United States District Court, D. Massachusetts
KEN JOHANSEN, individually and on behalf of all others similarly situated, Plaintiff,
LIBERTY MUTUAL GROUP, INC., and SPANISH QUOTES, INC. d/b/a WESPEAKINSURANCE, Defendants, LIBERTY MUTUAL GROUP, INC., Cross-Claimant,
SPANISH QUOTES, INC. d/b/a WESPEAKINSURANCE, Cross-Defendant, LIBERTY MUTUAL GROUP, INC., LIBERTY MUTUAL INSURANCE COMPANY, Third-Party Plaintiffs,
PRECISE LEADS, INC., and DIGITAS, INC., Third-Party Defendants.
MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.
case began as a putative class action complaint against
Liberty Mutual Group Inc. (“Liberty Mutual”), and
Spanish Quotes Inc. (“Spanish Quotes”), which
does business as WeSpeak Insurance. [ECF No. 1]. Plaintiff
Ken Johansen alleged that Liberty Mutual and Spanish Quotes
called him, or caused him to be called, multiple times in
violation of the Telephone Consumer Protection Act, 47 U.S.C.
§ 227 et seq. (“TCPA”), despite his
number being listed on the National Do-Not-Call Registry and
his request that Liberty Mutual not call him again.
Johansen settled with Liberty Mutual and Spanish Quotes, and
his claims against them were dismissed with prejudice on May
30, 2018. [ECF No. 184]. The Defendants were then unable to
agree whether Liberty Mutual was entitled to indemnity under
the Master Services Agreement (“MSA”) between
Liberty Mutual and Digitas and the associated Aggregator
Service Agreement (“ASA”) with Spanish Quotes.
The matter escalated from there. Now, as described in an
email between the parties, “it appears that Liberty and
Digitas [are] pointing their fingers at each other, . . .
making the case both more difficult to defend . . . and more
expensive to resolve.” [ECF No. 194-7 at 3].
before the Court are Digitas and Liberty Mutual's
respective motions for summary judgment. [ECF Nos. 191, 195].
For the reasons explained herein, the cross-motions for
summary judgment [ECF Nos. 191, 195], are each
GRANTED in part and DENIED in part.
February 12, 2016, after Mr. Johansen filed his class action
complaint, Liberty Mutual gave notice under Local Rule 15.1
of its intent to file a motion for leave to file an amended
answer with a third-party claim against Digitas. On March 4,
2016, Liberty Mutual filed the motion to amend its answer,
[ECF No. 57], which was granted on March 24, 2016, [ECF No.
60]. Liberty Mutual then filed its Amended Answer on March
24, 2016, [ECF No. 61], which included a third-party
complaint against Digitas, alleging that Digitas is under a
contractual obligation to indemnify, and that Liberty Mutual
is entitled to contractual damages because Digitas failed to
comply with federal law, failed to use reasonable efforts to
prevent claims against Liberty Mutual, and failed to perform
its duties in a competent and professional manner.
[Id. ¶¶ 37, 43, 52, 54, 55 (Third-Party
Compl.)]. Liberty Mutual also filed a cross-claim against
Spanish Quotes, alleging that Spanish Quotes is under a
contractual obligation to indemnify under its agreement with
Digitas, in which it agreed to indemnify Digitas and
Digitas' client. [Id. ¶¶ 16, 23
April 2016, Digitas moved to dismiss the third-party
complaint, claiming that it had paid Mr. Johansen, which
mooted his case (and thus the third-party complaint). [ECF
Nos. 68, 69]. Liberty opposed that motion. [ECF No. 82]. The
Court denied the motion on December 8, 2016. [ECF No. 123].
next moved for summary judgment on February 28, 2019, [ECF
Nos. 191, 192]; Liberty Mutual responded to that motion on
March 29, 2019, [ECF No. 203]; and Digitas replied on April
19, 2019, [ECF No. 205]. Meanwhile, Liberty Mutual also moved
for summary judgment on February 28, 2019, [ECF Nos. 195,
196]; Digitas responded to that motion on March 29, 2019,
[ECF No. 198]; Spanish Quotes responded on March 29, 2019,
[ECF No. 200]; and Liberty Mutual responded to both
Digitas' and Spanish Quotes' responses on April 19,
2019, [ECF Nos. 206, 207].
following facts are either uncontroverted pursuant to Federal
Rule of Civil Procedure 56 and Local Rule 56.1, or stated in
the light most favorable to the non-movant on each issue.
