent
to be called. See Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1041
(9th Cir. 2017) (citing 47 U.S.C. § 227(a)(5); id. § 227(b)(1)(A)(iii)) (explaining
TCPA violations). The district court granted summary judgment to Royal Seas. We
have jurisdiction over the plaintiffs’ appeal under 28 U.S.C. § 1291. Reviewing de
novo, Bell v. Wilmott Storage Servs., LLC, 12 F.4th 1065, 1068 (9th Cir. 2021), we
affirm in part and reverse in part.
1. Waiver. Our “general rule” is that “an issue may not be raised for the first
time on appeal.” United States v. Carlson, 900 F.2d 1346, 1349 (9th Cir. 1990).
Royal Seas argues that the plaintiffs waived their argument that it is vicariously
liable for Prospects’s TCPA violations because the plaintiffs did not allege vicarious
liability in their pleadings. Alternatively, Royal Seas argues that the plaintiffs
waived any arguments about actual and apparent authority because they asserted
only ratification as the basis for vicarious liability in their motion for summary
judgment and in their response to Royal Seas’s cross-motion.
The plaintiffs did not waive their vicarious liability arguments based on a
failure to specifically allege them in the consolidated complaint. To avoid waiver
by failing to plead an issue, plaintiffs may “make known during discovery their
2 intention to pursue recovery on the . . . theory omitted from their complaints.”
Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000). Royal Seas had
ample notice of, and opportunity to develop facts about, the actual and apparent
authority and the ratification theories the plaintiffs asserted. Notice of these theories
came from the plaintiffs’ class certification motion filed in July 2018 and the district
court’s class certification order issued in March 2019, both long before discovery
closed in February 2020. The plaintiffs also presented arguments on apparent
authority and ratification in their motion for summary judgment. We hold, however,
that the plaintiffs did waive an actual authority theory of vicarious liability by failing
to assert it either in their pleadings or at summary judgment. See Padgett v. Wright,
587 F.3d 983, 985 n.2. (9th Cir. 2009) (per curiam). None of the narrow exceptions
to waiver applies. See Carlson, 900 F.2d at 1349.
2. Nondelegable Duty. The plaintiffs argue that Royal Seas had a
nondelegable duty under the TCPA to ensure that Prospects had prior express
consent for each call it made to solicit potential customers for Royal Seas.1
We disagree. The Federal Communications Commission (“FCC”), the agency
responsible for implementing the TCPA, instructs that the relationship between a
1 The plaintiffs did not present this argument at summary judgment; however, because it is a pure question of law, we may address it. Carlson, 900 F.2d at 1349; see also In re Mercury Interactive Corp. Secs. Litig., 618 F.3d 988, 992 (9th Cir. 2010) (“[W]aiver is a discretionary, not jurisdictional, determination.”).
3 seller and a telemarketer should be assessed under federal common law agency
principles. In re Joint Petition Filed by Dish Network, LLC, 28 F.C.C. Rcd. 6574,
6574 (May 9, 2013). Our precedent defers to the FCC’s interpretation that the TCPA
requires vicarious liability, not strict liability. Henderson v. United Student Aid
Funds, Inc., 918 F.3d 1068, 1072 (9th Cir. 2019). The plaintiffs present no
compelling reason why we should change that position. See Campbell-Ewald Co. v.
Gomez, 577 U.S. 153, 168 (2016).
3. Vicarious Liability. The plaintiffs also argue that Royal Seas is vicariously
liable for Prospects’s placements of prerecorded voice calls to individuals without
their prior express consent. The plaintiffs rely on apparent authority and ratification.
“Apparent authority is the power held by an agent or other actor to affect a
principal’s legal relations with third parties when a third party reasonably believes
the actor has authority to act on behalf of the principal and that belief is traceable to
the principal’s manifestations.” RESTATEMENT (THIRD) OF AGENCY § 2.03.
Ratification is “the affirmance of a prior act done by another, whereby the act is
given effect as if done by an agent acting with actual authority.” Id. § 4.01(1). “A
person ratifies an act by (a) manifesting assent that the act shall affect the person’s
legal relations, or (b) conduct that justifies a reasonable assumption that the person
4 so consents.” Id. § 4.01(2).2 A principal assumes the risk of lack of knowledge and
may be found willfully ignorant if “the principal is shown to have had knowledge of
facts that would have led a reasonable person to investigate further, but the principal
ratified without further investigation.” Id. § 4.06 cmt. d.
The record does not support a finding that Prospects had apparent authority
from Royal Seas to call nonconsenting individuals. When Prospects placed calls, it
asked an individual who answered “qualifying questions” about products and
services that ranged from home improvement to medical equipment to leisure
packages, including cruises. Royal Seas approved the scripts used, but no script is
in the record. There is no record evidence of whether, or when, between making the
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS APR 5 2022 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
JOHN MCCURLEY; DAN DEFOREST, No. 21-55099 individually and on behalf of all others similarly situated, D.C. No. 3:17-cv-00986-BAS-AGS Plaintiffs-Appellants,
v. MEMORANDUM*
ROYAL SEAS CRUISES, INC.,
Defendant-Appellee.
