On July 2, 2014, the Ninth Circuit issued an unpublished decision in Thomas v. Taco Bell Corp. that is certain to give heart to defendants finding themselves being sued for calls/texts/faxes sent by another corporate entity under a vicarious liability analysis.

In 2005, an association of 12 Chicago-area Taco Bell store operators (one of which was Taco Bell Corp., with 160 stores, collectively, “ESW”) promoted its Nachos Bell Grande product through a text message campaign, hiring an advertising agency isph!net (“Ipsh”) to conduct the campaign. Tracie Thomas received one of the texts, which spawned her California-based TCPA lawsuit against Taco Bell Corp. As Taco Bell Corp. itself did not send the text message, the district court found it had direct liability under the TCPA.

The Ninth Circuit agreed with the district court’s ruling that there was no vicarious liability for Taco Bell Corp., because “[a]ll of [the] control over the manner and means of the text message campaign was exercised by the [Chicago] Association, ESW, and Ipsh, and Ms. Thomas has not presented any evidence . . . demonstrating that Taco Bell [Corp.] controlled the actions of these entities with respect to the campaign.”

The Ninth Circuit further indicated that even if principles of apparent authority and ratification could arguably provide a basis for vicarious liability, “Taco Bell Corp. cannot be held liable on either theory” because (1) Thomas did not demonstrate that she reasonably relied (to her detriment) on any apparent authority Taco Bell may have given to others, and (2) a ratification theory only holds up if the actor is an agent of the principal, and there was no evidence that Ipsh, ESW, or the Chicago association was an agent of Taco Bell Corp.

Why it matters: The Ninth Circuit, in its short and unpublished opinion affirming the trial court’s dismissal of the TCPA lawsuit, has indicated that TCPA liability does not simply work its way up the chain of actors to the deepest pocket. Instead, the court confirmed that a defendant must control the manner and means of a marketing campaign and the actions of the entities placing text calls, or that some other solid proof of agency must exist.