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Hood v. American Auto Care, LLC.

No. 20-1157. D.Colo. Judge Hartz. Telephone Consumer Protection Act—Personal Jurisdiction—Specific Jurisdiction—Fourteenth Amendment Due Process Clause.

December 28, 2021

Defendant American Auto Care, LLC (AAC) is a Florida limited liability company whose sole office is in Florida. It sells vehicle service contracts that provide extended warranties after the manufacturer’s warranty expires. Plaintiff is a Colorado resident who has a cell phone with a Vermont area code. He filed a putative class action alleging that AAC and related companies and individuals violated the Telephone Consumer Protection Act (TCPA) and invaded privacy by directing unwanted automated calls to the putative class members’ cell phones without consent. Plaintiff alleged that after purchasing a used car he received calls offering an extended warranty and was able to trace one of the calls to AAC, which was using a phone number with a Vermont area code. AAC and several other defendants moved to dismiss under Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction. The district court granted the motions, holding that the call to plaintiff’s Vermont phone number did not arise out of, or relate to, AAC’s calls to Colorado phone numbers.

On appeal, plaintiff argued that his case was erroneously dismissed for lack of personal jurisdiction. There are two types of personal jurisdiction, general and specific. The parties agreed that general jurisdiction in Colorado is not at issue. Specific jurisdiction is proper if there is an affiliation between the forum and the underlying controversy, principally, an activity or an occurrence that takes place in the forum state and is therefore subject to the state’s regulation.  Specific jurisdiction is proper when (1) the defendant has purposefully directed its activities at residents in the forum, and (2) the suit arises out of or relates to those activities. If both requirements are satisfied, a defendant can still escape jurisdiction by establishing that it would be incompatible with traditional notions of fair play and substantial justice.

The Tenth Circuit first assessed the second requirement. Following the district court’s decision, the US Supreme Court decided Ford Motor Co. v. Montana Eighth Judicial District Court, 141 S.Ct. 1017 (2021), where it held that this prong may be satisfied where a plaintiff’s claim arises from essentially the same type of activity, even if the activity that gave rise to the claim was not directed at forum residents. Accordingly, even if AAC’s call to plaintiff was not a direct result of its telemarketing efforts directed at Colorado, plaintiff was still injured there by activity essentially identical to activity that it directs at Colorado residents. It does not matter that AAC called plaintiff from a list of apparent Vermont residents. Therefore, the second prong was satisfied.

As to the first prong, plaintiff alleged that AAC maintained “continuous and systematic contacts” with Colorado through targeted telemarketing and used telemarketing to sell service contracts nationwide, including in Colorado, by calling Colorado phone numbers. AAC did not contradict these assertions. Plaintiff plausibly alleged that AAC purposefully directed its activities at residents of Colorado.

Lastly, the Tenth Circuit rejected AAC’s argument that personal jurisdiction in Colorado does not comport with fair play and substantial justice, because inconvenience alone is insufficient to meet this standard.

The order dismissing plaintiff’s suit for lack of personal jurisdiction was reversed and the case was remanded for further proceedings.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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