• Chihuahua Costs Taco Bell $42 Million in Damages
  • March 11, 2009
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • The Ninth Circuit Court of Appeals has ruled that Taco Bell is liable for $42 million in breach-of-contract damages to two Michigan admen who created the Chihuahua idea that served as the foundation for the fast-food chain’s hit $500 million ad campaign in the 1990s.

    The television spots starring the talking dog as a beret-wearing revolutionary or sombrero-sporting bandit were a huge success. "Yo quiero Taco Bell" became part of the pop-culture lexicon, along with "Drop the chalupa!" and "¡Viva Gorditas!"

    In 1998, Joseph Shields and Thomas Rinks, owners of the Wrench ad agency, sued Taco Bell for breach of contract. They claimed they had been in talks with Taco Bell ad agents to rework their "psycho Chihuahua" cartoon for TV spots when Taco Bell took the idea to ad shop TBWA\Chiat\Day.

    Five years later a federal court in Michigan ordered Taco Bell to pay Shields and Rinks $30 million in damages, plus close to $12 million in interest. Taco Bell then sued TBWA in California, claiming that the ad agency was liable for the disputed content. The Ninth Circuit ruled that TBWA is not liable.