Text Messages Part of Ongoing Business Transaction, California Court Rules

Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP

Text messages confirming a plaintiff’s hotel reservations—that also encouraged the recipient to download the defendant’s app—were not advertising or marketing under the Telephone Consumer Protection Act (TCPA), a California federal court has ruled.

On four separate occasions after booking travel on Agoda Company’s website, plaintiff An Phan received a text message reading: “Good news! Your Agoda booking [number] is confirmed. Manage your booking with our free app [link].” Phan filed a putative class action alleging the texts violated the TCPA.

Agoda moved for summary judgment. The Singapore-based international travel service provider explained that Phan provided the required level of consent under the statute because the text messages he received did not contain advertising and were not telemarketing.

Each time a customer books a reservation using the Agoda site, he or she agrees to certain terms and conditions, the defendant told the court, including “to receive confirmation messages (email and/or SMS),” defined by the terms as “transactional” and “not part of the newsletters or marketing mails[] from which [users] can unsubscribe.”

The messages received by Phan were merely transactional because they served two purposes, Agoda argued: to confirm that Phan’s bookings were reserved with the third-party hotel and to direct him to the app, where he could locate and modify the booking prior to his stay. The business transaction between Agoda and Phan did not conclude until Phan completed his stay at the hotels he booked through Agoda, the defendant said.

Phan countered that the business transaction was completed at the time of booking, rendering the app download link superfluous. The text messages were actually advertising, the plaintiff argued, and sent specifically to encourage use of the app, which allows users to undertake transactions having nothing to do with the original reservation.

After reviewing relevant case law from the U.S. Court of Appeals, Ninth Circuit, U.S. District Judge Beth Labson Freeman determined that the text messages at issue were neither advertising nor telemarketing.

“Both the context and the content of the messages dictate this result,” the court said. “As to the context, these messages were sent as part of an ongoing business transaction between Agoda and Phan. Phan used Agoda’s services to book a travel itinerary online. Up until the time he finished his travel, he could cancel that booking or otherwise modify it through Agoda. As such, his transactional relationship with Agoda as to each booking continued through the time when he completed his travel.”

This scenario “is directly comparable” to that of Mackinnon v. Hof’s Hut Restaurants, Inc., the court said, where a plaintiff filed a TCPA suit against a restaurant. After Mackinnon made a dinner reservation, the restaurant sent a confirmation text message that included a link to the evening’s dinner specials.

The Mackinnon court concluded that the text was not advertising or marketing because although the reservation was booked, it was not completed until the plaintiff ate dinner at the restaurant.

“Even assuming Phan paid for his booking on Agoda’s website at the time of booking (as opposed to at the time of travel), this fact does not change the Court’s conclusion,” Judge Freeman added. “Phan contracted with Agoda for the provision of travel accommodations; Agoda’s obligations were only completed by its successfully providing those accommodations to Phan at the time of Phan’s travel.”

The content of the messages only reinforced the court’s decision.

“The plain language of the text messages is limited to (1) confirming the booking (a purpose no court cited by Phan has found constitutes advertising or telemarketing); and (2) encouraging Phan to ‘manage [his] booking’ via the app,” the court said. “These two purposes directly related to Phan’s transaction with Agoda.”

For support, the court cited Aderhold v. Car2go, Wick v. Twilio and Daniel v. Five Stars Loyalty, Inc., each of which focused on whether the text messages at issue were directly germane to the transaction.

“Here, the context and the content of the messages demonstrate that the purpose of the messages was not to advertise or telemarket, but instead was directly cabined to facilitating and completing an existing transaction,” Judge Freeman wrote.

The inclusion of the link did not alter this analysis. Although the app may fairly be considered a product or service of Agoda, the messages “simply cannot be said to advertise the commercial availability of this product or service under the law,” the court said.

Instead, the app is readily analogized to Agoda’s website, as the two platforms have substantially similar processes for booking travel and most (if not all) of the same functions, the court said. Even though the app contains certain promotions, it was included to facilitate, complete or confirm a commercial transaction, making the link to it fully germane to the transaction, the court said.

“Put simply, Agoda was not advertising the app’s commercial availability,” Judge Freeman wrote. “To hold otherwise would run headlong into the decisions in this Circuit and others holding that inclusion of the link to a defendant’s website, without more, does not render a message advertising or telemarketing.”

As the messages were not advertising or telemarketing, Agoda needed only Phan’s express consent prior to sending the texts. With no dispute that Agoda obtained such consent because Phan voluntarily provided his phone number and agreed to the defendant’s terms of use for its website, which made clear that such messages would be sent, the court granted the defendant’s motion for summary judgment.

To read the order in Phan v. Agoda Company Pte. Ltd., click here.

Why it matters: In another commonsense decision, and relying heavily on precedent, the California court found that the text messages were sent as part of an ongoing business transaction between the parties and therefore did not constitute advertising or telemarketing. The mere inclusion of a link to the defendant’s app—which itself contained some promotional materials—did not impact the outcome. Critically, the text messages and inclusion of the linked app were made contemporaneously with and directly related to the ongoing transaction. Although not every jurisdiction agrees that a link to an app is not advertising or marketing, this decision is consistent with prior Ninth Circuit precedent that mere inclusion of a link, without more, is insufficient itself to transform an otherwise transactional text message into a marketing message. This decision is a helpful benchmark for those businesses in the Ninth Circuit who want to offer their customers the option of managing their transactions online or through an app.


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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