Another court decision reminds us that conclusory allegations that an agency relationship exists should not be sufficient to impute TCPA liability on the alleged beneficiary of a messaging campaign. Pleadings that lack plausible allegations showing “some degree of control over who sent the text and the manner and means by which it was sent” can lead to dismissal – with prejudice, if the plaintiff has run out of a reasonable number of opportunities to amend.
In Rogers v. Postmates Inc., No. 19-cv-05619-TSH, 2020 WL 3869191 (N.D. Cal. July 9, 2020), the Northern District of California dismissed a TCPA class action alleging that a third party sent an unsolicited text message to plaintiff’s cellphone with “a hyperlink directing [the plaintiff] to a job board on [the d]efendant’s website.” Like some exemplary decisions that we discussed previously (such as here and here), the Northern District of California held that the plaintiff’s allegations did not establish an agency relationship between the sender and the defendant, which in turn failed to give rise to a plausible inference that the defendant was vicariously liable for the text message.
In Rogers, the plaintiff was given three opportunities to plead a plausible claim that the defendant was vicariously liable for the alleged TCPA violation. The plaintiff, following two amendments, described the telephone number sending the message as a “dedicated number . . . regularly used to transmit text advertisements on [the defendant’s] behalf and for [the defendant’s] benefit.” The plaintiff contended that the defendant “specifically oversaw, monitored, tracked, realized and appreciated the results of [the third party’s] marketing campaign,” which the defendant “authorized, contracted for . . . and paid [the third party] to conduct.” The plaintiff also sought discovery of information that would “reflect that the hyperlink contained in [the third party’s] texts to individuals originated traffic to [the defendant’s] website as a result of individuals clicking the hyperlink.”
The defendant did not dispute that the text in question violated the TCPA. Instead, it only challenged plaintiff’s claim for “fail[ure] to allege facts sufficient to show that [the defendant] is vicariously liable” for the third party’s TCPA violation. To decide this issue, the court examined three “bedrock theories of agency”: actual authority, apparent authority, and ratification.
The court was not convinced by the plaintiff’s attempt to plead actual authority – either express or implied – by alleging that the defendant “contracted with [the third party] to promote its mobile application and driver opportunities . . . through [the third party’s] marketing campaign.” While plaintiff established that the defendant contracted with the sender, the court recognized that “an allegation of a beneficial contractual relationship alone is insufficient to establish agency.” The court found it significant that the overseeing, monitoring, and tracking, as alleged by the plaintiff, was only over “the results of the campaign” rather than “the manner and means in which [the third party] executed the campaign.” In fact, because the defendant was paying the third party for a marketing service, “[i]t is only natural that [the defendant] would want to keep an eye on the marketing campaign results to know whether [the service contract] was paying off.”
In order to establish the element of “control,” the court instructed that a plaintiff must allege “facts showing how defendant did those things[,] how it knew those things, what facts the allegations are based on,” and that “the defendant had the right to control the manner and means of the calls made.” According to the court, a number of allegations could have shown “control over the manner and means”: that the defendant directed the third party to send text messages as part of the marketing campaign; that the defendant dictated the content of any message or other communication; that the defendant identified or otherwise controlled to whom or how or when the third party sent such communications; or that the defendant equipped the third party with any technological capability or other insider information necessary for executing the marketing campaign. The fatal deficiency was that the plaintiff did not allege any of these.
The court also found that the plaintiff failed to allege that the third party acted with apparent authority. On this element, the plaintiff simply stated that the text referenced the defendant by name and the link in the text directed the visitor to defendant’s publicly available webpage. This argument was characterized by the court as “merely . . . showing that the purported agent claimed authority or purported to exercise it.” That was insufficient because “apparent authority must be established by proof of something said or done by the principal” (emphasis added). Because nothing in the plaintiff’s allegations showed that the third party had access to unique and detailed information from the defendant, the court held that the plaintiff could not have “reasonably relied, much less to his detriment, on any apparent authority with which [the defendant] allegedly cloaked . . . the entity responsible for creating and sending the text messages.”
Lastly, the court rejected the plaintiff’s contention that the defendant’s enjoyment of the benefits of the marketing campaign showed “willful ignorance” of the alleged TCPA violations and therefore constituted ratification. Relying on Ninth Circuit precedent, the court reasoned that plaintiff’s allegation that the defendant knew or should have known that the third party was sending text messages was insufficient because the sending of texts is “an otherwise commonplace marketing activity” and the defendant’s awareness that texts had been sent was “not the sort of red flag that would lead a reasonable person to investigate whether the agent was engaging in unlawful activities.” What was missing, and required, was an allegation showing that the defendant was aware that the third party “was sending such text messages on its behalf in violation of the TCPA” and “knowingly allowed and permitted [the third party] to conduct such marketing.” (Emphasis in original).
For these reasons, the court rejected the plaintiff’s attempt to assert a vicarious liability claim. As the plaintiff already had three opportunities, the court was “left with the impression that amendment would be futile” and dismissed his claim with prejudice.
This decision again reminds us that courts are willing to dismiss claims when the plaintiff fails, and especially when the plaintiff repeatedly fails, to plead sufficient facts to support a plausible inference of agency relationship for vicarious liability. The analysis in this decision illustrates the types of facts that courts may find germane to whether a claim for vicarious liability has been stated, such as the degree of control of the messaging campaign, and therefore, is a helpful guide for structuring and assessing vendor relationships.