The opinion of the court was delivered by: Jeffrey T. Miller United States District District Judge
ORDER DENYING MOTION TO DISMISS AND MOTION TO COMPEL ARBITRATION Docket Nos. 14, 16
Plaintiffs filed a Master Consolidated Class Action Complaint ("complaint") on September 23, 2011, claiming that Defendants Heartland Automotive Services, Inc. ("Heartland") and TextMarks, Inc. ("TextMarks") sent them text messages in violation of the Telephone Consumer Protection Act ("TCPA"). Shortly thereafter, Heartland filed (1) a motion to compel arbitration of one Plaintiff's claims and stay the litigation and (2) a motion to dismiss the complaint. For the reasons stated below, both motions are DENIED.
Heartland is a franchisee of Jiffy Lube and operates hundreds of service stations under the Jiffy Lube name. The six named Plaintiffs (residents of Washington, California, and Missouri) all claim to have received an unauthorized text message offering a discount on Jiffy Lube services.1 According to the complaint, Heartland hired TextMarks to run the marketing campaign responsible for the text messages. Plaintiffs allege that in order to send the text messages, TextMarks illegally used equipment that "had the capacity to store or produce telephone numbers to be called, using a random or sequential number generator." Compl. ¶ 35. Further, the "text calls were made en masse through the use of a short code and without prior express consent of the Plaintiffs." ¶ 36.
The complaint alleges "that the Class members number in the thousands," that class counsel has extensive experience in this area, and that class members would not be able to proceed individually because of prohibitive cost. ¶¶ 28-30.
Based on these factual allegations, Plaintiffs state only one cause of action: violation of 47 U.S.C. § 227, the TCPA. That statute prohibits the use of an automated telephone dialing system ("ATDS") "to make any call2 [without prior express consent] . . . to any telephone number assigned to a . . . cellular telephone service." § 227(b). An ATDS is defined as "equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers." § 227(a)(1). The law provides for statutory damages in the amount of $500 per violation, which may be trebled if the defendant has acted willfully or knowingly. § 227 (b)(3).
On October 26, Heartland filed a motion to dismiss the complaint and a motion to compel arbitration of the claims of Lawrence Cushnie. Because the motion to dismiss challenges the constitutionality of the TCPA, the United States has intervened to support the law's constitutionality.
The messages allegedly contained the following text:
JIFFY LUBE CUSTOMERS 1 TIME OFFER:
REPLY Y TO JOIN OUR ECLUB FOR 45% OFF A SIGNATURE SERVICE OIL CHANGE! STOP TO UNSUB MSG&DATA RATES MAY APPLY T&C: JIFFYTOS.COM For purposes of the law, sending a text message is often referred to as "making a call." The Ninth Circuit has held that a text message qualifies as a "call" under the TCPA. Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 952 (9th Cir. 2009).
A motion to dismiss under Fed. R. Civ. P. 12(b)(6) challenges the legal sufficiency of the pleadings. De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). In evaluating the motion, the court must construe the pleadings in the light most favorable to the non-moving party, accepting as true all material allegations in the complaint and any reasonable inferences drawn therefrom. See, e.g., Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003). The Supreme Court has held that in order to survive a 12(b)(6) motion, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The court should grant 12(b)(6) relief only if the complaint lacks either a "cognizable legal theory" or facts sufficient to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
A. Heartland's Liability for TextMarks' Actions
1. Liability Under the TCPA
Heartland argues that it cannot be held liable because Plaintiffs have not alleged that Heartland sent the text messages at issue, but only "engaged" TextMarks to send the messages. Plaintiffs respond by asserting that the law recognizes liability for any party responsible for the text messages, regardless of which entity physically sends the messages.
It does not appear that the Ninth Circuit has explicitly decided this issue, but case law and a reasonable reading of the statute indicate that Heartland should not be allowed to avoid TCPA liability merely because it hired a different firm to send advertisements to its customers.
First, at least one previous Ninth Circuit case implicitly accepted that an entity can be held liable under the TCPA even if it hired another entity to send the messages. In Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 955 (9th Cir. 2009), discussed by the parties with regard to other issues, the Ninth Circuit reversed a district court's grant of summary judgment that held there was no issue of material fact as to whether the equipment used by the defendants fit the description contained in the TCPA. The defendants in that case were Simon & Schuster and ipsh!net, a marketing company hired by Simon & Schuster to promote a new book released by Stephen King. Ipsh!net later engaged another firm to physically send the text messages. Despite the fact that Simon & Schuster seemed to play no role in physically sending the messages, the Ninth Circuit did not question whether it could be held liable.3
In Account Outsourcing, LLC v. Verizon Wireless, 329 F. Supp.2d 789, 805-806 (M.D. La. 2004), the Middle District of Louisiana heard a void-for-vagueness challenge to § 227(b)(1)(C), which is similar to the provision examined here, but applies to facsimile transmission. The court, accepting the United States' argument, cited the "rule of statutory construction that makes explicit vicarious liability unnecessary," and held that "congressional tort actions implicitly include the doctrine of vicarious liability." Id. (citing Meyer v. Holley, 537 U.S. 280, 285 (2003) (in Fair Housing Act case, explaining that the Supreme Court "has assumed that, when Congress creates a tort action, it legislates against a legal background of ordinary tort-related vicarious liability rules and consequently intends its legislation to incorporate those rules")).4 The court also decided that "[i]nterpreting the TCPA to exempt either fax broadcasters or advertisers would effectively allow advertisers to make an end-run around the TCPA's prohibitions." Id. at 806. The Northern District of California has recognized that in fax cases like Account Outsourcing, "courts have held both advertisers and advertisement broadcasters subject to liability under the TCPA." Kramer v. Autobytel, Inc., 759 F.Supp.2d 1165, 1170 (N.D. Cal. 2010).5
Though the court stated that Simon & Schuster hired ipsh!net to run its promotional campaign and that ipsh!net hired another company to "handle the actual transmission of the text messages to the wireless carriers," it described the text message in question as being "from Simon & Schuster." Id. at 949. It also stated that "Simon & Schuster sent the text message as part of its promotional campaign." Id.
Heartland cites Meyer v. Holley for the same proposition, but argues that TextMarks was an independent contractor and that under general tort rules, the employer of an independent contractor is not liable to third parties for negligence.
Heartland's attempts to factually distinguish these and other cases fail, in part because the relationship between Heartland and TextMarks is not currently clear. Similarly, its citation to Knutson v. Reply!, Inc., 2011 WL 291076 (S.D. Cal. 2011), which lists one of the elements of § 227(b)(1) as "that Defendant made the call" is unpersuasive. First, that quotation merely restates the language of the statute, and does not provide additional meaning as to the breadth of the phrase "to make any call." Second, the complaint at issue in ...