The Underlying Contractual Provisions
Mutual is a diversified insurer, which provides car insurance
policies to individual customers. [ECF No. 1 ¶ 15; ECF
No. 61 ¶¶ 3, 9 (Third-Party Compl.)]. Liberty
Mutual entered into a marketing agreement with Digitas, a
Boston-based marketing firm, [ECF No. 61 ¶¶ 4, 9
(Third-Party Compl.)], which includes the following language:
Each party agrees to indemnify and hold harmless the other
party and their respective officers, directors, shareholders,
members, managers, partners, employees, accountants,
attorneys, agents, affiliates, subsidiaries, and permitted
successors and assigns (collectively, the
“Indemnitiees”) from and against any and all
third party claims, damages, liabilities, costs and expenses,
including reasonable legal fees and expenses (collectively,
“Claims”), to the extent arising out of any
breach of any warranty, representation, covenant, obligation
or agreement 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.
The foregoing indemnity is conditioned upon (i) prompt
written notice by the indemnified party to the indemnifying
party of any claim, action, or demand for which indemnity is
claimed; (ii) the opportunity for complete control of the
defense and settlement thereof by the indemnifying party; and
(iii) such reasonable cooperation, at the indemnifying
party's expense, by the indemnified party in the defense
as the indemnifying party may request.
[ECF No. 195-2 at 11, § 14].
February 6, 2015, Digitas and Liberty Mutual entered into a
Statement of Work (“SOW”). The SOW describes the
covered marketing tactics as “paid search, aggregator,
affiliate and landing pages (tracking and read out only) . .
. .” [ECF No. 195-3 at 2]. The MSA incorporates the SOW
by reference. In the MSA, Digitas warranted that “All
Services will be performed in a competent and professional
manner by qualified personnel and will conform to [Liberty
Mutual's] requirements as specified in the applicable
SOW.” [ECF No. 195-2 at 8, § 9.a.v]. The MSA also
requires that Digitas “provide to [Liberty Mutual], to
the extent possible, the full benefit of all covenants,
warranties, representations and indemnities granted to
Digitas by third parties in connection with any Services or
Deliverables.” [Id. at 8, § 9.a.vii].
Liberty Mutual failed to sign the SOW. [ECF No. 195-3 at 14].
then entered into the ASA with Spanish Quotes, which acts as
an insurance shopping tool to help individual customers find
quotes on auto and home insurance. [ECF No. 1 ¶17]. The
ASA provides that Spanish Quotes “further warrants that
Services will meet the specifications in all material
respects and will not violate the proprietary rights of any
third party, or otherwise violate any other laws, rules or
regulations of the United States.” [ECF No. 195-4, at
4, § 7.a; ECF No. 199 ¶ 10; ECF No. 202 ¶ 9].
The ASA also included its own indemnity provision.
Incorporating the relevant party terms, the ASA indemnity
[Spanish Quotes] agrees to indemnify, defend and hold
harmless [Digitas], its affiliates, subsidiaries, officers
and employees, as well as any [Digitas] Client, Client's
affiliates, subsidiaries, officers and employees, from and
against any and all claims, damages, liabilities, losses
and/or expenses, including reasonable attorney fees,
(collectively “Losses”) incurred by [Digitas]
and/or its Client and arising from a breach of the foregoing
warranties, breach of the Privacy and Data Security Terms (if
applicable) or any other material breach of this Agreement.
[ECF No. 195-4 at 4-5, § 7.d].
Mr. Johansen Initiates This Lawsuit
13, 2014, a person identified as “Rita Johansen”
visited autoquotesdirect.com and indicated that she was
interested in receiving auto insurance for a 2003 Honda
Accord and consented to receive a call from a number of
insurance providers, including Liberty Mutual. [ECF No.
195-16]. On February 17, 2015, Ken Johansen received a call
from a representative of Auto Insurance Services. [ECF No.
199 ¶ 23]. After Mr. Johansen confirmed that he had
requested an auto insurance quote, the Auto Insurance
Services representative transferred the call to Liberty
Mutual. [Id. ¶ 24]. On February 18, 2015, Mr.
Johansen received another call from a representative of Auto
Insurance Services. [Id. ¶ 25]. He confirmed
that he had requested insurance information and was
subsequently transferred to Liberty Mutual. [Id.
¶¶ 25-26]. The same thing happened on February 20
and March 16, 2015. [Id. ¶¶ 29, 31]. A
caller, later identified as Ken Johansen, subsequently called
Liberty Mutual to complain that telemarketers had been
calling his house. [ECF Nos. 199-2, 199-3 (documenting
Digitas' and Liberty Mutual's conversations regarding
March 24, 2015, Liberty Mutual contacted Digitas to inform
them of Mr. Johansen's complaints and to request that
Spanish Quotes “track down the source based on the
caller ID and shut them down.” [ECF No. 199-3]. In
subsequent email communications between Liberty Mutual and
Digitas, it was determined that each of the calls that Mr.
Johansen was complaining about had been “transfers,
” in which a third party called Mr. Johansen and then
transferred his call to Liberty Mutual to speak with a
representative. [Id.]. Apparently the transfers had
been made from a site that Spanish Quotes had previously
tried to shut down as a call source. [Id.].
policy, Digitas did not allow transfers. [ECF No. 195-17 at
4-7 (“We have taken measures on our end that we believe
should resolve the issue of him being transferred into our
call center, with the key word being ‘transferred.'