Appeal from the United States District Court for the Southern District of California Cynthia A. Bashant, District Judge, Presiding
Argued and Submitted March 8, 2022 Pasadena, California
Before: WARDLAW and HURWITZ, Circuit Judges, and ROSENTHAL,** District Judge.
Royal Seas Cruises, Inc., hired Prospects DM, Inc., to generate leads and
initiate telephone calls to prospective consumers for cruise packages. The issue for
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Lee H. Rosenthal, Chief United States District Judge for the Southern District of Texas, sitting by designation. decision is whether Royal Seas is liable under the Telephone Consumer Protection
Act (“TCPA”) for prerecorded voice calls made by Prospects to those, including
plaintiffs John McCurley and Dan Deforest, who had not given prior express consent
to be called. See Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1041
(9th Cir. 2017) (citing 47 U.S.C. § 227(a)(5); id. § 227(b)(1)(A)(iii)) (explaining
TCPA violations). The district court granted summary judgment to Royal Seas. We
have jurisdiction over the plaintiffs’ appeal under 28 U.S.C. § 1291. Reviewing de
novo, Bell v. Wilmott Storage Servs., LLC, 12 F.4th 1065, 1068 (9th Cir. 2021), we
affirm in part and reverse in part.
1. Waiver. Our “general rule” is that “an issue may not be raised for the first
time on appeal.” United States v. Carlson, 900 F.2d 1346, 1349 (9th Cir. 1990).
Royal Seas argues that the plaintiffs waived their argument that it is vicariously
liable for Prospects’s TCPA violations because the plaintiffs did not allege vicarious
liability in their pleadings. Alternatively, Royal Seas argues that the plaintiffs
waived any arguments about actual and apparent authority because they asserted
only ratification as the basis for vicarious liability in their motion for summary
judgment and in their response to Royal Seas’s cross-motion.
The plaintiffs did not waive their vicarious liability arguments based on a
failure to specifically allege them in the consolidated complaint. To avoid waiver
by failing to plead an issue, plaintiffs may “make known during discovery their
2 intention to pursue recovery on the . . . theory omitted from their complaints.”
Coleman v. Quaker Oats Co., 232 F.3d 1271, 1294 (9th Cir. 2000). Royal Seas had
ample notice of, and opportunity to develop facts about, the actual and apparent
authority and the ratification theories the plaintiffs asserted. Notice of these theories
came from the plaintiffs’ class certification motion filed in July 2018 and the district
court’s class certification order issued in March 2019, both long before discovery
closed in February 2020. The plaintiffs also presented arguments on apparent
authority and ratification in their motion for summary judgment. We hold, however,
that the plaintiffs did waive an actual authority theory of vicarious liability by failing
to assert it either in their pleadings or at summary judgment. See Padgett v. Wright,
587 F.3d 983, 985 n.2. (9th Cir. 2009) (per curiam). None of the narrow exceptions
to waiver applies. See Carlson, 900 F.2d at 1349.
2. Nondelegable Duty. The plaintiffs argue that Royal Seas had a
nondelegable duty under the TCPA to ensure that Prospects had prior express
consent for each call it made to solicit potential customers for Royal Seas.1
We disagree. The Federal Communications Commission (“FCC”), the agency
responsible for implementing the TCPA, instructs that the relationship between a
1 The plaintiffs did not present this argument at summary judgment; however, because it is a pure question of law, we may address it. Carlson, 900 F.2d at 1349; see also In re Mercury Interactive Corp. Secs. Litig., 618 F.3d 988, 992 (9th Cir. 2010) (“[W]aiver is a discretionary, not jurisdictional, determination.”).
3 seller and a telemarketer should be assessed under federal common law agency
principles. In re Joint Petition Filed by Dish Network, LLC, 28 F.C.C. Rcd. 6574,
6574 (May 9, 2013). Our precedent defers to the FCC’s interpretation that the TCPA
requires vicarious liability, not strict liability. Henderson v. United Student Aid
Funds, Inc., 918 F.3d 1068, 1072 (9th Cir. 2019). The plaintiffs present no
compelling reason why we should change that position. See Campbell-Ewald Co. v.
Gomez, 577 U.S. 153, 168 (2016).
3. Vicarious Liability. The plaintiffs also argue that Royal Seas is vicariously
liable for Prospects’s placements of prerecorded voice calls to individuals without
their prior express consent. The plaintiffs rely on apparent authority and ratification.
