Internet Law: Mobile Apps Class Action Lawsuit; Businesses Liable for Actions of Hired Marketers

Richard B. Newman on Inside Edition

We periodically publish guest posts from Internet Law Attorney and Regulatory Investigation Lawyer Richard B. Newman on topics that affect our readers.

This post contains details on two recent Internet Law topics:

• Class Action Lawsuit Against Mobile Apps Stealing Data
• Jiffy Lube held liable for their marketing firm’s use of text messages.

Read on for news coverage about the mobile apps class action and Richard’s analysis of the Jiffy Lube text message marketing ruling. 

MOBILE APPS CLASS ACTION LAWSUIT

Image Credit: Netchunks: Click image to read Great Ways to Monetize Mobile Apps

The Austin American Statesman reports:

Popular Mobile Apps allegedly “routinely steal address book data such as names, phone numbers, email addresses, job titles and even birthdays from millions of users without their knowledge or consent”.

Mobile Apps News had this additional detail:

A list of 13 plaintiffs, acting “on behalf of themselves and all others similarly situated,” have filed a suit against a series of high-profile companies that make some of the most popular mobile apps around today. The list names 18 companies in all: Path,  Twitter, Apple, Facebook, Beluga, Yelp!, Burbn, Instagram, Foursquare, Gowalla, Foodspotting, Hipster, LinkedIn, Rovio, ZeptoLab, Chillingo, Electronic  Arts and Kik  Interactive. Coincidentally, the suit was filed on Monday, the same day that Yahoo filed a patent infringement suit against Facebook.

And it looks like the lawyers representing the plaintiffs — the Austin firms of Edwards Law, Carl F. Schwenker, and the Jordan Law Firm — appear to have filed this week in an attempt at maximum effect: the suit was made public right in the middle of the SXSW interactive event that brings upwards of 20,000 tech types to the city, including those from the companies named in the suit, and of course exactly the kind of people who use these apps regularly.

Mobile Internet Law

• Mobile Marketer: Do mobile phone users have a constitutional privacy interest in call-location data?

Image Credit: Abnormal Marketing ~ Click image to Read Mobile Marketing Boom

Businesses Liable for Text Messaging by their Marketing Firms

Vicarious Liability Rules Require Companies to Scrutinize
the Consumer Communication Methods of Marketing Partners

The U.S. District Court for the Southern District of California, in the matter of Jiffy Lube International, Inc., has held that a company that engaged a third-party marketing firm to promote its services can be held vicariously liable for violations of the Telephone Consumer Protection Act (“TCPA”) resulting from the marketing firm’s unlawful use of automated text messages – even if the client company did not physically send the messages at issue.

The TCPA prohibits the use of an “automated telephone dialing system” to make non-consensual calls to cell phones. The class action was initiated by six named plaintiffs who claimed that defendants violated the TCPA by sending unauthorized, automated commercial text messages. Text messages to cell phones are considered “calls” for purposes of the TCPA, and unsolicited commercial texts can be a violation of that law, the U.S. Court of Appeals for the Ninth Circuit held in Satterfield v. Simon & Schuster, Inc.

Heartland Automotive Services, Inc., a multi-unit franchisee of Jiffy Lube and a defendant in the case, moved to dismiss on the grounds that it had engaged another of the defendants, Textmarks, Inc., to send the messages. Defendant Heartland argued that because it did not send the messages itself, it could not be held liable under the TCPA. The district court rejected the argument, holding that “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.”

The court explained that the same result was reached, at least implicitly, in Satterfield, where the Ninth Circuit did not question the fact that Simon & Schuster might incur TCPA liability even though they had hired a marketing company to send contested text messages during a book promotion. The district court noted that the Ninth Circuit described the messages as being “from” Simon & Schuster and then cited the decision in Account Outsorcing, LLC v. Verizon Wireless, where a federal district court in Louisiana faced a similar provision regulating facsimile transmissions and held that “congressional tort actions implicitly include the doctrine of vicarious liability.”

The defendants also argued that several named plaintiffs failed to plead the use of an auto-dialer. The court disagreed. One plaintiff pleaded a “specific short code” for one of the messages, and the other named plaintiffs pleaded receiving “substantially identical” text messages. The court held that this was sufficient and ultimately rejected the complaint on a technicality.

Interestingly, the court rejected the defendants’ attempt to submit some of the plaintiffs’ customer invoices into evidence at the motion stage. The defendants claimed that several of the named plaintiffs gave their phone numbers on the invoices when they got an oil change, and by doing that they effectively consented to the text messages. The district court disagreed, in part, because it was not clear whether submitting phone numbers in this manner would equate to consent in any event.

Lastly, the defendants moved to compel arbitration of the dispute with one of the plaintiffs based on an arbitration clause in the invoice he signed when he visited a Jiffy Lube. The court said the clause, which addresses “any and all disputes” between the parties, was “incredibly broad,” by not being limited to contract disputes. The court decided that the clause would be unconscionable if it was read to include tort actions such as this one.

Richard B. Newman is an Internet Law Attorney and Regulatory Investigation Lawyer at Hinch Newman LLP (New York & California)

Tagged as: class action lawsuits, internet law, mobile apps, mobile marketing