The U.S. Court of Appeals for the Ninth Circuit cited the Restatement of the Law Third, Agency in an opinion affirming the district court’s finding that defendants, three lenders and two marketing companies, were not vicariously liable for the acts of a lead-generator.
The case involved the question of whether AC Referral, a publisher who generates leads, was an “agent” of defendants for purposes of a violation of the Telephone Consumer Protection Act (TCPA).
Under the TCPA, it is unlawful to use any automatic telephone dialing system to make any call to a cellular service other than a call made for emergency purposes or made with the prior express consent of the called party. The FCC interprets “mak[ing] any call” to include sending text messages.
The violation occurred when AC Referral sent an unauthorized text message advertisement through a program after purchasing lists of consumer phone numbers from other lead-generating companies. The plaintiff claimed that the five defendants ratified the unlawful text message sent by AC Referral, which was not a party to the suit.
Section 4.01(1) of the Restatement defines “ratification” as “the affirmance of a prior act done by another, whereby the act is given effect as if done by an agent acting with actual authority.”
The court applied the Restatement of the Law Third, Agency as the federal common law of agency. In particular, the court applied § 4.03, Comment b, holding that an asserted principal could not ratify an act where the asserted agent was not an “agent” and did not purport to act as an “agent.” Because AC Referral was neither the agent nor purported agent of four of the defendants, those defendants cannot have ratified AC Referral’s acts.
One of the five defendants did have an agency relationship with AC Referral. However, the court found that this defendant was not bound by AC Referral’s acts, because it did not know of the TCPA violation and did not have information that would have led a reasonable person to investigate further.