Navy Recruiter Could be|Liable, 9th Circuit Says

(CN) – A Navy contractor that hired a third party to send unsolicited text messages to cellphone users as a recruitment method may be liable for violations of the Telephone Consumer Protection Act, the 9th Circuit ruled.
     The three-judge panel vacated a ruling from California’s Central District in favor of Campbell-Ewald Company on the basis of immunity under the doctrine of derivative sovereign immunity because the Navy participated in the text-messaging campaign.
     Lead plaintiff Jose Gomez filed the class action after receiving a text message on May 11, 2006, stating: “Destined for something big? Do it in the Navy. Get a career. An education. And a chance to serve a greater cause. For a FREE Navy video call [number].”
     Campbell-Ewald, a marketing consultant hired to develop and execute a multimedia recruiting campaign for the Navy, hired third-party Mindmatics to send the message to thousands of cellphones.
     Campbell-Ewald and the Navy, which is not a defendant, agreed to send the message to people between the ages of 18 and 24, and only to those who had consented to solicitation.
     Mindmatics, not a defendant, was responsible for generating a list of phone numbers fitting these conditions and for transmitting the messages.
     A Navy representative testified that the Navy did not authorize messages to be sent to people who had not opted in.
     But Gomez said he did not consent to receiving the test message and was 40 years old at the time, well outside of the specified age range.
     U.S. District Judge Dolly Gee found in favor of Campbell-Ewald, holding that the company was immune because it was working at the Navy’s direction to implement the text message recruitment campaign.
     But in vacating and remanding, the 9th Circuit found that Gee applied the standard for liability under the wrong precedent, the 1940 Supreme Court decision in Yearsley v. W.A. Ross Construction Co.
     In that case, which involved unconstitutional taking of property, the Supreme Court found that a contractor was immune from suit because its work was done in accordance with express congressional directive and because the government had impliedly promised to compensate the plaintiffs.
     Ninth Circuit Judge Fortunato Benavides found that the reasoning employed in that decision is not relevant to Gomez’s case, because his claims do not implicate a constitutional promise to compensate injured plaintiffs.
     “Instead, Congress has expressly created a federal cause of action affording individuals like Gomez standing to seek compensation for violations of the TCPA. In the 70-year history of the Yearsley doctrine, it has apparently never been invoked to preclude litigation of a dispute like the one before us,” Benavides wrote for the court. “This court, in particular, has rarely allowed use of the defense, and only in the context of property damage resulting from public works projects.”
     Benavides also rejected Campbell-Ewald’s argument that more recent cases provide the company with immunity, as they were not applicable to Gomez’s case.
     The 9th Circuit declined to establish a new immunity for government service contractors as suggested by Campbell-Ewald, noting that “immunity must be extended with the utmost care.”
     “The record contains sufficient evidence that the text messages were contrary to the Navy’s policy permitting texts only to persons who had opted in to receive them. Consequently, we decline the invitation to craft a new immunity doctrine or extend an existing one,” Benavides wrote.
     The 9th Circuit also rejected Campbell-Ewald’s argument that it cannot be held liable for Telephone Consumer Protection Act (TCPA) violations because it outsourced the sending of the text messages to Mindmatics.
     Several district courts have concluded that the TCPA imposes vicarious liability between a defendant and a third-party caller, and the Federal Communications Commission recognizes vicarious liability for violations committed by third-party telemarketers.
     “The present case affords an opportunity to clarify that a defendant may be held vicariously liable for TCPA violations where the plaintiff establishes an agency relationship, as defined by federal common law, between the defendant and a third-party caller,” Benavides wrote.
     The 9th Circuit also rejected Campbell-Ewald’s claim that the federal statute restricting unsolicited text messaging is unconstitutional. The government’s imposition of restrictions of protected speech do not extend only to the protection of residential privacy.
     There is no evidence that the government’s interest in privacy ends at home, and furthermore, “the nature of cell phones renders the restriction of unsolicited text messaging all the more necessary to ensure that privacy. After all, it seems safe to assume that most cellular users have their phones with them when they are at home. Campbell-Ewald itself notes that in many households a cell phone is the home phone,” Benavides wrote.
     Campbell-Ewald also argued that the military recruiting messages were a form of government speech, afforded greater protection by the First Amendment. However, the government speech doctrine is a theory that states that the government need not maintain viewpoint neutrality in its own speech.
     “(I)n this context, the doctrine would preclude Campbell-Ewald from demanding that the Navy create an advertising campaign that discourages military participation. The government speech doctrine is simply immaterial to the present dispute, in which the plaintiff is not advocating for viewpoint neutrality, but is instead challenging the regulation of a particular means of communication,” Benavides wrote.

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