The U.S. Court of Appeals for the Ninth Circuit recently held that the term automatic telephone dialing system ("ATDS"), as defined by the federal Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. ("TCPA"), includes devices that store telephone numbers to be called, "whether or not those numbers have been generated by a random or sequential number generator."
Accordingly, the Ninth Circuit vacated the trial court's order dismissing the plaintiff's putative class action asserting violations of the TCPA.
A copy of the opinion is available at: Link to Opinion
In 2012, Plaintiff signed up for a gym membership with defendant gym ("Defendant"). After joining the gym, Plaintiff received three text messages from Defendant over an eleven month period, which Plaintiff's phone carrier charged him for. In February 2014, Plaintiff filed a putative class action against Defendant alleging violations of the TCPA. Plaintiff specifically alleged that Defendant sent text messages via an ATDS that had the "the capacity to send text messages to cellular telephone numbers from a list of telephone numbers automatically and without human intervention."
Defendant subsequently moved for summary judgment, which the trial court granted. Specifically, the trial court held the system sending the text messages at issue was not an ATDS as it did not have the present or potential capacity "to store or produce telephone numbers to be called, using a random or sequential number generator." Plaintiff timely appealed. The Ninth Circuit vacated the submission of Plaintiff's appeal pending a decision in ACA Int'l v. FCC, 885 F.3d 687 (D.C. Cir. 2018) ("ACA").
As you may recall, the D.C. Circuit in ACA Int'l v. FCC vacated the FCC's interpretation of the types of devices that qualified as an ATDS leaving only the statutory definition Congress created in 1991 that defined an 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." 47 U.S.C. § 227(a)(1).
The chief issue on appeal here was whether the text message sending device (the "System"), qualified as an ATDS for TCPA purposes. The System is a web-based marketing platform designed to send promotional text messages to a list of stored telephone numbers. The System stores phone numbers when: (1) an individual manually enters the phone numbers into the System; (2) a customer responds to a text message, which automatically provides the customer's phone number in the System; or (3) a customer provides his or her phone number by completing a consent form on the System's website.
On appeal, Plaintiff argued a piece of equipment qualifies as an ATDS "if it has the capacity to store telephone numbers and then dial them." Defendant responded by arguing that in order to qualify as an ATDS, "a device must store telephone numbers that have been produced using a random or sequential number generator." The Ninth Circuit disagreed with both interpretations explaining that "both parties fail to make sense of the statutory language without reading additional words into the statute."
After finding the definition of an ATDS ambiguous, the Ninth Circuit held that an ATDS includes devices with the capacity to call stored numbers automatically and that the definition is not limited to devices having the capacity to call numbers produced by a "random or sequential number generator."
The Court found support for its interpretation of § 227(a)(1) in other TCPA provisions that allowed an ATDS to call selected numbers from a list of phone numbers as opposed to a system that simply dials a block of random or sequential phone numbers. See e.g., 47 U.S.C. §§ 227(b)(1)(A), and (b)(1)(A)(iii).
The Ninth Circuit further noted that when Congress amended certain TCPA sections after the FCC's 2015 Order, it did not amend the TCPA's definition of an ATDS. This is even though the FCC's prior orders defined an ATDS "to include devices that could dial numbers from a stored list." The Court concluded that Congress' decision to forgo amending the statutory definition of an ATDS meant Congress "tacitly approved" the FCC defining an ATDS to include devices with the ability to dial numbers from a stored list. See, Lorillard v. Pons, 434 U.S. 575, 580 (1978).
Accordingly, the Ninth Circuit held that § 227(a)(1)'s definition an ATDS includes equipment with the capacity to: (1) store numbers to be called; or (2) produce numbers to be called, using a random or sequential number generator—and to dial such numbers.
The Ninth Circuit further rejected Defendant's argument that a device cannot be an ATDS unless it operates "without any human intervention whatsoever." In rejecting this argument, the Court explained Congress clearly targeted equipment that could engage in automatic dialing as opposed to equipment "that operated without any human oversight or control."
Accordingly, the Ninth Circuit reversed the trial court's order granting Defendant's motion for summary judgment and remanded the matter for further proceedings.
Eric Tsai
Maurice Wutscher LLP
71 Stevenson Street, Suite 400
San Francisco, CA 94105
Direct: (415) 529-7654
71 Stevenson Street, Suite 400
San Francisco, CA 94105
Direct: (415) 529-7654
Fax: (866) 581-9302
Mobile: (714) 600-6000
Email: etsai@MauriceWutscher.com
Admitted to practice law in California, Nevada and Oregon
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