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Liberty Mutual Insurance Company v. Precise Leads, Inc.

United States District Court, D. Massachusetts

January 12, 2019

PRECISE LEADS, INC. and DIGITAS, INC., Third-Party Defendants.



         This action, initially brought under the Telephone Consumer Protection Act (“TCPA”), now concerns how a settlement payment and litigation expenses should be apportioned among the original defendants and the third-party defendants.

         I. BACKGROUND

         On July 8, 2015, Ken Johansen filed class action claims for violations of the TCPA against Liberty Mutual Group Inc. (“LMG”) and Spanish Quotes, Inc (“Spanish Quotes”). [ECF No. 1]. The Court ordered that any motions for leave to amend the pleadings be filed by March 15, 2016. [ECF No. 49]. In March 2016, after obtaining leave, LMG and its subsidiary Liberty Mutual Insurance Company (“LMIC”) (together, “Liberty Mutual”) filed a Third-Party Complaint that asserted claims for contractual indemnity, breach of contract, and negligence against Precise Leads, Inc. (“Precise Leads”) and Digitas, Inc. (“Digitas”). [ECF No. 61]. Liberty Mutual alleged that Precise Leads and Digitas were responsible for any violations of the TCPA as to Mr. Johansen but that they were, in violation of their agreements with Liberty Mutual, refusing Liberty Mutual's requests for indemnification. Liberty Mutual claimed damages including attorneys' fees and costs and any other payment provided to Plaintiff to resolve this action. [ECF No. 61 at 24-31].

         In early 2018, Mr. Johansen settled his claims against Liberty Mutual and Spanish Quotes, and on May 30, 2018, his claims were dismissed with prejudice. [ECF No. 184]. Liberty Mutual now seeks leave to file an Amended Third-Party Complaint that would add Massachusetts Chapter 93A § 11 claims against Precise Leads and Digitas. [ECF No. 181-1] (“PFAC”). Precise Leads and Digitas argue that the amendment is untimely and futile, and Precise Leads also argues that the motion is frivolous and that it should be awarded attorneys' fees and costs. [ECF Nos. 185, 186].

         For the reasons explained herein, the Motion to Amend is GRANTED IN PART and DENIED IN PART. Precise Leads' motion for fees and costs is DENIED.

         II. FACTS

         The following facts are drawn primarily from the Proposed Amended Third-Party Complaint, ECF No. 181-1, the well pled allegations of which must be taken as true for any evaluation regarding the futility of amending the Third-Party Complaint.

         Liberty Mutual sells auto insurance policies to consumers. [PFAC at 8]. In April 2012, Digitas entered into a master services agreement to assist LMIC in marketing auto insurance policies by generating customer leads. [PFAC at 9]. The master services agreement contained a mutual indemnification provision under which Digitas was obligated to indemnify Liberty Mutual for:

all third party claims, damages, liabilities, costs and expenses, including reasonable legal fees and expenses . . . to the extent arising out of any breach of warranty, representation, covenant, obligation or agreement made by the indemnifying party in this Agreement, provided that in no event shall a party indemnify another party to the extent of any Claim arising on account of the gross negligence or intentional misconduct of any Indemnitee.

[PFAC at 9]. Under the agreement, indemnity is conditional upon prompt written notice of any claim, the opportunity for complete control of the defense and settlement, and reasonable cooperation from the indemnified party. [PFAC at 9]. Digitas warranted that it would use commercially reasonably efforts that would not give consumers grounds for asserting certain claims, including invasion of the right of privacy, and that it would comply with the requirements of applicable statements of work. [PFAC at 10].

         On February 6, 2015, under the framework provided for by the master services agreement, Liberty Mutual and Digitas agreed to a statement of work to help drive acquisition of new customers through “paid search, aggregator and affiliate landing pages.” [PFAC at 10]. The statement of work did not include outbound calls, but Digitas made such calls and did so without adequate procedures to ensure compliance with the TCPA, including the unlawful calls to Mr. Johansen that led to this lawsuit. [PFAC at 10-11, 26-27]. Liberty Mutual notified Digitas of Mr. Johansen's claims on August 7, 2015 and gave Digitas the opportunity to take complete control of the defense and settlement of this litigation on that date and several times thereafter. [PFAC at 11]. Liberty Mutual also made numerous requests for indemnification between August 2015 and February 2016. [PFAC at 11]. Digitas never took control of the litigation and refused to indemnify Liberty Mutual for its costs. [PFAC at 11].

         Precise Leads also entered an agreement with Liberty Mutual to support certain marketing activities. [PFAC at 12]. The Precise Leads agreement contained a mutual indemnification provision that required indemnification:

against any and all claims, losses, costs and expenses, including reasonable attorneys' fees, which the Indemnified Party may incur as a result of claims in any form by third parties . . . arising from . . . [t]he Indemnifying Party's acts omissions or misrepresentations to the extent that the Indemnifying Party is deemed an agent of the Indemnified ...

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