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Texts, Tacos, and the TCPA on Vicarious Liability

8/27/14

In Thomas v. Taco Bell, Inc., the Ninth Circuit affirmed a district court’s ruling in a Telephone Consumer Protection Act (“TCPA”) case, which held that Taco Bell was not vicariously liable for text messages sent by a third party advertising a Taco Bell product.  (See Thomas v. Taco Bell Corp., No. 12-56458, 2014 U.S. App. LEXIS 12547 (9th Cir. July 2, 2014).)  The ruling is one of the first California appellate decisions to consider the issue of vicarious liability since the FCC’s declaratory ruling, which held that companies can be “vicariously liable under federal common law agency principles [i.e. Formal Agency, Apparent Authority, and Ratification] for a TCPA violation by a third-party telemarketer.”  (In re Joint Petition filed by Dish Network LLC, CG Docket No. 11-50, ¶24 (2013) (“Dish Network”).)      

In Thomas, plaintiff attempted to hold Taco Bell vicariously liable for a text message marketing campaign, which was conducted by the Chicago Area Taco Bell Local Owners Advertising Association (the “Association”).  (See Thomas, No. 12-56458, 2014 U.S. App. LEXIS, *2.)  A four-member board of directors headed the Association: three directors were elected by the Association’s membership and Taco Bell selected the fourth.  Susan Viti served as Taco Bell’s appointed director during the relevant time period.  After the Association approved of the marketing campaign, Ms. Viti sent the promotional materials to Taco Bell and informed it that the promotion also included a text-messaging component.  After plaintiff allegedly received an unsolicited text message regarding the promotion, she filed suit.   

The district court, however, found that there was insufficient evidence to support the conclusion that Taco Bell was vicariously liable.  In particular, plaintiff did not: 

  1. Present evidence that Taco Bell directed or supervised the manner and means of the text messaging campaign, which was conducted by the Association;
  2. Present evidence that Taco Bell created or developed the text message; and
  3. Present evidence that Taco Bell played any role in the decision to distribute the message by way of a blast text. 

(Thomas v. Taco Bell Corp., 879 F. Supp. 2d 1079, 1084-1085 (C.D. Cal. 2012).)

Plaintiff appealed, but the Ninth Circuit affirmed the lower court’s ruling.  Specifically, a formal agency relationship did not exist because Taco Bell did not control the actions of the Association or the other entities that assisted with the text marketing campaign.  (Thomas, No. 12-56458, 2014 U.S. App. LEXIS, *4.) 

The Ninth Circuit also held that apparent authority was inapplicable.  (Id. at *5)  “‘Apparent authority exists only as to those to whom the principal has manifested that an agent is authorized.  There is, therefore, tort liability only if such a manifestation and its execution by the apparent agent results in harm.’”  (Id. [initial citations omitted].)  Plaintiff, however, failed to show she reasonably and to her detriment relied on any apparent authority that Taco Bell allegedly cloaked the Association with or the other entities that assisted with the text marketing campaign.  (Id. at *6.) 

The Ninth Circuit finally held that ratification was inapplicable.  “‘Although a principal is liable when it ratifies an originally unauthorized tort, the principal-agent relationship is still a requisite, and ratification can have no meaning without it.’”  (Id. [initial citations omitted].)  But plaintiff failed to show that the Association or the other entities that assisted it with the text marketing campaign were agents of Taco Bell.  (Id. at *6.)

Although the Ninth Circuit’s decision is unpublished, it is a straightforward application of the vicarious liability principles that the FCC articulated in Dish Network, and therefore California courts might rely on this case as they address future TCPA cases involving the issue of vicarious liability.