In In re: Jamster Marketing Litigation, 2009 WL 1456632 (S.D.Cal. 2009), Judge Miller ruled on whether a Wireless Provider could be held vicariously liable under the CLRA and UCL for alleged misleading advertising by Content Providers. While a bit far afield from auto finance, the point of law is pertinent as to whether defendants sued under such legal theories may be held vicariously liable:
AT & T generally argues that it cannot be held liable for the alleged deceptive marketing practices of Content Providers. The FACC repeatedly alleges that Content Providers, and not the Wireless Providers, issued the allegedly false and misleading advertisements. (FACC 250, 252, 264, 272, 281, and 284). It is well established that the “concept of vicarious liability has no application to actions brought under the unfair business practices act.” Emery v. Visa International Service Ass’n, 95 Cal.App.4th 952, 960 (2002) (quoting People v. Toomey, 157 Cal.App.3d 1. 14 (1984)). As explained in Emery,“[a] defendant’s liability must be based on his personal ‘participation in the unlawful practices’ and ‘unbridled control’ over the practices that are found to violate section 17200 or 17500.” Id. (quoting Toomey, 157 Cal.App.3d at 15). ¶
Plaintiffs respond that “T-Mobile and AT & T were certainly on notice that Jamster was engaging in false advertising. . . . These allegations, the court concludes, are insufficient to demonstrate that Wireless Provides participated or exercised unbridled control over Content Providers alleged false advertising. To allege, in conclusory fashion without adequate particularity, that T-Mobile knew of complaints concerning deceptive marketing is insufficient to show that Wireless Providers controlled, participated, approved, marketed or otherwise adopted Content Providers’ advertising practices. Consequently, the court grants the motion to dismiss the § 17200 and 17500 claims against Wireless Providers to the extent those claims are based upon the alleged false advertising of Content Providers.
With respect to the seventh cause of action for alleged violation of the California Consumers Legal Remedies Act and eighth cause of action for alleged violation of California‘s false advertising laws, the court concludes that Wireless Providers cannot be held liable for Content Providers alleged misleading advertising. See Perfect 10 v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 808 (9th Cir.2007). Civil Code Section 1770 generally provides that any consumer who suffers damages as a result of the use or employment of unlawful practices may recover damages. Meyer v. Sprint Spectrum L.P., 45 Cal.4th 634, 639-40 (2009). Absent allegations of participation or control in the alleged unlawful advertising scheme by Wireless Providers, these Defendants cannot be held vicariously liable for the acts of third parties like Content Providers. Plaintiffs fail to identify any authority permitting a CLRA claim to be maintained under a secondary liability theory. Consequently, the court grants the motion to dismiss the CLRA and FAL claims to the extent those claims are anchored to allegations related to Content Provider’s false advertising.