Taco Bell Corp. v. TBWA Chiat/Day Inc.

Decision of 9th Circuit in Taco Bell v. TBWA


Yo quiero Taco Bell's dinero!

In this decision the Ninth Circuit Court of Appeals ruled that Taco Bell is solely liable for the $42 million breach of contract award to the creators of the Taco Bell chihuahua.

Taco Bell was seeking indemnification from TBWA, its former advertising agency. In 1996 Taco Bell met with the principals Wrench who had created a cartoon character called Psycho Chihuahua. Taco Bell entered into a negotiation with Wrench to license the use of Psycho Chihuahua but never into an agreement. Taco bell switched advertising agencies to TBWA. Taco bell sent the Psycho Chihuahua materials to TBWA.

Unless you were living under a rock in the late 10 years ago, you know that Taco Bell made extensive use of the Yo Quiero Taco Bell Chihuahua in its advertising.

Taco Bell and TBWA entered into a joint defense agreement to deal with the likely litigation. Wrench won on its claim of implied contract and judgment was entered against Taco Bell. In turn Taco Bell sought indemnification from TBWA.

The court found that the district court properly concluded there is evidence only of Taco Bell’s fault in its liability to Wrench. As a result, no indemnification obligation from TBWA to Taco Bell arose.

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Reference Info:Decision | Federal, 9th Circuit, California | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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