Companies often hire lead generation companies to find consumers who may be interested in their product and service offerings. Buyers of these leads typically enter into contracts requiring that all leads come from consumers who have consented to be called/texted in compliance with the Telephone Consumer Protection Act ("TCPA"). Python Leads, LLC ("Python") is a marketing company which now finds itself defending numerous causes of action, including breach of contract, for, among other things, allegedly failing to provide TCPA-compliant leads.

Owners of Lead Generation Company Facing Individual Liability

Final Expense Direct ("FED"), a seller of life insurance policies, filed a civil lawsuit against Python and its owners, Jacquelyn Leah Levin ("Ms. Levin") and David Levin ("Mr. Levin") (collectively, the "Levins"), in the United States District Court for the Middle District of Florida. The Amended Complaint asserts eleven counts against Python and the Levins, including breach of contract and violation of Florida's Deceptive and Unfair Trade Practices Act. In naming the Levins as defendants and seeking to hold them individually liable, FED alleges that: (1) "the corporate form of [Python] should be disregarded as a sham;" and (2) the Levins purposely made false representations designed to induce FED and other companies to enter into lead generation agreements.

In the lawsuit, FED details that on March 15, 2021, it entered into a contract with Python for live lead transfer services (the "March Agreement"). The March Agreement stated that it was Python's sole responsibility to familiarize itself with "all laws and regulations applicable with [the] TCPA and [the] Federal and State Do Not Call Registry." Within that same provision, Python agreed to indemnify FED from and against any and all claims and losses arising from Python's breach of the March Agreement or its failure to ensure that the leads provided were TCPA-compliant (the "March Indemnity Provision"). In addition, the March Agreement stated that no modifications of the March Agreement would be valid unless made in writing and agreed upon by both FED and Python. Notably, although FED signed the March Agreement, Python did not sign it.

During the course of their business relationship, FED allegedly received numerous TCPA lead-related complaints. Until June 2022, Python had resolved these complaints without involving FED. In June 2021, Python proposed a new arrangement with FED (the "June Agreement"). Among other changes, the June Agreement materially altered the March Indemnity Provision by shifting the burden to FED for any losses or damages incurred for TCPA violations. Unlike the March Agreement, Ms. Levin signed the June Agreement for Python, but FED did not. In June 2022, FED started being named in lawsuits for alleged TCPA violations. Citing the June Agreement, Python's counsel disclaimed responsibility for any of FED's losses or damages related to TCPA claims. Ultimately, FED paid over $100,000 to settle these lawsuits. As a result, FED sued Python for breach of its contractual indemnification obligations.

In response to the Amended Complaint, Python and the Levins filed a Motion to Dismiss. Python argued, among other things, that: (1) the Levins cannot be individually liable to FED; (2) Python did not execute or intend to be bound by the March Agreement; (3) the March Agreement was superseded by the June Agreement; and/or (4) FED unilaterally and voluntarily settled the claims without including Python.

On February 7, 2024, the Court denied Defendants' Motion to Dismiss and held that FED had plausibly alleged that the Levins fraudulently used their control of Python: (1) to induce FED into the March Agreement; and (2) by representing that Python could ensure TCPA compliance and indemnify FED. Regarding FED's contractual claims, the Court held that FED plausibly alleged that Python intended to be bound by the March Agreement because FED had produced e-mails demonstrating that FED was attempting to pay Python through banking information contained in the March Agreement. Moreover, Python's subsequent invoicing to FED was consistent with the March Agreement. In addition, Python had represented in communications with FED that Python bore the responsibility of ensuring TCPA lead compliance and handling of any and all telemarketing claims. Citing Eleventh Circuit case law, the Court held that the "absence of a party's signature is not the death knell of a binding contract or amendment. Both Florida and Louisiana law acknowledge that the validity of an agreement may be shown by other acts of the parties." The Court concluded that, at this stage, it is bound to accept FED's allegations as true, and that it would "not accept Defendants' invitation to convert the instant Motion [Python's Motion to Dismiss] to one for summary judgment."

Ensuring Leads Are TCPA-Compliant

Piercing the corporate veil to hold individuals personally liable is difficult and rare. In this TCPA lead lawsuit, the Levins did not sign the March Agreement or personally make any false statements to FED, and yet, the Court allowed the claims against them to proceed. If your company buys or generates leads, the Court's decision underscores the critical importance of ensuring that these leads are TCPA-compliant.

The attorneys at Klein Moynihan Turco have a wealth of experience in all aspects of TCPA compliance and defense. Our first-rate litigation team will use this experience to ensure that your business is well-represented in the event that you are named in a TCPA lead-related lawsuit.

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