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Ninth Circuit Calls on Established Principles of Vicarious Liability to Affirm Summary Judgment in TCPA Class Action

Feb 28, 2018 | Posted by Nicole M. Ambrosetti | Topics: Class Actions, Telephone Consumer Protection Act

The Ninth Circuit Court of Appeals affirmed summary judgment in favor of the multiple defendants in a Telephone Consumer Protection Act (TCPA) class action case law interpreting the same and Federal Communications Commission (FCC) rulings in reliance upon the Restatement (Third) of Agency,—none of whom had sent the subject text message.  As is typical in TCPA cases, in Kristensen v. Credit Payment Servs. Inc. (9th Cir. 2018) 879 F.3d 1010, the five defendants—three lenders and two marketing companies—were rather removed from the unlawful activity: the three lender defendants had contracted with one other defendant marketing company, which in turn contracted with another defendant marketing company acting as an aggregator of leads from multiple publishers.  One such publisher, not named as a party, was tapped to generate leads for the subject text message, and, critically, was obliged by the contract with aggregator defendant to comply with the TCPA.  And comply they did not; such that the plaintiff filed a putative class action on behalf of all recipients of the subject text message.

Thus, the central issue before the Court was whether the five defendants could be held vicariously liable for the unlawful spamming of the non-defendant publisher.  Not unsurprisingly, the non-defendant publisher was unknown to four of the defendants before the filing of suit; this fact was cited by the Ninth Circuit in support of its finding that the publisher was thus neither an agent or a purported agent of these four defendants (thereby cutting off liability vis-à-vis those defendants).  However, the issue as to the aggregator defendant’s ratification of the publisher’s acts was more complex.  The Court did state, however, that the non-defendant publisher was an agent of the aggregator defendant, such that an inquiry into ratification would be required. 

Because the plaintiff did not bring forth evidence that the aggregator defendant had actual knowledge of the non-defendant publishers violations, ratification could not be found (nor could the inference be made that the aggregator defendant assumed the risk of not knowing whether such violations had occurred, because it had not been tipped off by any facts which would have led a reasonable person to investigate further.  Therefore, the fifth (aggregator) defendant was not found to be vicariously liable for the non-defendant publisher’s unlawful text messaging, and summary judgment was affirmed.