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9th Cir. Adopts Broad Definition of ATDS Under TCPA, Reverses Trial Court’s Ruling

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, 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, 47 U.S.C. § 227, et seq.

A copy of the opinion in Marks v. Crunch San Diego, LLC is available at:  Link to Opinion.

In 2012, the plaintiff signed up for a gym membership with defendant gym.  After joining the gym, the plaintiff received three text messages from the defendant over an 11-month period, for which the plaintiff’s phone carrier charged him.  In February 2014, the plaintiff filed a putative class action against the defendant alleging violations of the TCPA.  The plaintiff specifically alleged that the defendant sent text messages via an ATDS that had “the capacity to send text messages to cellular telephone numbers from a list of telephone numbers automatically and without human intervention.”

The 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.”  The plaintiff timely appealed.  The Ninth Circuit vacated the submission of the plaintiff’s appeal pending a decision in ACA Int’l v. FCC, 885 F.3d 687 (D.C. Cir. 2018).

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, the plaintiff argued a piece of equipment qualifies as an ATDS “if it has the capacity to store telephone numbers and then dial them.”  The 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 of 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 the 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 the defendant’s motion for summary judgment and remanded the matter for further proceedings.

Webinar to Break Down Ruling

Join Maurice Wutscher’s Donald Maurice and attorney for the plaintiff in Marks v. Crunch San Diego, LLCAbbas Kazerounian of Kazerouni Law Group APC, in a webinar explaining the ruling. Offered by the American Bar Association’s Consumer Financial Services Committee, the webinar will be held on Oct. 10, at 11 a.m. PT / 2 p.m. ET. To join the webinar, click here.

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Patrick Kane practices in Maurice Wutscher’s commercial litigation, consumer credit litigation, insurance recovery and advisory, intellectual property litigation, and equine law practice groups. Patrick has substantial experience in a variety of civil matters including business litigation, insurance recovery, foreclosure litigation, wrongful death, product liability, general tort litigation and general liability defense. Among other achievements, he has served as first chair in a five-day jury trial and as second chair during a weeklong arbitration. In 2012, the San Diego Daily Transcript named him a “Young Attorney of the Year.” Patrick's equine practice focuses on the representation of industry participants at administrative hearing and appeals, purchase and sale agreements, partnership and limited liability creation, gaming law, regulatory matters, and equine related negligence actions. In 2015, he was appointed to serve the California Horse Racing Board as a hearing officer. Patrick graduated from the University of San Diego School of Law. He obtained his undergraduate degree from the University of Arizona where he majored in Animal Science and was a graduate of the Race Track Industry Program; there he received the Mildred Vessels Scholarship Award and the Race Track Industry Program’s Scholarship Award.

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