Thompson v. AT&T Corp.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

JAMES THOMPSON, )

)

Plaintiff, )

) No. 17 C 3607

Vv. )

) Chief Judge Rubén Castillo

SUTHERLAND GLOBAL SERVICES, )

INC., )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

James Thompson (“Plaintiff”), on behalf of himself and a putative class of individuals

who allegedly received unsolicited telephone calls, brings this action against Sutherland Global

Services, Inc. (“Defendant”) pursuant to the Telephone Consumer Protection Act (“TCPA”), 47

U.S.C. § 227. (R. 40, Second Am. Compl. 9] 44-61.) Before the Court is Defendant’s renewed

motion to compel arbitration and stay this case pending arbitration pursuant to the Federal

Arbitration Act (“FAA”), 9 U.S.C. §§ 3-4. (R. 69, Renewed Mot. at 1; R. 69-1, Mem. at 12.) For

the reasons stated below, the Court grants Defendant’s motion.

BACKGROUND

The following facts are undisputed unless otherwise stated. The Court presumes

familiarity with the material facts and allegations as described in its order issued on September

24, 2018, which related to Defendant’s previous motion to compel arbitration. (R. 66, Order.) To

summarize, Plaintiff is an individual who resides in the Northern District of Mimois and allegedly

received unsolicited phone calls from Defendant about AT&T U-Verse Intermet service. (7d. at

1-2.) Defendant is a New York corporation headquartered in Pittsfield, New York, that AT&T

Services, Inc. (“AT&T”) contracted with to call AT&T customers. (fd)

Plaintiff registered for AT&T’s U-verse Internet service and accepted the accompanying

terms of service in March 2016. (/d. at 2.) The terms of service provide that “AT&T and you

agree to arbitrate all disputes and claims between you and AT&T.” (R. 49-3 at 22, Terms of

Service.) “AT&T” is defined in the terms of service to include “AT&T Corporation”! and all

local entities that provide AT&T U-Verse Internet service, which for Plaintiff—who resided in

Ilinois—was Iflinois Bell Telephone Company (“Illinois Bell”). (id. at 6, 29 n.1.) The arbitration

agreement states that any references to “‘AT&T,” “you,” and ‘us’ include our respective

subsidiaries, affiliates, agents, employees, predecessors in interest, successors, and assigns, as

well as all authorized or unauthorized users or beneficiaries of [U-verse] . . . under this or prior

Agreements[.]” (/d. at 22.) The arbitration agreement covers “(claims arising out of or relating

to any aspect of the relationship between usj;] . . . [c]laims that arose before this or any prior

Agreement . . . [;] [c]laims that are currently the subject of purported class action litigation im

which you are not a member of a certified class[;]” and “[c|laims that may arise after the

termination of this Agreement.” Ud.)

Michael Shannon Barker (“Barker”), AT&T’s Vice President of Service Delivery,

declares that AT&T hired Defendant to make phone calls to AT&T customers as part of AT&T's

proactive churn management (“PCM”) program.’ (R. 69-2, Barker Decl. at 1-2.) The services

under this program were carried out in accordance with a “Call Center Master Service

| This entity is affiliated with but a different entity than AT&T Services, Inc., the entity that the Court

refers to in this opinion as “AT&T.”

2 AT&T’s PCM program identified customers who were likely to “churn,” or cancel or reduce services,

and took steps to retain those customers. (See R. 69-2, Barker Decl. at 4; R. 70-2, PCM Order at 3.)

Agreement” (“MSA”) and a separate work order (“PCM Order’”).? Ud.) Under the PCM Order,

Defendant was to provide English and Spanish customer service support over the telephone to

AT&T customers for the purpose of reducing AT&T customer churn by, among other things,

proactively troubleshooting and resolving customer connectivity, home computer, and network

issues. (/d. at 4; R. 70-2, PCM Order at 3.) Pursuant to the PCM program, Defendant made three

calls to Plaintiff on December 24, 2015. (R. 69-2, Barker Decl. at 5; R. 69-3, Baker Decl. Ex. C.

at 2.) Defendant placed these calls because Plaintiffhad registered for AT&T"s U-Verse service

but had not yet installed the necessary equipment. (/d.)

