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By Jimmy H. Koo
Consumers can’t sue a company that made Affordable Care Act enrollment reminder robocalls for the government over alleged telemarketing law violations, a Virginia federal court held May 1 ( Cunningham v. Gen. Dynamics Info. Tech., Inc. , 2017 BL 144380, E.D. Va., No. 1:16-cv-00545, 5/1/17 ).
Dismissing the class complaint on derivative sovereign immunity grounds, the U.S. District Court for the Eastern District of Virginia found that the Centers for Medicare and Medicaid Services properly authorized General Dynamics Information Technology Inc. (GDIT) to make the phone calls about the ACA.
Petrina Hall McDaniel, a privacy and data security partner at Dentons in Atlanta, told Bloomberg BNA May 2 that the issue of derivative sovereign immunity is a “zero sum game.” Either government contractors are acting under authority validly conferred by the federal government or they aren’t, she said. However, it isn’t a blanket immunity and must be analyzed on a case-by-case basis, she said.
In Campbell-Ewald Co. v. Gomez, the U.S. Supreme Court held that the federal government and government contractors have qualified immunity and are exempt from the Telephone Consumer Protection Act (TCPA) claims—as long as the defendants can show they were lawfully acting on behalf of the government—McDaniel said. Companies making calls on behalf of the government must ensure they are working within the governmental grant of authority, she said.
Named plaintiff Craig Cunningham alleged that GDIT used an automatic telephone dialing system to call his mobile phone and left a pre-recorded message reminding him to enroll in the ACA. He alleged that, because he didn’t give permission to receive such calls, they violated the TCPA.
Dismissing the claim with prejudice, Judge Liam O’Grady said the U.S. Supreme Court’s decision in Yearsley v. W.A. Ross Const. Co. protects “federal contractors from both state and federal causes of action.” GDIT did exactly what it was authorized and instructed to do, the court concluded.
Kaufman & Canoles PC represented the plaintiff. Wiley Rein LLP and Davis Polk & Wardwell LLP represented GDIT.
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