As we previously reported, a merchant may be vicariously liable under the Telephone Consumer Protection Act (“TCPA”) if a plaintiff can demonstrate that the third party telemarketer or text message transmitter had “apparent authority” from the merchant to make the subject call or send the subject text message. Recently, the United States Court of Appeals for the Ninth Circuit held that the middleman, e.g., marketing consultant, may also be vicariously liable for violating the TCPA.
The Marketing Chain
While courts have held sellers vicariously liable under the TCPA, the recent decision in Gomez v. Campbell-Ewald Co., No. 13-55486 (9th Cir. 2013), extends such potential liability to all parties in the marketing chain.
The plaintiff, Jose Gomez, filed a putative class action complaint against the Campbell-Ewald Company (“CE”) in the United States District Court for the Central District of California, alleging that CE violated the TCPA by causing an unsolicited text message to be sent to his mobile phone. CE is a marketing company that was hired by the U.S. Navy to develop and execute a multimedia recruiting campaign aimed at young adults. The Navy and CE agreed that text messages would be sent “only to cellular users that had consented to the solicitation.” CE hired a third party, Mindmatics, to acquire leads and transmit the actual text messages. Mindmatics sent the subject text message to the plaintiff, who was forty years old at the time he received the alleged unsolicited text message – well outside the target age for the Navy recruitment campaign.
The plaintiff did not sue the Navy or Mindmatics – it only sued CE, a middleman that was not the merchant advertised in the campaign or responsible for sending the subject text message. While the California federal court sided with CE and dismissed the case, on appeal, the Ninth Circuit overturned that decision.
Vicarious Liability: A Marketing Consultant May Be Held Liable for TCPA Violations
CE argued that vicarious liability “only extends to the merchant whose goods or services are being promoted by the telemarketing campaign.” The Ninth Circuit disagreed, stating that the language of the TCPA imposes liability upon any “person,” not just a “merchant.” Further, the Court held that policy reasons and common sense dictate that the consultant should be held liable by virtue of that fact that the subject campaign was entrusted to it as the advertising professional. Therefore, the Court held that the consultant should be “equally accountable for any resulting TCPA violation.”
Import of this Decision
All parties in a telemarketing chain – regardless of whether such marketing occurs by text message or traditional telemarketing – may be subject to liability if one of the parties in the chain commits a rogue, or even a mistaken, TCPA violation. Of course, a common law agency relationship must be demonstrated by the plaintiff for vicarious liability to arise, but the mere pleading of such a relationship in a well-drafted complaint may be sufficient for a plaintiff to survive a motion to dismiss. As we find our clients involved in all three parts of the marketing chain described in this case, we note that it is important to, among other things, draft solid indemnification provisions in respective contracts to anticipate such potential liabilities and impose strict requirements on marketing partners to comply with the law.