Under the MSA and PCM Order, AT&T reserved the right to set Defendant’s target call

volume, the number of Defendant’s employees working on the PCM program, and the personnel

structure for the PCM program. (R. 70-2, PCM Order at 3-5.) AT&T also retained the right to be

notified if any employment changes occurred, to set the hours that Defendant’s employees would

be available to work, and to designate the location from which Defendant’s services would be

provided. (/d.) In addition, AT&T reserved the right to choose and provide the technology that

Defendant used to carry out PCM services. (dd. at 5-8.)

Kristina Carter (“Carter”), AT&T’s Lead Product Marketing Manager, declares that

AT&T retained control over both the manner and means of Defendant’s calls on AT&T’s behalf,

and that AT&T required Defendant to hold itself out as AT&T when making calls to AT&T

customers. (R. 69-4, Carter Decl. at 3.) The customers to be called by Defendant were selected

by AT&T. (Ud. at 3-4.) Any data generated from Defendant’s calls were provided to AT&T. Ud.

3 Where the Court cites or discusses portions of a document filed under seal, it is because the Court has

determined that those portions of the document were improperly filed under seal. See In re Specht, 622

F.3d 697, 701 (7th Cir. 2010) (“Documents that affect the disposition of federal litigation are

presumptively open to public view, even if the litigants strongly prefer secrecy, unless a statute, rule, or

privilege justifies confidentiality.”).

at 4.) AT&T prepared training materials for Defendant’s customer service representatives to use,

Defendant’s managers were directly trained by AT&T personnel, and AT&T placed an onsite

manager with Defendant who “was responsible for overseeing [Defendant].” Ud. at 5-7.)

Additionally, Defendant’s employees were instructed by AT&T to tell AT&T customers that the

calls were from “AT&T customer service” and not Defendant. (Jd. at 4.) AT&T also provided

scripts for Defendant’s employees to follow when making calls to AT&T customers. (id.)

Though Defendant had freedom to hire its own employees, AT&T “set the head count”

for the PCM program, and Defendant’s employees “were segregated from representatives [who]

worked on other . . . projects, including other work [Defendant] did for AT&T.” (id. at 5.) AT&T

obligated these employees “to have their own floor space at [Defendant’s] call centers that

required badge access[,] and to not share computers, printers, or other equipment with other

[Defendant] projects.” Ud.) AT&T held weekly performance meetings with Defendant that

involved “measuring [Defendant’s] results against AT&T’s targets according to a variety of

metrics identified by AT&T.” (id. at 6.) AT&T also held regular meetings to address

Defendant’s performance, and AT&T had access to Defendant’s call centers to conduct regular

site visits and review Defendant’s work. (Id. at 5-6.) AT&T even had control over the music that

AT&T customers would listen to when Defendant placed them on hold. (R. 70-2, PCM Order at

17.)

PROCEDURAL HISTORY

On May 12, 2017, Plaintiff filed a complaint against AT&T Corporation alleging

violations of the TCPA. (R. 1, Compl. {ff 25-42.) Plaintiff amended his complaint twice, and the

second amended complaint, filed on May 10, 2018, is the operative complaint. (R. 40, Second

Am. Compl.) It advances one count for violation of the TCPA against AT&T, Illinois Bell, and

Defendant for the allegedly unsolicited calls that Plaintiff received. Ud. 2, 5, 15-52.) Plaintiff

brings this action on behalf of himself and a putative class consisting of persons who received

phone calls from Defendant on or after May 12, 2013, and persons who received a pre-recorded

message from Defendant. (Ud. J) 53-61.) On June 19, 2018, Plaintiff voluntarily dismissed

AT&T and Illinois Bell from this action without prejudice. (R. 57, Voluntary Dismissal.)

