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Johansen v. Liberty Mutual Group Inc.

United States District Court, D. Massachusetts

October 2, 2019

KEN JOHANSEN, individually and on behalf of all others similarly situated, Plaintiff,
v.
LIBERTY MUTUAL GROUP, INC., and SPANISH QUOTES, INC. d/b/a WESPEAKINSURANCE, Defendants, LIBERTY MUTUAL GROUP, INC., Cross-Claimant,
v.
SPANISH QUOTES, INC. d/b/a WESPEAKINSURANCE, Cross-Defendant, LIBERTY MUTUAL GROUP, INC., LIBERTY MUTUAL INSURANCE COMPANY, Third-Party Plaintiffs,
v.
PRECISE LEADS, INC., and DIGITAS, INC., Third-Party Defendants.

          MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

          ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.

         This 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.

         Mr. 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].

         Presently 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.

         I. BACKGROUND

         A. Procedural History

         On 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 (Cross-Claim)].[1]

         In 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].

         Digitas 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].[2]

         B. Factual Summary

         The 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.

         1. The Underlying Contractual Provisions

         Liberty 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].

         On 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].

         Digitas 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 provision provides:

[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].

         2. Mr. Johansen Initiates This Lawsuit

         On June 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 the caller)].

         On 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.].

         As a 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.”)].[3] 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 them.”)].[4]

         On July 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].

         3. Liberty Mutual Notifies Digitas of the Johansen Lawsuit

         On 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].

         On 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;].

         Liberty 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 Service Agreement.

[ECF No. 194-6 at 1; ECF No. 204 ¶ 10].

         On 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].

         On 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 ...

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