Whether a buyer inherits a seller’s TCPA claims depends on how the deal is built. A merger or stock purchase brings the target’s past calls along. A true asset purchase usually doesn’t, unless the buyer assumed the liability, the deal works as a merger, the buyer is a mere continuation of the seller, or the sale defrauded creditors. In my view, a buyer that diligences the calling program and papers the deal carefully has strong ground to leave pre-closing calls with the seller.
Does the buyer inherit TCPA claims for calls made before closing?
The TCPA doesn’t address acquisitions, so the answer comes from corporate law.
Mergers. The surviving company takes on everything. California’s merger statute says the survivor “shall be subject to all the debts and liabilities of each in the same manner as if the surviving corporation had itself incurred them,” under Corporations Code § 1107(a). A pending TCPA class action against the target becomes the survivor’s case.
Stock purchases. The target is still the company that placed the calls, and once it’s your subsidiary, its exposure is yours to manage.
Asset purchases. Here the default favors the buyer. The California Supreme Court described the general rule in Ray v. Alad Corp.: “the purchaser does not assume the seller’s liabilities unless (1) there is an express or implied agreement of assumption, (2) the transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing corporation is a mere continuation of the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller’s debts.” Plaintiffs who want to reach an asset buyer ordinarily have to fit the deal into one of those exceptions, or persuade a court to apply a broader federal test (more on that below).
When can an asset buyer be liable as a successor?
Ordinarily, only when the facts fit one of the exceptions, and the party claiming successor liability bears the burden of proving it, as the Vanderbrug court explained under Washington law.
Express or implied assumption. This one is in the buyer’s control. If the asset purchase agreement defines assumed liabilities broadly, such as every liability arising from the business, pre-closing TCPA claims can come along. The fix is a schedule of excluded liabilities that names claims arising from calls and texts made before closing.
Mere continuation. California courts don’t impose it just because the business carried on. According to Ray v. Alad, California decisions imposing mere-continuation liability required a showing that no adequate consideration was paid for the predecessor’s assets and made available to its unsecured creditors, or that the two companies shared officers, directors, or stockholders.
In my view, the exception bites hardest when an owner reorganizes instead of selling. In Robison v. 7PN, LLC, a federal court in Utah refused to dismiss TCPA claims against an LLC formed after the texts were sent, because the complaint alleged the same sole owner ran the business before and after. The court wrote: “So 7PN’s prior nonexistence does not foreclose liability.” That was a pleading-stage ruling on the complaint’s allegations, and the court said the company could raise the issue again on summary judgment. Still, forming a new entity may not leave old calls behind when the owners and the business stay the same. Owners can also be sued directly, as our post on personal TCPA liability for owners and officers explains.
De facto merger and fraud. Ray noted that the merger exception has been invoked where the buyer paid nothing creditors could reach, or paid solely in its own stock that went promptly to the seller’s shareholders as the seller liquidated. The fraud exception makes the buyer liable when the assets were transferred for the fraudulent purpose of escaping the seller’s debts. Both turn on price and ownership, so a clean, arm’s-length record matters.
Does federal or state successor law apply to a TCPA claim?
The cases I found don’t settle it. In Robison, the court applied state law and noted in a footnote that “no court has concluded that federal common-law principles apply to the successor liability context as well,” as of that 2021 decision.
Plaintiffs who argue for federal law rely on a broader test. In Vanderbrug v. MaxSold Inc., the plaintiff argued that a buyer’s U.S. subsidiary was liable for an unfinalized TCPA settlement, or for the underlying claims, under a federal “substantial continuity” theory, which can reach a distinct buyer that had notice of the claim and kept the business running the same way. The Western District of Washington noted that the doctrine comes from labor law and that federal courts have been reluctant to extend it. It then found the facts didn’t fit anyway and granted summary judgment in March 2026 to the subsidiary, which hadn’t bought the defunct company’s shares or assets, writing that “These facts do not support successor liability.”
I’d resist that theory in every TCPA case, because it was built for labor relationships and doesn’t fit a consumer statute. Still, build a record that defeats it on the facts.
Does a bankruptcy 363 sale cut off TCPA claims?
Often, but it may not hold against a claimant the debtor knew about and didn’t notify. If one of five statutory conditions is met, Section 363(f) of the Bankruptcy Code lets the trustee or debtor sell property “free and clear of any interest in such property of an entity other than the estate,” under 11 U.S.C. § 363. A sale order can also include a finding that the buyer isn’t a successor, as the one in Newman did.