On June 15, 2018, Defendant moved to compel arbitration. (R. 56, First Mot. at 3.) The

Court denied Defendant’s motion without prejudice, finding that the U-Verse terms of service

are enforceable and rejecting Plaintiff's argument of unconscionability. (R. 66, Order at 12.) The

Court concluded, however, that Defendant had failed to provide sufficient evidence that it was

AT&T’s agent so as to warrant the arbitration agreement's application in this case. (Ud. at 12-15.)

As a result, the Court permitted Plaintiff to take discovery on the relationship between Defendant

and AT&T to test whether Defendant was AT&T's agent. Ud. at 16-17.)

On January 11, 2019, after discovery concluded on the agency issue, Defendant filed a

renewed motion to compel arbitration. (R. 69, Renewed Mot.; R. 69-1, Mem.) Defendant argues

that it acted as AT&T’s agent when it made calls to Plaintiff, thereby making the arbitration

agreement enforceable as to any dispute between Plaintiff and Defendant. (R. 69-1, Mem. at

8-12.) In support of its motion, Defendant presents declarations from AT&T employees and the

contract between Defendant and AT&T. (R. 69-2, Barker Decl.; R. 69-4, Carter Decl.)

Defendant argues that this evidence shows it was AT&T's agent because AT&T retained

significant control over how Defendant was to carry out its obligations. (R. 69-1, Mem. at 8-9.)

Defendant also contends that it had actual authority to affect AT&T’s legal relationships. (/d. at

10-11.) Defendant argues that, as a result, any disputes between it and Plaintiff are covered by

the arbitration agreement in the U-Verse terms of service. (Id. at 12.}

Plaintiff, on the other hand, argues that no enforceable arbitration agreement exists

between Plaintiff and Defendant. (R. 75, Resp. at 4-8.) In Plaintiffs view, the calls at issue arose

before Plaintiff accepted the online terms of service containing the arbitration provision. (/d.)

Plaintiff also argues that Defendant has no right to enforce Plaintiffs arbitration agreement with

AT&T because Defendant is neither a party to that contract nor an intended beneficiary under the

contract. (/d. at 8-9.) Plaintiff contends that the arbitration agreement is between Plaintiff and

Illinois Bell and [inois Bell’s agents, not between AT&T and its agents. (/d.) Thus, according to

Plaintiff, it does not matter if Defendant was AT&T’s agent because the arbitration agreement

only covers Illinois Bell’s agents. (/d.) Finally, Plaintiff argues that Defendant was not an agent

of AT&T but instead hired by AT&T as an independent contractor. Ud. at 9-15.)

LEGAL STANDARD

Under the FAA, courts compel arbitration if the following three elements are shown: “(1)

an agreement to arbitrate, (2) a dispute within the scope of the arbitration agreement, and (3) a

refusal by the opposing party to proceed to arbitration.” Zurich Am. Ins. Co. v. Watts Indus., Inc.,

466 F.3d 577, 580 (7th Cir. 2006). The U.S. Court of Appeals for the Seventh Circuit has

established three bedrock principles related to the enforcement of arbitration agreements: (1) that

the FAA “evinces a national policy favoring arbitration;” (2) “an arbitration agreement generally

cannot bind a non-signatory;” and (3) “arbitration agreements generally are enforceable against

non-signatories only in a handful of limited circumstances, depending on the applicable state

law” A.D. v. Credit One Bank, NA., 885 F.3d 1054, 1059-60 (7th Cir. 2018) (internal quotation

omitted). “These limited exceptions are: (1) assumption, (2) agency, (3) estoppel, (4) veil

piercing, and (5) incorporation by reference.” Jd. at 1060.

Cc

While arbitrability of a dispute is generally a question of law, the FAA provides for a jury

trial if there is a factual dispute about whether an arbitration agreement was made. Scheurer y.