We do not allow ‘transfers' in our call programs,
so when [Mr. Johansen] made his way into our call center, it
has been against our program rules.”)]. Digitas explained
to Liberty Mutual, via email, that none of its work for
Liberty Mutual should include calls in which a customer was
transferred to speak to a Liberty Mutual representative.
See, e.g., [ECF No. 195-18 at 3 (“[N]one of
the campaigns [that Digitas worked with Liberty Mutual on]
should have calling out as a feature; if there are any
outbound calls happening that then lead to transfers,
[Digitas] jump[s] on them as soon as [it] hear[s] about
8, 2015, Mr. Johansen, individually and on behalf of a
putative class, filed a complaint against Liberty Mutual and
Spanish Quotes, alleging violations of the TCPA. [ECF No. 1].
Liberty Mutual Notifies Digitas of the Johansen
August 7, 2015, Liberty Mutual notified Digitas of the
Johansen lawsuit. [ECF No. 199 ¶ 57]. On January 11,
2016, counsel for Digitas informed counsel for Liberty Mutual
that Digitas was “inclined to enter into an agreement
with Liberty to fund 40% of the defense of the underlying
TCPA action if Precise Leads [did] the same. Since there
[we]re issues about the information received and provided to
Liberty which may or may not have been forwarded to or among
the vendors, [Digitas] th[ought] it [wa]s important for
Liberty to continue to have some skin in the game.”
[ECF No. 194-4 at 1]. Digitas' counsel suggested tolling
indemnification issues “until after [counsel
determined] if there is anything to indemnify for.”
[Id.]. On January 14, Liberty Mutual's counsel
responded saying that it had relayed the proposed terms to
its client. [ECF No. 194-5 at 1].
January 22 and 23, 2016, Digitas offered to pay for the
defense of the case, with the understanding that
(1) Digitas . . . would control the defense; (2) the parties
would enter into a tolling agreement with respect to
responsibility for any judgment or settlement; (3) Digitas .
. . would reserve their right to seek reimbursement of fees
paid as discovery proceeded and the relative responsibility
of the parties for any judgment or settlement; (4) Digitas .
. . would pay a portion of Liberty Mutual's fees and
costs to date, subject to review of the relevant invoices;
and (5) Digitas . . . could withdraw from the defense if [it
was] named as part[y] or it appeared that the defense of
Liberty placed [it] at unreasonable risk of loss.
[ECF No. 194-6 at 1-2; ECF No. 204 ¶ 9;].
Mutual's counsel responded to Digitas' proposal on
January 25, 2016, explaining:
If Digitas intends to take complete control of the defense of
the pending litigation pursuant to the terms of the Master
Services Agreement effective as of April 1, 2012, then
Liberty Mutual is entitled to full and complete indemnity of
all claims, damages, liabilities, costs and expenses,
including all past and future reasonable legal fees and
expenses associated with the pending litigation. The
foregoing includes claims against any current parties or
third parties. It is not subject to reservations of any kind.
Liberty Mutual will provide reasonable cooperation in the
defense of the litigation, as requested by Digitas and at
Digitas' expense, as stated in paragraph 14 of the Master
[ECF No. 194-6 at 1; ECF No. 204 ¶ 10].
January 23, Digitas responded that it would “take over
the defense of the Johansen case on the terms set
out below . . . .” [ECF No. 194-6 at 1]. Those terms
included that Liberty Mutual could participate in the defense
at its own expense, subject to Digitas' decisions, and
that Liberty Mutual's cooperation would be at its own
expense. [Id. at 1-2].
February 3, 2016, Liberty Mutual's counsel responded,
informing Digitas that Liberty Mutual disagreed with many of
the statements in Digitas' offer email. [ECF No. 194-7].
Both parties rely on that email in support of their arguments
concerning whether Liberty Mutual adequately performed all of
the conditions precedent in order to be indemnified. In
relevant part, the email stated:
1. Liberty has never tendered the defense of the
pending litigation to Digitas pursuant to the Master Services
Agreement effective as of April 1, 2012 (“MSA”).
During Liberty's good faith negotiations of a tolling
agreement over the last few weeks, you advised me that if
Digitas and Precise Leads were going to cover 80% of the
defense costs of the litigation, Digitas would likely avail
itself of the opportunity to take full control of the defense
of the litigation pursuant to paragraph 14a of the MSA. You
first advised me that Digitas elected to take over the
defense of the litigation in your email to me on Sunday,
January 23, 2016, but subject to the reservations in your
email and that of Precise Leads' counsel.
2. Liberty has never “refused to allow Digitas
to accept and assume the defense” of the litigation.
3. Digitas has never given Liberty an unqualified
acceptance of the defense of the pending litigation,
including the ...