Tag:ninth circuit

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Supreme Court Agrees to Review Growing Circuit Split on Definition of ATDS
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The FCC Clarifies the Definition of ATDS
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Strength in Numbers: The Seventh Circuit Joins the Third and Eleventh Circuits in Limiting the Definition of an Automatic Telephone Dialing System under the TCPA
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In Wake of ACA Int’l, Ninth Circuit Adopts Expansive Definition of ATDS

Supreme Court Agrees to Review Growing Circuit Split on Definition of ATDS

By Andrew C. Glass, Gregory N. Blase, Joseph C. Wylie II, Molly K. McGinley, and Hollee M. Boudreau

On Thursday, the United States Supreme Court agreed to review the question of what type of dialing equipment qualifies as an “automatic telephone dialing system” (ATDS) under the Telephone Consumer Protection Act (TCPA).  The Court’s review arises from a challenge to the Ninth Circuit’s broad definition of ATDS.  The plain language of the TCPA states that an ATDS is “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.”  47 U.S.C. § 227(a)(1).  Since the D.C. Circuit abrogated the Federal Communications Commission (FCC) rulings construing that language, see ACA International v. FCC, 885 F.3d 687, 701 (D.C. Cir. 2018), a split has emerged among the federal circuit courts that have examined the definition.  The Ninth and Second Circuits have held that a dialing system need only have the capacity to “store numbers to be called” and “to dial such numbers automatically” to constitute an ATDS.  See Duran v. La Boom Disco, Inc., 955 F.3d 279, 283-84 (2d Cir. 2020); Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1052-53 (9th Cir. 2018).  The Third, Seventh, and Eleventh Circuits, on the other hand, have reined in the definition of ATDS.  These courts have held that a system cannot constitute an ATDS where it lacks the capacity either to (1) store telephone numbers to be called using a random or sequential number generator, or (2) produce telephone numbers to be called using a random or sequential number generator.  See Gadelhak v. AT&T Servs., Inc., 950 F.3d 458, 464, 469 (7th Cir. 2020); Glasser v. Hilton Grand Vacations Co., 948 F.3d 1301, 1310 (11th Cir. 2020); Dominguez v. Yahoo, Inc., 894 F.3d 116, 119-21 (3d Cir. 2018).   

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The FCC Clarifies the Definition of ATDS

By Andrew C. Glass, Gregory N. Blase, Joseph C. Wylie II, Molly K. McGinley, and Hollee M. Boudreau

The Federal Communications Commission (FCC) recently issued a declaratory ruling on a petition seeking clarification of the definition of an “automatic telephone dialing system” (ATDS) under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227.  In its order, the FCC ruled that a text messaging platform that requires a person to actively and manually dial a recipient’s number and transmit those messages, and that lacks the capacity to transmit more than one message without a person manually dialing each number, is not an ATDS under the TCPA.  The FCC concluded such a system does not meet the definition of ATDS because it does not store or produce numbers to be called using a random or sequential number generator and dial such numbers automatically.  See FCC Order ¶¶ 3, 8–12.  Although not expressly stated, the FCC ruling is consistent with prior decisions of the Third, Seventh, and Eleventh Circuit Courts of Appeals, discussed here, specifically in that curating a list of numbers, and then dialing the numbers from that list, is not sufficient to establish the use of an ATDS under the TCPA.  The FCC order may present businesses facing TCPA lawsuits with another basis to challenge the Ninth and Second Circuit Courts of Appeals’ decisions that construed the definition of ATDS more broadly than Third, Seventh, and Eleventh Circuit’s definition.

Strength in Numbers: The Seventh Circuit Joins the Third and Eleventh Circuits in Limiting the Definition of an Automatic Telephone Dialing System under the TCPA

By Andrew C. GlassGregory N. BlaseJoseph C. Wylie IIMolly K. McGinleyHollee M. Boudreau, and Adam R.D. Paine

The Seventh Circuit recently acted to limit the definition of “automatic telephone dialing system” (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”). In Gadelhak v. AT&T Services, Inc., [1] the court ruled that a dialing system that “neither stores nor produces numbers using a random or sequential number generator,” but rather “exclusively dials numbers stored in a customer database,” “is not an ‘automatic telephone dialing system’ as defined by the Act.” In construing the definition of ATDS narrowly, the Seventh Circuit joined the interpretation adopted by the Third and Eleventh Circuits and rejected the Ninth Circuit’s differing interpretation.

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In Wake of ACA Int’l, Ninth Circuit Adopts Expansive Definition of ATDS

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

The U.S. Court of Appeals for the Ninth Circuit recently adopted an expansive definition of the term “automatic telephone dialing system” (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”).  In Marks v. Crunch San Diego LLC, the panel held that, in light of ACA Int’l, the U.S. Court of Appeals for the D.C. Circuit’s landmark decision interpreting certain provisions within the TCPA (previously discussed here) and based on the panel’s own review of the TCPA, the statutory definition of an ATDS includes devices that store telephone numbers to be called, whether or not the device has the ability to generate numbers randomly or sequentially.  In so holding, the Ninth Circuit splits from a number of other decisions holding that an essential element of an ATDS is the capacity to generate random or sequential numbers.