“Apparent authority is the power held by an agent or other actor to affect a
principal’s legal relations with third parties when a third party reasonably believes
the actor has authority to act on behalf of the principal and that belief is traceable to
the principal’s manifestations.” RESTATEMENT (THIRD) OF AGENCY § 2.03.
Ratification is “the affirmance of a prior act done by another, whereby the act is
given effect as if done by an agent acting with actual authority.” Id. § 4.01(1). “A
person ratifies an act by (a) manifesting assent that the act shall affect the person’s
legal relations, or (b) conduct that justifies a reasonable assumption that the person
4 so consents.” Id. § 4.01(2).2 A principal assumes the risk of lack of knowledge and
may be found willfully ignorant if “the principal is shown to have had knowledge of
facts that would have led a reasonable person to investigate further, but the principal
ratified without further investigation.” Id. § 4.06 cmt. d.
The record does not support a finding that Prospects had apparent authority
from Royal Seas to call nonconsenting individuals. When Prospects placed calls, it
asked an individual who answered “qualifying questions” about products and
services that ranged from home improvement to medical equipment to leisure
packages, including cruises. Royal Seas approved the scripts used, but no script is
in the record. There is no record evidence of whether, or when, between making the
phone call and transferring the individual answering to a live person at Royal Seas,
Prospects stated that it was calling on behalf of a third party or mentioned “Royal
Seas.” Cf. Salyers v. Metro. Life Ins. Co., 871 F.3d 934, 940–41 (9th Cir. 2017).
There is no basis to find that the person answering a Prospects call would reasonably
believe that Prospects was acting on behalf of Royal Seas before the point of the
transfer. We affirm the district court’s grant of summary judgment in favor of Royal
2 An act is ratifiable “if the actor acted or purported to act as an agent on the person’s behalf.” Id. § 4.03. Although the scope of its agency is in dispute, Prospects is at least an agent of Royal Seas for the purpose of generating leads. See Kristensen v. Credit Payment Servs. Inc., 879 F.3d 1010, 1015 (9th Cir. 2018) (because Click Media contracted with AC Referral to generate leads for prospective customers, AC Referral was an agent of Click Media for the purpose of the ratification analysis).
5 Seas as to apparent authority.
But that does not end the inquiry. Drawing reasonable inferences in the light
most favorable to the plaintiffs, Ironhawk Techs., Inc. v. Dropbox, Inc., 2 F.4th 1150,
1159 (9th Cir. 2021), there is a material dispute of fact as to whether Royal Seas
ratified Prospects’s acts. Royal Seas had knowledge of facts that would have led it
to investigate Prospects’s lead-generation activities to determine if it was calling
only consenting individuals, but instead accepted leads generated by Prospects’s
calls with scant investigation. Royal Seas knew that Prospects placed calls using
prerecorded voices, a prima facie violation of the TCPA. Royal Seas also knew that
it received 2.1 million warm-transferred calls from Prospects between January 2017
and June 2018. Royal Seas knew that TCPA compliance required each call to be to
an individual who had previously “agreed” to be called by Royal Seas by clicking
“next” after submitting personal contact information and seeing a consent box on
websites such as www.diabeteshealth.info and www.yourautohealthlifeinsurance-
.com. Royal Seas knew that the calls Prospects placed to individuals who had
allegedly consented by checking forms on the website www.diabeteshealth.info
generated 80,081 warm transfers to Royal Seas in 2017. The plaintiffs submitted
expert testimony that this number of transfers, which was only a subset of the calls
Prospects placed, from this lead-generation website during this period is implausible
at best. The expert testimony also addressed several other websites responsible for
6 generating the 2.1 million transfers, such as www.123FreeTravel.com, and
concluded that the volume of traffic to these sites, much less the number of leads
from consenting individuals that could be reasonably harvested from them, was very
low.
Royal Seas also knew that of the 560 customers whom Prospects warm-
transferred and who made purchases from Royal Seas, 13 percent had phone
numbers that did not match the customer consent data that Prospects had provided
to Royal Seas, and 31 percent did not have a matching phone number and last name.
The amount of mismatched data in the record cannot all be explained by data-entry
errors or family members with different last names. The number for one of the
named plaintiffs, John McCurley, for example, was associated with the name “Jose
Fernandez.” There is evidence that Royal Seas’s employees knew of the
discrepancies because when they spoke with the transferred customers, because they
addressed the customers by the first name that Prospects provided.
These facts, in combination with the evidence of widespread TCPA violations
in the cruise industry, would support a finding that Royal Seas knew facts that should
have led it to investigate Prospects’s work for TCPA violations. See Henderson,
918 F.3d at 1076. We reverse the district court’s summary judgment in favor of
Royal Seas as to ratification.
7 AFFIRMED in part, REVERSED in part, and REMANDED. Each party to
bear its own costs.