Fromm Family Foods LLC, 863 F.3d 748, 751 (7th Cir. 2017). Accordingly, “[jJust as in

summary judgment proceedings, a party cannot avoid compelled arbitration by generally denying

the facts upon which the right to arbitration rests; the party must identify specific evidence in the

record demonstrating a material factual dispute for trial.” Tinder v. Pinkerton Sec., 305 F.3d 728,

735 (7th Cir. 2002). Furthermore, “[iJn deciding whether the party opposing .. . compelled

arbitration has identified a genuine issue of material fact for trial, the evidence of the non-movant

is to be believed and all justifiable inferences are to be drawn in his favor.” /d (internal

quotations omitted).

Once a district court determines that the parties have agreed to arbitrate, the court must

compel arbitration and, upon application by one of the parties, stay the trial of the action until

arbitration is completed. Paragon Micro, Inc. v, Bundy, 22 F. Supp. 3d 880, 887 (N.D. Ill. 2014)

(citing 9 U.S.C. §§ 3-4). Although state law applies to issues of contract formation, “[o]nce it is

clear... that the parties have a contract that provides for arbitration of some issues between.

them, any doubt concerning the scope of the arbitration clause is resolved in favor of arbitration

as a matter of federal law.” Gore v. Alltel Comme’ns, LLC, 666 F.3d 1027, 1032-33 (7th Cir.

2012) (citing Moses H. Cone Mem’! Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)).

ANALYSIS

I. Plaintiff’s Challenges to Enforceability of the Arbitration Agreement

The majority of Plaintiffs response is directed toward the enforceability of the arbitration

agreement between Plaintiff and Defendant, (R. 75, Resp. at 1-9), despite the fact that the Court

addressed the arbitration agreement’s enforceability in a prior order. (See R. 66, Order at 12.) For

the sake of completeness, however, the Court considers Plaintiff's argument that the arbitration

agreement is not enforceable because Defendant is not a party or signatory to the arbitration

agreement. (R. 75, Resp. at 8-9.)

The U-Verse terms of service provide that it “is a binding agreement between you . . . and

the AT&T entity that provides the Service[.]” (R. 49-3 at 6, Terms of Service.) “AT&T” is

defined in the terms of service as “your local AT&T telephone company,” which for Plaintiff—

an Illinois customer-—is Illinois Bell. Ud. at 6, 29 n.1.)

The arbitration agreement within the terms of service includes even more patties to that

agreement, as it provides that “AT&T and you agree to arbitrate all claims between you and

AT&T,” and “AT&T” is defined to include Illinois Bell as well as its “affiliates, agents,

employees, predecessors in interests, successors, and assigns[.|” Ud. at 22.) Thus, the parties to

the arbitration agreement are Illinois Bell as well as Illinois Bell’s “affiliates.” (/d.)

The Court concludes that Defendant was acting as an Illinois Bell “affiliate” when it

called Plaintiff and therefore is a party to the arbitration agreement in the U-Verse terms of

service. See, ¢.g., Dr. Robert L. Meinders, D.C., Ltd. v. UnitedHealthcare, Inc., 800 F.3d 853,

857 (7th Cir. 2015) (“The general rule, of course, is that an arbitration agreement binds only the

parties to that agreement.”). Specifically, in response to interrogatories issued to AT&T

Corporation, AT&T Corporation stated that AT&T-affiliated companies called Plaintiff □□ part

of the PCM program. (R. 29-1, Defs.’ Resps. at 3-6, 10.) These responses also provide that the

calls to Plaintiff were from “AT&T affiliates” made to “customer contact numbers provided by

the individuals” who signed up for U-Verse. (/d. at 10.) Plaintiff provides no evidence

contradicting this evidence which shows that Defendant, the company that called AT&T

customers, was an affiliate of AT&T Corporation and its related companies such as Illinois Bell.

Thus, Defendant is covered by the arbitration agreement as an “affiliate” of Tllinois Bell,

Additionally, Defendant can invoke the arbitration agreement because AT&T is a party to

the arbitration agreement, and Defendant was acting as AT&T’s agent when it called Plaintiff.

