Court Opinion

ID: 2681797
Source: CourtListenerOpinion
Date Created: 2014-07-02 21:00:50.526255+00
Date Added: 2024-06-11T09:35:20.628255
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              JUL 02 2014

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                           FOR THE NINTH CIRCUIT

TRACIE THOMAS,                                   No. 12-56458

              Plaintiff - Appellant,             D.C. No. SACV 09-01097-CJC
                                                 (Anx)
  v.

TACO BELL CORP.,                                 MEMORANDUM*

              Defendant - Appellee.

                   Appeal from the United States District Court
                      for the Central District of California
                   Cormac J. Carney, District Judge, Presiding

                        Argued and Submitted June 6, 2014
                              Pasadena, California

Before: GOULD and N.R. SMITH, Circuit Judges, and KORMAN, Senior District
Judge.**

       Tracie Thomas (“Thomas”) appeals from the dismissal of her complaint against

Taco Bell Corp. arising out of a brief text message she received advertising a Taco

Bell product. The complaint alleged that this message violated the Telephone

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable Edward R. Korman, Senior District Judge for the U.S.
District Court for the Eastern District of New York, sitting by designation.
Consumer Protection Act (“TCPA”), which provides that “[i]t shall be unlawful for

any person . . . to make any call . . . using any automatic telephone dialing system or

an artificial or prerecorded voice . . . to any . . . cellular telephone service.” 47 U.S.C.

§ 227(b)(1)(A)(iii). The text message at issue was sent as part of a promotion

conducted by the Chicago Area Taco Bell Local Owners Advertising Association (the

“Chicago Association”), a corporation comprised of Taco Bell store operators in the

Chicago area. The Chicago Association consisted of twelve members, one of which

was Taco Bell Corp., representing approximately 160 Taco Bell restaurants. In 2005,

the Chicago Association and its advertising agency, ESW Partners, LLC (“ESW”),

sponsored a local sweepstakes promotion for the Nachos Bell Grande product. As

part of that promotion, ESW hired ipsh!net, Inc. (“Ipsh”), which administered and sent

the text message at issue.

       There are two potential theories of liability: (1) direct liability; and (2)

vicarious liability. After reviewing the record, we agree with the district court that

“[d]irect liability is inapplicable here as the parties do not dispute that the actual

sender of the text was Ipsh, a separate provider of text-message based services

retained by ESW.” Thomas v. Taco Bell Corp., 879 F. Supp. 2d 1079, 1084 (C.D.

Cal. 2012). Nevertheless, the district judge properly concluded vicarious liability can

provide the basis for liability for a TCPA violation. See Meyer v. Holley, 537 U.S.
2
280, 285 (2003). Indeed, in a recent declaratory ruling, the FCC expressly agreed

with the district judge in this case that the “TCPA contemplates that a seller may be

vicariously liable under agency principles for violations of section 227(b)

notwithstanding the absence of ‘on behalf of’ liability available for do-not-call

violations under section 227(c).” In re DISH Network, LLC, 28 F.C.C. Rcd. 6574,

6590 n.124 (2013).

      While the district judge here concluded that vicarious liability could constitute

a basis for holding a party liable for a section 227(b) violation, he held that the

evidence was insufficient to establish that Taco Bell Corp. was liable under those

principles. Specifically, the district judge held that “[t]o succeed on this vicarious

liability theory, Ms. Thomas must demonstrate that these entities [the Chicago

Association, ESW, and Ipsh] acted as . . . agent[s] of Taco Bell: that Taco Bell

controlled or had the right to control them and, more specifically, the manner and

means of the text message campaign they conducted.” Thomas, 879 F. Supp. 2d at

1084 (citing United States v. Bonds, 608 F.3d 495, 506 (9th Cir. 2010)). After

analyzing the evidence under this standard, the district judge observed that “[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

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evidence . . . demonstrating that Taco Bell [Corp.] controlled the actions of these

entities with respect to the campaign.” Id. at 1085.

       While we agree with the district judge’s analysis of the evidence under the

standard he applied, the FCC observed in its declaratory ruling, to which we have

alluded earlier, that it does “not believe it is appropriate to limit vicarious liability to

the circumstances of classical agency (involving actual seller, or right to control, of

the telemarketing call) . . . . Principles of apparent authority and ratification may also

provide a basis for vicarious seller liability for violations of section 227(b).” In re

DISH Network, LLC, 28 F.C.C. Rcd. at 6590 n.124.

       On the assumption that principles of apparent authority and ratification may

provide a basis for vicarious liability, we hold that Taco Bell Corp. cannot be held

liable on either theory. Apparent authority is inapplicable because it can only “be

established by proof of something said or done by the [alleged principal], on which

[the plaintiff] reasonably relied.” NLRB v. Dist. Council of Iron Workers of Cal. &

Vicinity, 124 F.3d 1094, 1099 (9th Cir. 1997); Restatement (Second) of Agency § 265

cmt. a (1958) (“Apparent authority exists only as to those to whom the principal has

manifested that an agent is authorized. There is, therefore, tort liability only if such

a manifestation and its execution by the apparent agent results in harm.” (internal

citations omitted)). Thomas has not shown that she reasonably relied, much less to

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her detriment, on any apparent authority with which Taco Bell Corp. allegedly

cloaked the Chicago Association, ESW, or Ipsh.

      Nor did Taco Bell Corp. ratify the text message. “Although a principal is liable

when it ratifies an originally unauthorized tort, the principal-agent relationship is still

a requisite, and ratification can have no meaning without it.” Batzel v. Smith, 333
F.3d 1018, 1036 (9th Cir. 2003) (footnote omitted). As explained above, neither the

Chicago Association, nor ESW or Ipsh, were agents of Taco Bell Corp.

      AFFIRMED.

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