Ninth Circuit: Agency Not Liable Over Use of Dog in Ads
Panel Rejects Taco Bell’s Claim Regarding Chihuahua
By a MetNews Staff Writer
The advertising agency that guided Taco Bell’s Chihuahua-themed campaign in the late 1990s is not responsible for any part of the $42 million judgment the fast-food chain suffered in a suit by the company credited with first presenting the idea, the Ninth U.S. Circuit Court of Appeals ruled Friday.
The court upheld the grant of summary judgment in favor of TBWA Chiat/Day Inc., saying Taco Bell could not show that the award in favor of Wrench LLC was covered by an indemnification agreement.
Senior Judge David Thompson, writing for the panel, agreed with U.S. District Judge George Schiavelli of the Central District of California that the agreement only required indemnification if the agency was at fault, and that TBWA was not guilty of wrongdoing because it did not know about Wrench’s idea at the time.
Schiavelli has since resigned from the court.
Evidence presented to
the district judge on cross-motions for summary judgment showed that the first
contact between Taco Bell and Wrench occurred in 1996 at a
There were subsequent discussions among Wrench, Alfaro, a licensing agent, other Taco Bell executives, and the agency that handled the chain’s advertising account before TBWA was hired in March 1997. Those discussions included an acknowledgment that Wrench was entitled to payment if the character was used, but there was no such use at the time and no payment to Wrench.
In May 1997, TBWA
presented about 30 ideas to Taco Bell for a campaign to be launched the
following year. One involved a male
In its complaint against TBWA, Taco Bell alleged that it was entitled to complete indemnification under either a joint defense and confidentiality agreement, or an agency agreement, both of which were entered into after the suit was filed, although the agency agreement was by its terms retroactive to the beginning of the parties’ relationship. The verdict in the Wrench action, Taco Bell said, established that TBWA was wrongfully expropriated Psycho Chihuahua.
Both the district judge and the appellate court disagreed, saying the issue of whether it was Taco Bell or the ad agency that took the idea was not before the jury in the underlying case.
“The undisputed facts do not support a finding of fault or negligence on the part of TBWA,” Thompson wrote. “TBWA was not a party to the implied contract between Taco Bell and Wrench and was unaware of its existence.”
“TBWA had no knowledge
of Psycho Chihuahua nor Taco Bell’s contact with
Wrench before proposing a
Besides, Thompson wrote,
the agency agreement specifically allowed TBWA to rely on Taco Bell’s approval
of the ads. Not only did Taco Bell approve the use of the
“The district court
correctly considered Taco Bell’s approval to broadcast the
The case is Taco Bell Corporation v. TBWA Chiat Day Inc., 07-56532.
Copyright 2009, Metropolitan News Company