Your Car's Extended Warranty Can Get You Sued Where the Consumer Lives: Hood v. American Auto Care

Alexander Hood got those calls too. And the U.S. Court of Appeals for the Tenth Circuit decided he could sue the Florida seller in Colorado, even though the calls went to his Vermont cell number.

The case is Hood v. American Auto Care, LLC, No. 20-1157, 21 F.4th 1216 (10th Cir. Dec. 28, 2021). Judge Hartz wrote the opinion for a panel that included Judges Phillips and McHugh.

So what happened?

American Auto Care (AAC) is a Florida company that sells vehicle service contracts. Its only office is in Florida.

Hood used to live in Vermont, so his cell had a Vermont area code. After he moved to Colorado and bought a used car, the prerecorded warranty calls started, coming from Vermont area code numbers. He traced one to AAC and filed a putative class action under the Telephone Consumer Protection Act (TCPA) in Colorado federal court.

The district court agreed AAC purposefully telemarketed to Colorado. But it dismissed for lack of personal jurisdiction anyway, because the call to Hood went to a Vermont number. No connection to Colorado, it said.

What changed

Here's the thing ... after that dismissal, the Supreme Court decided Ford Motor Co. v. Montana Eighth Judicial District Court. Ford said a claim must "arise out of or relate to" the defendant's forum contacts, and the "relate to" part doesn't require strict causation.

The Tenth Circuit took that and ran with it. A state can exercise jurisdiction over an out-of-state company that injured a resident there if:

• the company purposefully directs marketing at that state's residents, and
• the claim comes from essentially the same type of activity, even if that specific call wasn't aimed at the state.

If AAC makes the same warranty calls to Vermont and Colorado residents, it doesn't matter which list Hood's number was on. Same "model" call, as the court put it.

AAC's arguments didn't work

• "We're not Ford." True, AAC doesn't have a "truckload of contacts" in Colorado. Didn't matter. Ford's rule wasn't limited to giant companies.
• "This is like the internet." Nope. A website is passive. Telemarketing means you pick up the phone and call people.
• "He moved, that's on him." The court flipped it. If AAC regularly calls Colorado, the fluke is that a Coloradan had a Vermont number.
• "It's unfair to make us litigate there." Inconvenience isn't rare or special. This is "standard fare."

The court reversed and sent the case back.

Why should you care?

Look, a lot of telemarketers think area codes protect them. They don't.

Read that again. If you call into a state on purpose, you can get sued there by someone whose number has some other area code.

What to do this week

• Assume you can be sued where people live, not just where their area code points.
• Get consent before prerecorded calls to cell phones. That's the actual problem here.
• Track where your leads really are. Area codes are a bad proxy now.
• Know which state rules apply. The court flagged that state-specific disclosure rules could change the analysis.

Stop relying on geography tricks. Get consent, and you won't have to argue about where to get sued.

Read the Tenth Circuit's opinion in Hood v. American Auto Care.