Tracie Thomas v. Taco Bell Corp

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NOT FOR PUBLICATION JUL 02 2014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.
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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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