Plaintiff does not dispute that AT&T is [llinois Bell’s affiliate. (R. 29-1, Defs.’ Resps. at 3-6;

R. 40, Second Am. Compl. {ff 11-13.) Thus, it is undisputed that AT&T is a party to the

arbitration agreement because the arbitration agreement is between Plaintiff on the one hand and

Illinois Bell and its “affiliates, agents, employees, predecessors in interests, successors, and

assigns” on the other hand. (R. 49-3 at 22, Terms of Service.) A non-signatory to an arbitration

agreement can enforce the agreement if the non-signatory is the agent of a party to the arbitration

agreement. Peach y. CIM Ins, Corp., 816 N.E.2d 668, 671 (Ill. App. Ct. 2004). As discussed at

length below, Defendant is the agent of AT&T who is a party to the arbitration agreement,

therefore, Defendant has standing to enforce the arbitration agreement because Defendant’s calls

were made within the scope of the agency relationship between Defendant and AT&T. See, □□□□

Griffis v. Wells Fargo Advisors, LLC, No. 13 CV 8372, 2014 WL 3027683, at *5 (N.D. Ill. July

3, 2014) (non-signatory could enforce arbitration agreement because he was an agent of a party

to the arbitration agreement and the misconduct alleged was related to duties the non-signatory

performed within the scope of the agency relationship). Accordingly, the Court rejects Plaintiffs

challenges to the enforceability of the arbitration agreement.

Plaintiff also argues that he agreed to the U-Verse terms of service and accompanying

arbitration agreement in March 2016, which was after the phone calls Defendant placed in

December 2015. (R. 75, Resp. at 5-8.) Therefore, according to Plaintiff, the arbitration agreement

could not cover disputes related to the December 2015 phone calls. (/d.) This argument fails

because the arbitration agreement expressly applies to “[c]laims that arose before this or any

prior Agreement” relating to the U-Verse service. (/d.) The arbitration agreement here covers

claims related to the U-Verse service, was contained within the U-Verse terms of service, and

Defendant’s calls to Plaintiff related to the U-Verse service. (See R. 49-3 at 6, 22.) Thus, unlike

Plaintiff's cited authorities, the Court is satisfied that Plaintiff's dispute bears enough relation to

the subject matter of the U-Verse terms of service and the accompanying arbitration agreement

such that the parties must proceed to arbitration. Cf Tillman v. The Hertz Corp., No. 16 C 4242,

2016 WL 5934094, at *2 (N.D. Ill. Oct. 11, 2016) (‘An arbitration agreement is logically and

necessarily tied to the underlying contract that specifies arbitration as the agreed upon method of

dispute resolution.”).

Finally, Plaintiff contends that because AT&T failed to expressly identify Defendant as

an intended third-party beneficiary in the arbitration clause, the Court should not compel

arbitration. (R. 75, Resp. at 9.) A third-party beneficiary is just one of the types of parties who

are not parties to an arbitration agreement but have standing to enforce the agreement. See A.D.

y. Credit One Bank, NA., 885 F.3d at 1059-60. The Court has found that Defendant can enforce

the arbitration agreement as a party to that agreement and as an agent of a party to the arbitration

agreement; thus, there is no need for Defendant to rely on a third-party beneficiary theory to

enforce the arbitration agreement. Nevertheless, the Court is unpersuaded by Plaintiff's argument

that Defendant is not a third-party beneficiary to the arbitration agreement.

Under Illinois law, for Defendant to be a third-party beneficiary of the arbitration

agreement, the agreement must have been made “for the direct benefit of” Defendant, and such

benefit “must affirmatively appear from the language” of the arbitration agreement. Brown y.

