Warciak v. Subway: A Brand Is Not Liable for a Carrier's Promotional Text Without Agency

The bottom line: a contract between a brand and the company that sends a message does not, by itself, make the sender the brand's agent.

Background

T-Mobile customers with qualifying plans may participate in "T-Mobile Tuesdays," a weekly program offering free items and discounts from well-known stores. They may opt out through T-Mobile customer service.

In September 2016, Matthew Warciak received this text from T-Mobile: "This T-Mobile Tuesday, score a free 6" Oven Roasted Chicken sub at SUBWAY, just for being w/ T-Mobile." He was not charged for the text.

Warciak sued Subway (not T-Mobile) because his subscriber agreement contained an arbitration clause. He alleged that T-Mobile acted as Subway's agent and that the text violated the TCPA and the Illinois Consumer Fraud and Deceptive Business Practices Act. The district court dismissed the TCPA claim and declined to exercise jurisdiction over the state claim.

The decision

Judge Bauer wrote for a panel with Judges Easterbrook and St. Eve.

1. No plausible vicarious liability. Citing Campbell-Ewald Co. v. Gomez, the court noted that the Federal Communications Commission (FCC) recognizes vicarious liability under federal common law agency principles. This requires actual or apparent authority.

• Actual authority. The only conduct alleged against Subway was its contract with T-Mobile. "Not all contractual relationships form an agency." The court compared it to an advertiser placing an ad in a circular. The publisher does not become the advertiser's agent.
• Apparent authority. Apparent authority must be traced to the principal's own manifestations. Warciak relied on T-Mobile's statements, not anything Subway said to the public. The text itself indicated that T-Mobile controlled the content, timing and recipients: it was part of "T-Mobile Tuesdays," sent on a Tuesday, only to T-Mobile customers, "just for being w/ T-Mobile," and with a link to T-Mobile's site.

2. The wireless carrier exemption applied. The TCPA allows the FCC to exempt calls to cell phones "that are not charged to the called party." 47 U.S.C. § 227(b)(2)(C). The FCC has concluded that a carrier's autodialed or prerecorded calls to its own customers, when the customer is not charged, do not require prior written consent. Warciak conceded that T-Mobile was his carrier, T-Mobile sent the text, and he was not charged. There was no underlying violation for which Subway could be vicariously liable.

Why it matters

Co-marketing and partner promotions are common. Warciak provides a valuable precedent for brands when a partner controls the message and the audience. However, the outcome was based on thin allegations. A plaintiff who can show the brand controlled content, timing or recipients, or held the sender out as its agent, may fare differently.

Practical takeaways

1. In co-marketing agreements, make clear who controls the message content, timing and recipient lists.
2. Avoid statements that suggest a partner speaks for your brand.
3. Do not assume the carrier exemption covers you. It applies to a carrier messaging its own customers without charge.
4. Senders still need appropriate consent and opt-out processes.

Read the Seventh Circuit's opinion in Warciak v. Subway Restaurants.