As consumers lean more toward using mobile devices primarily for text messaging in lieu of telephonic conversations, businesses have sought to tap into this rapidly expanding advertising frontier. Before utilizing this mechanism for reaching their target consumers, businesses would be prudent to take note of recent cases that reveal the substantial legal risks associated with text message marketing campaigns.

The United States Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. (TCPA) makes it unlawful “to make any call” using an “automatic telephone dialing system.” Although the Federal Communications Commission (FCC) since 2003 has interpreted the term “call” to include text messages, no court had confirmed this interpretation of the statute until the Ninth Circuit Court of Appeals in 2009. In Satterfield v. Simon & Schuster, Inc., the Ninth Circuit held that text messages are “calls” within the meaning of the TCPA, thus spawning a wave of class action lawsuits targeting companies that launch text message marketing campaigns. A recent lawsuit filed in the Central District of California alleging violations of the TCPA demonstrates how aggressive plaintiffs have become in attempting to extend the reach of the TCPA in light of the Satterfield decision. In Weiss v. Lemieux Group, L.P. d/b/a/ The Pittsburgh Penguins, Fred Weiss filed a putative class action lawsuit alleging that his favorite NHL team violated the TCPA by sending him four to five text messages per week, contrary to the team’s promise to only send him a maximum of three text messages per week when he voluntarily signed up to receive the text messages alerting him to game scores, player statistics and team news. Weiss claimed that he was entitled to statutory and punitive damages in addition to recovering for the costs of the receipt of text messages and his own aggravation.

Recent TCPA litigation has also honed in on the seemingly innocuous, but potentially costly practice of sending a confirmatory text message after an individual has requested that he or she not be sent any more text messages by a company. In Ibey v. Taco Bell Corp., which was filed in the Southern District of California, the plaintiff alleged that he voluntarily sent a text message to Taco Bell in order to participate in a survey, received a text message from Taco Bell in response to inform him of how to complete the survey, and that he then changed his mind and texted “STOP” to Taco Bell so that he would not receive any further text messages. The plaintiff alleged that he was then harmed when Taco Bell, in supposed violation of the TCPA, sent him a text message confirming that he no longer wanted to receive any text messages. The court disagreed, dismissing the case on the ground that holding Taco Bell liable under these circumstances would be contrary to public policy and the purpose of the TCPA, which is “prevention of unsolicited telemarketing in bulk format,” rather than transmitting a single confirmatory text message. Businesses conducting text marketing campaigns should not take great comfort in Ibey, given that another judge in the same court held in Ryabyshchuk v. Citibank that a plaintiff stated a claim under the TCPA when he alleged that he was sent a confirmatory text message after texting “STOP” in response to a text message sent by Citibank when he applied for a credit card.

Companies engaging in unauthorized text messaging should also be aware that the TCPA provides for statutory damages of $500 per unlawful call (or text) and $1500 if the violation was knowing and willful. For example, in the Weiss case, each person receiving allegedly excessive text messages would theoretically be entitled to between $500 and $3000 per week in which they received the messages. The potentially substantial damages in these cases may help explain why major companies such as Heartland, which operated a large Jiffy Lube franchise, and retailer Steve Madden agreed to settle TCPA class actions for $47 million and $12.5 million, respectively.

While the main impact of Satterfield was the holding that a text message is a “call” under TCPA, the case also left open the question of who may be held liable for text messages on a derivative or vicarious basis. For example, are parties such as franchisors, marketing companies and others, who are peripherally involved in a text message campaign, liable under the TCPA? Although Satterfield did not directly address this issue, some have opined that the opinion could be interpreted broadly to hold parties not directly involved in a marketing campaign liable under the TCPA. The Ninth Circuit will have an opportunity to express its views on these secondary liable issues when it reviews the Southern District of California’s recent decision in Thomas v. Taco Bell Corp., which will be heard in early 2013.

In Thomas, an association of Taco Bell franchisees conducted a text marketing campaign through an advertising agency, which, in turn, contracted with another company that actually sent the text messages to consumers. Although the association was autonomous from the franchisor Taco Bell Corp. and was allowed to advertise separately from the national marketing conducted by the franchisor, the association was still required to obtain the franchisor’s approval for local advertising. Armed with these facts, the plaintiff in Thomas sued the franchisor, alleging that it was liable for a text message marketing campaign that the plaintiff claimed offended the TCPA. The district court rejected the plaintiff’s attempt to hold the franchisor liable and granted summary judgment in favor of Taco Bell Corp., finding that the franchisor did not supervise or direct the manner and means of the text message marketing campaign, did not play any role in creating or developing the text message and had no part in deciding to distribute the message by way of text.

Although the Thomas case represents a win for franchisors, the outcome at the Ninth Circuit is uncertain, given the court’s avoidance of the secondary liability issues in Satterfield. Pending the court’s decision in the case, it is important that all companies, directly conducting or otherwise involved in marketing campaigns, understand the potential risks associated with the campaigns before pressing the “send” button for advertising text messages.