The TCPA defines ATDS as “equipment which has the capacity–(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”  In ACA Int’l, in brief, the D.C. Circuit invalidated the Federal Communications Commission (“FCC”)’s interpretation of two key questions raised by the statutory definition of an ATDS, namely “(i) when does a device have the ‘capacity’ to perform the two enumerated functions; and (ii) what precisely are those functions?”  In so doing, the D.C. Circuit created uncertainty as to what features or attributes of a dialing system would bring it within the scope of the ATDS definition.

Plaintiff Jordan Marks filed suit against Crunch San Diego LLC (“Crunch”) after he joined the gym and received three text messages over a period of eleven months.  Crunch utilized a system called Textmunication.  In this system, phone numbers are captured and stored in one of three ways: an operator of the system can manually enter a phone number into the system; a current or potential customer may respond to a marketing campaign with a text; or a customer may provide a phone number by filling out a consent form on a Textmunication client’s website.  A client of Textmunication can then design a marketing campaign and Textmunication will automatically send the desired messages to the stored phone numbers at a time scheduled by the client.  When Crunch wants to send a text through Textmunication, a Crunch employee logs into the system, selects the recipient phone numbers, generates the content of the message, and selects the date and time for the message to be sent.  The messages are then automatically sent at the appointed time.

Prior to the decision in ACA Int’l, the district court held that Textmunication was not an ATDS because it lacked the present or potential capacity “to store or produce telephone numbers to be called, using a random or sequential number generator” and granted summary judgment for Crunch.  Marks appealed the decision, and following his appeal, ACA Int’l was decided.  The Ninth Circuit then reversed, holding that a system could be an ATDS if it has the capacity to store a list of numbers and call those numbers automatically, even if the system does not have the ability to generate random or sequential lists of numbers.  In doing so, the Ninth Circuit first reviewed the statutory definition of ATDS as set forth by Congress in 1991 and determined that the provision is ambiguous, and, accordingly, that it was appropriate to look to the context and structure of the statutory scheme.  The Ninth Circuit found that Congress intended to regulate devices that make automatic calls, including those devices that make automatic calls from lists of recipients, rather than utilizing a random or sequential number generator.  The Ninth Circuit rejected Crunch’s argument that because the system was not fully automatic, it did not qualify as an ATDS, holding that Congress had been clear that it was targeting equipment that could engage in automatic dialing rather than equipment that operated without any human oversight or contact.  The Ninth Circuit remanded the matter back to the district court for further proceedings.

In addition to the Ninth Circuit, several other courts have discussed the effect of ACA Int’l on the definition of ATDS:

  • In Gonzalez v. Ocwen Loan Servicing, LLC, the Court concluded that a predictive dialer that lacks the capacity to generate random or sequential telephone numbers and dial them, but it does include a predictive dialer that has the “present ability” to do so.
  • In Washington v. Six Continents Hotels, Inc., the Court agreed that ACA Int’l set aside not only the FCC’s 2015 ruling but also the FCC’s historic treatment of which devices qualify as an ATDS. 16-3719, 2018 WL 4092024, at *3 (C.D. Cal. Aug. 24, 2018)  The Court then determined that the complaint adequately alleged the use of an ATDS by claiming that the defendant “acquired Plaintiff’s number, stored it in a database connected to its telephonic or computer system . . . [the system] . . . has the capacity to generate random numbers . . . has the capacity to generate sequential numbers . . . [and] has the capacity to store and dial the random or sequential numbers it generates just like it stored and dialed Plaintiff’s number.”  Id.

  • In Heard v. Nationstar Mortg. LLC, the Court held that a system that could and did store customer information for at least 24 hours and did not have the capacity to store or produce telephone numbers to be called using a random or sequential number generator fell within the definition of ATDS. 16-694, 2018 WL 4028116, at *5-6 & n.2 (N.D. Ala. Aug. 23, 2018).
  • In King v. Time Warner Cable Inc., the Second Circuit determined that qualification as an ATDS was limited to those devices that were “capable at the time of use” of performing the functions of an autodialer, absent any modifications to the device’s hardware or software. 849 F.3d 473, 476–77 (2d Cir. 2018).
  • In Dominguez ex rel Himself v. Yahoo, Inc., the Court held that, absent any evidence that the device had the capacity to generate random or sequential telephone numbers and dial those numbers, the plaintiff failed to show that the text messaging system was an ATDS in light of ACA Int’l. 894 F.3d 116, 119 (3d Cir. 2018).

Given the split among courts on how to interpret ATDS, uncertainty will continue to prevail until there is additional clarification, either from the Supreme Court or the FCC.  The FCC has requested further comment from the public regarding the interpretation of the TCPA in light of this decision.

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