Worldpac, Inc., No. 17 CV 6396, 2018 WL 656082, at *3 (N.D. IIL. Feb. 1, 2018) (internal

wa

quotations and emphasis omitted) (applying Illinois law), The arbitration agreement need not

identify Defendant by name, “but it must be identified in some manner, for example, by

describing the class to which it belongs.” Id. at *3; see also Cont’! Cas. Co. v, Am. Nat. Ins. Co.,

F.3d 727, 734 (7th Cir. 2005) (applying the same principle under [linois law). For example,

in Brown v. Worldpac, Inc., No. 17 CV 6396, 2018 WL 656082, at *3 (N.D. ill. Feb, 1, 2018),

the court found that the defendant’s customer could enforce an arbitration agreement as a

third-party beneficiary because the arbitration agreement, although it did not explicitly name the

defendant’s customer, covered all disputes involving the defendant “or its customers.” Brown,

2018 WL 656082, at *3-4 (emphasis omitted); see also Manor v. Copart Inc., No. 17-CV-2585,

2017 WL 4785924, at *4 (N.D. IIL. Oct. 24, 2017) (subsidiary was a third-party beneficiary of the

arbitration agreement because it was a subsidiary of a company that was a party to the arbitration

agreement, and the agreement defined the company as including all of its subsidiaries).

The arbitration agreement in the U-Verse terms of service identifies the class to which

Defendant belongs—Illinois Bell’s “affiliates.” (R. 49-3 at 22, Terms of Service.) There is also a

clear intent in the arbitration agreement to benefit Illinois Bell’s affiliates and provide them the

legal right to dispute claims with Plaintiff in arbitration. (/d.) Thus, like the defendant’*s customer

in Brown, Defendant can enforce the arbitration agreement as a third-party beneficiary because it

is an affiliate of Illinois Bell. See Brown, 2018 WL 656082, at *3-4; Manor, 2017 WL 4785924,

at *4. Accordingly, whether under a theory of agency, third-party beneficiary, or simply

Defendant being a party to the arbitration agreement, Defendant has the right to enforce the

arbitration agreement against Plaintiff. The Court, therefore, compels arbitration and stays this

case. See 9 U.S.C. §§ 3-4; Paragon Micro, Ine., 22 F. Supp. 3d at 887.

11

IL. Agency

Next, the parties dispute whether Defendant was AT&T’s agent such that Defendant has

the right to enforce the arbitration agreement against Plaintiff. (See R. 75, Resp. at 9-15.) The

test to determine whether a principal-agent relationship exists is whether the alleged principal

has the right to control the alleged agent, and whether the agent can affect the legal relationships

of the principal. Uesco Indus., Inc. v. Poolman of Wis., Inc., 993 N.E.2d 97, 112 (I. App. Ct.

2013); see also see also Wilson v. Edward Hosp., 981 N.E.2d 971, 978 (HL. 2012) (describing the

elements of a principal-agent relationship). “Principal among these considerations is the right to

control the manner that the work is done.” Taylor v. Kohli, 642 N.E.2d 467, 468 (I. 1994).

Therefore, for Defendant to establish a principal-agent relationship between itself and AT&T, it

must show that (1} AT&T had the right to control Defendant; and (2) that Defendant had the

power to affect AT&T’s legal relationships. See Uesco Indus., Inc., 993 N.E.2d at 112; Wilson,

981 N.E.2d at 978. The Court addresses each element in turn.

A. Right to Control

AT&T retained the services of Defendant and tasked Defendant with making phone calls

as part of AT&T’s PCM program. (R. 69-2, Barker Decl. at 2.) Defendant, however, was not

given freedom to carry out tasks as it saw fit; instead, AT&T retained a significant level of

control over the manner and means in which Defendant performed services for AT&T. (R. 69-4,

Carter Decl.; R. 70-1, MSA; R. 70-2, PCM Order.) “A hallmark of the principal/agent

relationship is the principal’s right to control the conduct of the agent.” Wis. Cent. Lid. v.

Tiknergy, LLC, 894 F.3d 851, 858 (7th Cir. 2018). The right of control, not the actual exercise of

wn

control, is the principle factor in distinguishing a servant from a contractor. McNerney v.

Allamuradov, 84 N.E.3d 437, 454 (IL App. Ct. 2017).

Because AT&T exerted significant control] over Defendant, the Court finds that the first

prong of the agency analysis is satisfied. See Uesco Indus., Inc., 993 N.E.2d at 112. AT&T’s

control over Defendant can be grouped into two categories: (1) control over Defendant’s

customer calls, and (2) control over employment decisions and supervision of Defendant’s work.

