Antitrust Law Daily Wrap Up, PRIVACY—9th Cir.: Taco Bell found “outside the bun” of TCPA liability, (Jul 3, 2014)

By Greg Hammond, J.D.

Taco Bell did not violate the Telephone Consumer Protection Act (TCPA) when a consumer received a promotional text message advertising the company’s Nachos Bell Grande product. In reaching its decision to affirm the lower court’s dismissal, the U.S. Court of Appeals in San Francisco concluded that the restaurant chain was neither directly nor vicariously liable for the text message sent by a third party company (Thomas v Taco Bell Corp., July 2, 2014, per curiam).

Background. Tracie Thomas received a brief text message from ipsh!net, Inc., advertising Taco Bell’s Nachos Bell Grande product. The text message was part of a promotion conducted by the Chicago Area Taco Bell Local Owners Advertising Association (Chicago Association), which consisted of twelve members, including Taco Bell Corp. In 2005, the Chicago Association and its advertising agency sponsored a local sweepstakes promotion for the Nachos Bell Grande product and the advertising agency hired ipsh!net to send the text message at issue. Thomas filed suit in the federal district court in Pasadena, California. However, the district court dismissed the complaint after finding the corporation was not directly or vicariously liable for ipsh!net’s text message. Thomas appealed.

Liability. The appellate court first agreed that direct liability was inapplicable in this case, as Thomas did not dispute that ipsh!net was the actual sender of the text message. However, in determining whether the restaurant chain was vicariously liable under the TCPA, the court considered principles of agency, apparent authority, and ratification. In concluding that Taco Bell was not vicariously liable under the TCPA, the appellate court found that: (1) the Chicago Association, advertising agency, and ipsh!net controlled the manner and means of the text message campaign and there was no evidence that Taco bell controlled the actions of those three entities; (2) apparent authority is inapplicable in this case, as Thomas failed to show that she reasonably relied on any statement or action made by the restaurant chain; and (3) ratification is also inapplicable in this case because no principal-agent relationship was found between Taco Bell and the other entities. Consequently, the lower court’s decision was affirmed.

The case number is 12-56458.

Attorneys: Suzanne Lucille Havens Beckman (Parisi & Havens LLP) for Tracie Thomas. Steven E. Bledsoe (Arent Fox LLP) and Karin Bohmholdt (Greenberg & Traurig LLP) for Taco Bell Corp.

Companies: Taco Bell Corp.

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