The RDI Corporation v. Charter Communications, Inc..

Background

RDI provided telemarketing services to Charter under a Master Services Agreement and related statements of work. The contract required Charter to remove certain do-not-call numbers before sending calling lists to RDI. It separately required RDI to scrub those lists through a third-party service before using them and periodically during each campaign. The agreement also required RDI to comply with the Telephone Consumer Protection Act, a federal law that restricts certain telemarketing calls to numbers on do-not-call registries.

Charter discovered that RDI had made calls to numbers on do-not-call registries. RDI acknowledged that it had not scrubbed Charter’s lists between December 2016 and October 2017 and again failed to scrub lists in May and June 2018. Charter terminated the parties’ agreement effective August 21, 2018, and withheld $334,063.44 for services RDI had performed between May and August 2018.

RDI sued to recover the withheld payment under breach-of-contract, unjust-enrichment, and quantum-meruit theories. Charter counterclaimed for breach of contract based on RDI’s failure to comply with applicable laws and for failing to indemnify Charter for defense costs in a separate lawsuit involving a call allegedly made by RDI.

Summary-Judgment Rulings

Summary judgment is a decision without a trial when the undisputed evidence shows that a party is entitled to judgment under the law. Both parties moved for summary judgment.

1. Charter’s breach-of-contract counterclaim: RDI’s motion for summary judgment dismissing this counterclaim was denied. Charter’s motion for summary judgment on this counterclaim was granted to the extent of liability and nominal damages. The court found that RDI breached the agreement by failing to scrub lists and by making calls to do-not-call numbers. Charter was therefore entitled to nominal damages, but not to its requested repayment of more than $12.2 million.

The court rejected Charter’s theory that it could recover every payment made to RDI from January 2017 through August 2018 because Charter would supposedly have terminated the contract earlier if it had known about RDI’s breaches. Charter did not prove actual losses from the calls, and RDI had provided Charter with customer contracts and other benefits. Repayment of all amounts paid would have given Charter a windfall by allowing it to keep those benefits without paying for the services.

2. Charter’s indemnification counterclaim: RDI’s motion for summary judgment dismissing this counterclaim was granted, and the court dismissed the claim with prejudice. The contract required Charter to give RDI prompt notice of a third-party claim and allowed the indemnifying party to control the defense. Charter did not notify RDI or demand indemnification until four months after the separate lawsuit had ended. Because RDI lost its contractual opportunity to control or participate in the defense, the court found that RDI was materially prejudiced.

3. RDI’s claim for unpaid services: RDI’s motion for partial summary judgment on liability was granted. Charter’s cross-motion for summary judgment dismissing RDI’s claims was denied. The court held that RDI’s breaches in May and June 2018 were serious but were not material breaches—that is, breaches substantial enough to defeat the central purpose of the contract and excuse Charter’s obligation to pay.

The court reasoned that the purpose of the agreement was to generate new or upgraded customer contracts for Charter, and RDI continued to do that. The do-not-call calls were a very small fraction of RDI’s total calls, the evidence suggested that the errors resulted from technical or human mistakes rather than intentional misconduct, and Charter had not shown actual harm from the calls. Charter therefore could not retain the benefits of RDI’s accepted services without paying for them. The amount of RDI’s recovery remained to be determined in a later damages proceeding.

Alternative Claims and Other Orders

Because the parties had an enforceable written contract covering the same subject matter, the court stated that RDI’s alternative unjust-enrichment and quantum-meruit claims were moot. The court also authorized withdrawal of RDI’s counsel and required RDI, a corporation, to obtain new counsel to complete the case. The opinion was temporarily filed under seal while the parties identified material they believed should remain sealed.