The limit is due process. In In re Motors Liquidation Co., the General Motors bankruptcy, the Second Circuit upheld the finding that the debtor knew or should have known about the ignition-switch claims, held that those claimants were owed actual notice, found that the lack of notice prejudiced them, and reversed the decision to enforce the sale order against their claims. It also affirmed that the sale order didn’t cover “independent claims” based on the buyer’s own conduct. As the court put it, “But if a debtor does not reveal claims that it is aware of, then bankruptcy law cannot protect it.”
A ruling three days before this post shows how that plays out in a TCPA case. In Newman v. Converge Marketing, LLC, decided October 26, 2026, the Western District of North Carolina addressed a buyer that bought a calling vendor’s assets in a 2024 Chapter 11 sale. According to the court’s order, the vendor had been in settlement talks with the plaintiff for about seven months before it filed, then didn’t list him as a known creditor or mail him notice. The sale order, as the court described it, said the buyer was not “a mere continuation” of the seller.
The court refused to dismiss for lack of jurisdiction, explaining that “federal courts derive their jurisdiction through federal statutes” and not through a sale order’s retention clause. It didn’t decide whether the sale order bars the claim. Instead, it sent the claim against the buyer to the Southern District of New York, reasoning that the bankruptcy court “is in the best position to determine whether Plaintiff was a known or unknown creditor and to what degree due process was afforded to him.”
Two lessons for buyers come out of that order. First, a free-and-clear order is only as strong as the notice behind it, and I’d expect a court to have trouble calling a claimant unknown when the seller was already negotiating with that claimant. Second, what the buyer does after closing can create new exposure. The court kept, and stayed, a crossclaim that, according to the order, alleged only the buyer’s own post-sale conduct, including taking over the seller’s settlement talks and sending a proposed indemnity agreement saying it had stepped into an earlier vendor’s obligations. Those allegations haven’t been proven, but don’t pick up the seller’s disputes after closing unless you mean to own them.
A court-supervised foreign sale helped the buyer’s subsidiary in Vanderbrug, where a Canadian court had approved the sale “free and clear of claims.” The court rejected the fraud theory because the subsidiary got no assets from the defunct company and the plaintiff didn’t show inadequate consideration or an improper purpose.
What should TCPA due diligence look for?
Both the claims you can see and the ones the records predict. Start with demand letters, lawsuits, consumer complaints, and any settlement talks. In Newman, according to the court’s order, the plaintiff complained to the law firm and then to the Better Business Bureau months before the vendor filed for bankruptcy. I’d ask every target for its complaint log along with its litigation list.
Then I’d test the calling program itself, because a buyer that keeps the target’s program running owns every call made after closing. Ask whether consent records can be produced for any given number. The FCC’s rule defines prior express written consent as a signed agreement that “clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice,” under 47 C.F.R. § 64.1200(f)(9). Consent given to the target’s brand may not cover the buyer’s brand. Our post on consent records for purchased leads covers what a strong record looks like.
The same goes for existing customers. The rule extends a customer relationship that would let the target call a number on the Do Not Call Registry to the target’s affiliates only if the customer would reasonably expect it, because the relationship “does not extend to affiliated entities unless the subscriber would reasonably expect them to be included given the nature and type of goods or services offered by the affiliate and the identity of the affiliate,” under § 64.1200(f)(5)(ii). A buyer that isn’t an affiliate is in a weaker spot, in my view. If you buy a customer list, buy the opt-out list with it. Every company that telemarkets “must maintain a record of a consumer’s request not to receive further calls,” under § 64.1200(d)(6), and a buyer that loses the target’s suppression list will call people who already said stop.
Finally, look for the written procedures that support the statutory defense. A Do Not Call defendant can avoid liability by showing it “has established and implemented, with due care, reasonable practices and procedures to effectively prevent telephone solicitations in violation of the regulations prescribed under this subsection,” under 47 U.S.C. § 227(c)(5). Vendor and lead-source contracts matter too, since a seller can be liable for calls placed on its behalf, as we explained in our post on vendor-placed calls.
Which deal terms protect a buyer from TCPA exposure?
The ones that put money behind the promises, because exposure adds up per call or text. An autodialer or prerecorded-call claim carries $500 per violation or actual loss, whichever is greater. A Do Not Call claim, available to a person who got more than one violating call within any 12-month period by or on behalf of the same entity, carries up to $500 per violation or actual loss, whichever is greater. A court can raise either to as much as $1,500 per violation if the violation was willful or knowing, under 47 U.S.C. § 227(b)(3) and (c)(5).
A specific representation. I’d treat a general compliance-with-laws rep as weak protection. Ask for a stand-alone TCPA rep covering consent records, Registry scrubbing, opt-out handling, and pending or threatened claims, ideally without a knowledge qualifier.