1. Customer Calls

AT&T exercised significant control over Defendant by controlling the manner and means

by which Defendant was to call and speak to AT&T’s customers. Specifically, AT&T required

Defendant to use an AT&T-approved script. (R. 69-4, Carter Decl. at 4; R. 69-2, Barker Decl. at

3.) AT&T also had the right to control which customers could be called, and AT&T provided

Defendant with its confidential customer list. (R. 69-4, Carter Decl. at 3.) Defendant could not

deviate from this list. fd.) AT&T even had control over the call volume and reserved the right to

change the call volume as it saw fit. (R. 69-2, Barker Decl. at 4; R. 70-2, PCM Order at 5.)

Notably, the core service Defendant provided AT&T was making phone calls to AT&T

customers, (R. 70-2, PCM Order at 4); therefore, it is significant that AT&T retained and exerted

contro! over how those phone calls would be placed. AT&T had control over almost every

decision that Defendant might have encountered, from the number of calls Defendant had to

make to the precise words Defendant was authorized to say to AT&T customers. (R. 69-4, Carter

Decl. at 3-4.) AT&T even controlled the music Defendant played when an AT&T customer was

placed on hold. (R. 70-2, PCM Order at 17.) This undisputed evidence is enough to satisfy the

control prong of the agency analysis. See, e.g., Thomas v. Weatherguard Constr. Co., 42 N.E.3d

19

21, 24-26 (Ill. App. Ct. 2015) (affirming agency finding where a sales representative was given a

script and instructed to hold herself out as working for defendant).

2. Control over Employment Decisions and AT&T’s Supervision of

Defendant

AT&T also controlled how Defendant was to allocate its resources on the PCM program

through Defendant’s staffing, training, discipline, and equipment decisions. (R. 69-2, Barker

Decl. at 4; R. 70-2, PCM Order at 3-14.) This control is also more than enough to satisfy the first

element of the agency analysis.

In Bruntjen v. Bethalto Pizza, LLC, 18 N.E.3d 215, 239-40 (I. App. Ct. 2014), for

example, the court held that an agreement between the parties, an operating manual, and the

franchisor’s contract with the franchisee’s employees provided ample evidence that “[the

defendant] had the right to control many aspects of [the purported agent’s] daily operations.” fd.

at 240. Therefore, the court reasoned that the first prong of the agency test was satisfied because

the agreements allowed the franchisor to control “employment decisions, training, safety, daily

maintenance, wage and hour requirements, record-keeping, supervision and discipline of

employees, and hiring and firing[.]” fd

Similar to the franchisor in Bruntjen, AT&T retained significant control over Defendant’s

employment and staffing decisions. (R. 69-2, Barker Decl. at 4; R. 70-2, PCM Order at 4-14.)

For example, AT&T required that Defendant segregate a space (requiring security badge access)

for Defendant’s employees assigned to the PCM program and required that the equipment those

employces used be exclusively used for the PCM program. (R. 70-2, PCM Order at 5-8.) AT&T

went even further by controlling the training of Defendant’s employees and obligating Defendant

to build a “customer simulation lab” for its employees “to learn how to troubleshoot AT&T

customer problems.” (Jd. at 7.) AT&T also required Defendant’s employees to meet a certain

amount of training hours set by AT&T. (/d. at 18-19.)

Finally, AT&T carefully supervised how Defendant carried out its obligations. AT&T

required Defendant to provide daily reports and a detailed quality assurance plan. (/d. at 9-14.)

AT&T placed an onsite manager with Defendant who monitored Defendant’s work. (R. 69-4,

Carter Decl. at 5-7.) AT&T also had the right to conduct regular site visits at Defendant’s

offices. (R. 70-1, MSA at 3.) Accordingly, the control prong in the agency analysis is satisfied in

this case. See Bruntjen, 18 N.E.3d at 239-41.

