A federal appellate court has ruled in favor of Taco Bell after a lawsuit accused the restaurant chain of violating commercial text message legislation.
Last week, a three-judge panel of the 9th Circuit Court of Appeals upheld a 2012 ruling that said Taco Bell was not responsible for SMS messages sent to consumers by a marketing agency in 2005.
The promotion at the center of the legal drama allegedly saw twelve franchisees in the Chicago area send text messages to local residents asking them to vote on two varieties of the Nacho Bell Grande item. Ad agency ESW outsourced the mobile strand of the campaign to a company called Ipsh (now the Marketing Arm).
A woman from Georgia sued Taco Bell in the wake of the campaign, claiming she had received two unsolicited text messages – a violation of the Telephone Consumer Protection Act (TCPA) which prohibits companies from using automated dialing systems to send cell phone communications without the recipients' consent. After the judge dismissed her case, the plaintiff decried the ruling as a “blueprint for retailers to evade liability for transmitting spam text messages en masse to the public.”
During the case, Taco Bell denied involvement in the text message campaign, which was put together by a group of local franchise owners and Ipsh, without the knowledge or consent of the parent company. According to court papers, Taco Bell successfully argued that it played “no role in the decision to distribute the message by way of a blast text or that it ever reviewed any proposed text message, or even knew about the outgoing text message component of the local promotion.”
The TCPA was recently updated to reflect the shift towards mobile. Historically, advertisers could depend on pre-existing business relationships (such as a prior purchase). Now, mobile marketing campaigns must obtain express written consent in order to contact consumers.
The court’s decision has probably made it harder for consumers to sue advertisers for campaigns that potentially violate the law. It could prove to be a landmark ruling. It’s certainly dealt a blow to opponents of aggressive marketing strategies. Whether or not it sets a precedent remains to be seen.