A special indemnity with a longer tail. Indemnify pre-closing calls as a line item, outside the general basket and cap, and keep it alive long enough to cover claims filed well after closing.
An escrow or holdback. Newman shows why. According to the order, the calling vendor had promised to indemnify the law firm that hired it, then went bankrupt. An indemnity is only as good as the company giving it, so hold back cash when the seller may not exist later.
Representations and warranties insurance, read closely. Ask the underwriter directly whether the policy excludes TCPA or telemarketing claims, and assume anything your diligence turns up will be treated as a known issue. Ordinary liability policies raise their own TCPA coverage questions.
| Deal structure | Does pre-closing TCPA exposure follow? | Buyer’s main protection |
|---|---|---|
| Merger | Yes, by statute | Price adjustment and escrow |
| Stock purchase | Yes, the target stays liable | Special indemnity backed by escrow |
| Asset purchase | Not ordinarily, absent an exception | Excluded-liabilities schedule and an arm’s-length price |
| Asset purchase assuming liabilities | Yes, to the extent assumed | Narrow assumed-liabilities definition |
| Owner moves business into a new entity | It can, as a mere continuation | Little; these claims are hard to dismiss early |
| Section 363 sale | Not if the sale order validly bars it | Actual notice to known TCPA claimants |
If a TCPA claim surfaces after closing
- Preserve the target’s call and text logs, dialer and platform data, and consent records you received in the deal, and put a litigation hold on them.
- Pull the opt-out and internal do-not-call records, with dates, and confirm whether the target’s suppression list made it into your systems.
- Pull the Registry scrub records and the version dates used before and after closing.
- Gather the purchase agreement and any sale order, plus vendor and lead-source contracts, call scripts, message templates, and any recorded or AI-voice message files.
- Talk to a lawyer before responding to the claimant, tendering to the seller or escrow agent, or offering anything to settle.
The firm’s California TCPA defense lawyers page explains how it approaches claims involving calls made before an acquisition.
Questions buyers ask about TCPA successor liability
If we buy only a customer list, can we market to those customers?
Not automatically. Written consent runs to the seller the customer agreed to hear from, and an existing customer relationship doesn’t extend even to an affiliate unless the customer would reasonably expect it. A company buying a list should treat the numbers as new contacts for consent purposes and scrub them against the Registry.
Does a free-and-clear sale order protect us from claims nobody told us about?
Usually, for claimants who were unknown and got publication notice. It’s open to challenge by claimants the debtor knew about, and Motors Liquidation held that those claimants were owed actual notice. In my view, people already in settlement talks or who complained are the likeliest to make that argument. Review the debtor’s notice list against its complaint and demand-letter files before the sale closes.
Can a plaintiff sue our company for calls made before it existed?
Yes, if the plaintiff can plausibly allege a successor theory. In Robison, a company formed after the texts couldn’t get the claims dismissed because the complaint alleged the same owner ran the same business before and after. A buyer that’s actually new, with different owners and a fair price paid, has a much stronger defense.
Will representations and warranties insurance cover pre-closing TCPA claims?
Don’t count on it. I’d expect some underwriters to exclude TCPA or telemarketing claims for a target with a large calling program, and anything found in diligence to be excluded as a known issue. Ask early, before you’ve priced the deal around coverage you may not have, and keep the seller’s special indemnity and escrow as the first line of protection.
Defending a buyer against inherited TCPA claims
If your company is facing TCPA claims over calls a business you acquired made before closing, the purchase agreement and any sale order often matter as much as the call records. Rosenberger + Kawabata represents businesses defending TCPA lawsuits and class actions through its business litigation practice, including claims against buyers over calls placed before an acquisition. Contact Rosenberger + Kawabata online for a free and confidential consultation, or call (310) 894-6921.
Sources
The statute is the Telephone Consumer Protection Act at 47 U.S.C. § 227. The FCC’s rules are at 47 C.F.R. § 64.1200, as published in the eCFR through October 29, 2026. The bankruptcy sale provision is 11 U.S.C. § 363, and California’s merger statute is Corporations Code § 1107.
The court decisions are Ray v. Alad Corp., 19 Cal. 3d 22 (1977); In re Motors Liquidation Co., 829 F.3d 135 (2d Cir. 2016); Robison v. 7PN, LLC, No. 2:21-cv-00308 (D. Utah Nov. 1, 2021); Vanderbrug v. MaxSold Inc., No. 2:22-cv-01707 (W.D. Wash. Mar. 16, 2026); and Newman v. Converge Marketing, LLC, No. 3:25-cv-00042 (W.D.N.C. Oct. 26, 2026).
This post is general information about the Telephone Consumer Protection Act and related laws as of October 29, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Courts and the FCC change the rules in this area often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.