B. Defendant was authorized to affect AT&T’s legal relationships.

Turning to the second prong of the agency analysis, whether Plaintiff authorized to

affect AT&T’s legal relationships, see Uesco Indus., Inc., 993 N.E.2d at 112, Defendant has

presented undisputed evidence showing that it had the authority to affect AT&T’s legal

relationships. “Agency may be actual or apparent.” Paul v. ING Fin. Partners Inc., No.

3-09-0588, 2010 WL 8544601, at *5 (ll. App. Ct. 2010). “Actual agency occurs by either

express or implied authority.” /d. “An agent has express authority when the principal explicitly

grants the agent authority to perform a particular act.” Jd. A contract that explicitly creates an

agency relationship is the most basic example of actual authority. F.g., Zahl v. Krupa, 850

N.E.2d 304, 311 (Ll. App. Ct. 2006). “Implied authority is actual authority proved by

circumstantial evidence or authority that is inherent in an agent’s position.” /d.

The Court finds that the undisputed evidence leads to the conclusion that Defendant had

actual authority to bind AT&T. The MSA and PCM Order give Defendant express authority to

make calls to customers representing itself as “AT&T,” to solicit AT&T customers for additional

AT&T services, and to close sales for AT&T’s U-Verse service. (R. 70-1, MSA at 14; R. 70-2,

15

PCM Order at 3-4.) This fits squarely within the realm of actual authority. See Curto v. Hlini

Manors, Inc., 940 N.E.2d 229, 233 (il. App. Ct. 2010) (observing that actual authority “may be

granted through a written contract”).

Thus, the Court concludes that the second prong of the agency analysis is satisfied. See

Uesco Indus., Inc., 993 N.E.2d at 112. With both elements of the agency test satisfied, the Court

finds that Defendant was acting as AT&T’s agent when it made the phone calls to Plaintiff. See

id. Accordingly, the Court must compel arbitration because, as explained above, AT&T is a party

to the arbitration agreement and Defendant has standing to compel arbitration as AT&T’s agent.

See Griffis, 2014 WL 3027683, at *5; Peach, 816 N.E.2d at 671.

The Court rejects Plaintiff's arguments challenging the agency relationship between

Defendant and AT&T. First, Plaintiff argues that Defendant is not AT&T’s agent because AT&T

identifies Defendant as an independent contractor in the MSA. (R. 75, Resp. at 9-10.) The

MSA’s independent contractor clause provides, however, that Defendant “is engaged in an

independent business and, except as specifically provided herein, shall perform all obligations

under this Agreement as an independent contract[.]” (R. 70-1, MSA at 2 (emphasis added).) That

clause does not apply here because the MSA unambiguously carves out an exception to this

provision for when Defendant is making marketing calls to AT&T customers. Ud.) Because this

case involves marketing calls to Plaintiff, (R. 69-4, Carter Decl. at 6), Defendant acted as

AT&T’s agent and not an independent contractor.‘

In addition, Illinois agency law requires courts to rely on the facts of each case to

determine whether an agency relationship exists regardless of contractual labels. A written

4 Plaintiff argues that these were not marketing phone calls, but Defendant presents unrebutted evidence

showing that these calls were designed to retain paying customers, and that the PCM program was

overseen by AT&T’s marketing division. (R. 69-4, Carter Decl. at 6.)

we

contract is not conclusive of the relationship between the alleged agent and the alleged principal.

Bruntjen, 18 N.E.3d at 239. Thus, even if the agreement between AT&T and Defendant had

exclusively labeled Defendant as an “independent contractor,” [Illinois agency law requires the

Court to look beyond that provision and find that Defendant is AT&T’s agent because the

evidence shows AT&T had control over Defendant and that Defendant could affect AT&T's

legal relationships. See id. at 239-42. Accordingly, the Court grants the motion to compel

arbitration.

CONCLUSION

For the foregoing reasons, Defendant’s renewed motion to compel arbitration (R. 69,

Renewed Mot.) is GRANTED. The Court STAYS all further proceedings in this matter until the

parties have completed arbitration of this dispute.

ENTERED: Ma

Chief Judge Rubén Castillo

United States District Court

Dated: April 3, 2019