Third Circuit Applies FCC’s New TCPA “Autodialer” Interpretation

By Joseph C. Wylie II, Molly K. McGinley, Nicole C. Mueller

The Third Circuit recently applied the FCC’s new interpretation of “automated telephone dialing system” under the Telephone Consumer Protection Act (“TCPA”), which the Commission adopted this past summer in its highly controversial Telephone Consumer Protection Act declaratory ruling.  The court in Dominguez v. Yahoo, Inc. vacated and remanded for further proceedings the district court’s order on summary judgment for Yahoo.

According to the Third Circuit, under the FCC’s newly-formulated definition, a system is an autodialer, and, in general, subject to the TCPA’s prohibition on autodialed calls to wireless numbers absent consent of the called party, if it is “able to store or produce numbers that themselves are randomly or sequentially generated ‘even if [the autodialer is] not presently used for that purpose.’”  In adopting this definition and following the FCC, the Third Circuit focused on the “capacity” element that was at the crux of the FCC’s decision.

While noting that the FCC’s decisions on the issue were “hardly a model of clarity,” the court observed that the declaratory ruling did clarify that to qualify as an autodialer, neither “present ability” nor the use of a single piece of equipment is required.  Rather, under the FCC’s ruling as interpreted by the Third Circuit, equipment that is part of a “system” that has the “latent capacity” to place autodialed calls, qualifies as an autodialer under the TCPA.  The Third Circuit’s ruling did suggest, however, that a detailed inquiry into whether a system has the “capacity” to store or produce numbers randomly or sequentially will be required in subsequent cases.

In Dominguez, Plaintiff received 27,809 text messages intended to be sent to the prior subscriber of Plaintiff’s wireless number from Yahoo over the course of 17 months using a system that dialed numbers from a compiled list and that, according to Yahoo’s expert opinion, “did not have the capacity to store or produce numbers to be called, using a random or sequential number generator, and to call those numbers.”  Id. at 8.  Plaintiff filed a putative class action under the TCPA, which prohibits any person from making non-emergency calls to wireless number using an autodialer absent consent of the called party.

The District Court granted summary judgment in favor of Yahoo!, agreeing that the phrase “random or sequential” refers to the manner in which numbers are stored or generated, not the manner they are dialed.  The District Court further rejected the FCC’s interpretation of ATDS to cover “any equipment” with the capacity to “generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists” as contrary to the TCPA’s plain language and inapplicable outside the narrow context of “predictive dialers.”

On appeal, the Third Circuit (in a non-precedential opinion) agreed with the District Court that the phrase “random or sequential” refers to the manner in which the numbers are stored or generated rather than the manner in which they are dialed, but found that Yahoo had not sufficiently shown that its equipment lacked the requisite capacity to autodial numbers.  The Third Circuit vacated for further briefing on the equipment’s “present capacity” to store or dial randomly generated numbers, holding that Yahoo’s expert’s opinion that the system at issue does not have the capacity to function as an ATDS constituted a legal conclusion that was insufficiently detailed to support summary judgment in Yahoo’s favor.  The Third Circuit also acknowledged that it is “unclear how a number can be stored (as opposed to produced) using a ‘random or sequential number generator,’” and directed the District Court to address this issue on remand.

The autodialer question is among several issues that will be heard by the D.C. Circuit in consolidated appeals of the FCC’s declaratory ruling.  Briefs for petitioners and intervenors are due over the next month, with briefs from the FCC and groups supporting the decision due in January.

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