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N.D. Illinois Joins Other Courts in Limiting Scope of ‘ATDS’ Under TCPA

The U.S. District Court for the Northern District of Illinois recently held that the defendant company did not use an automatic telephone dialing system (ATDS) because its phone system did not use a random or sequential number generator to store or produce phone numbers to be called.

In so ruling, the Court reversed a prior order and now entered summary judgment in favor of the defendant company on the plaintiff’s alleged TCPA claim in light of ACA International v. FCC, 885 F.3d 687, 695 (D.C. Cir. 2018).

A copy of the opinion in Johnson v. Yahoo! Inc. is available at: Link to Opinion.

The defendant company’s phone system sent text messages to the plaintiff “by pulling her number from a database of stored numbers — an address book — and then automatically sending that number a text message.”  The plaintiff alleged that the company sent her text messages without her prior express consent using an ATDS and sued the company for allegedly violating the Telephone Consumer Protection Act, 47 U.S.C. § 227(b)(1)(A)(iii).

As you may recall, the TCPA defines an ATDS to be equipment that has the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator.” 47 U.S.C. § 227(a)(1).

In 2014, relying on the 2003, 2008, and 2012 FCC rulings that interpreted an ATDS to include systems that dialed numbers taken from a stored list without human intervention, the trial court denied the company’s motion for summary judgment finding that a dispute existed over whether the company’s phone system was an ATDS.

In 2015, the FCC issued a ruling again interpreting the ATDS provision of the TCPA.  30 F.C.C. Rcd. 7961 (2015).  The 2015 FCC decision reaffirmed its prior interpretation that “dialing equipment generally has the capacity to store or produce, and dial random or sequential numbers (and thus meets the TCPA’s definition of ‘autodialer’) even if it is not presently used for that purpose, including when the caller is calling a set list of consumers.” 30 F.C.C. Rcd. 7961, 7971–74 (2015) (citing the 2003 and 2008 TCPA Orders).

However, the U.S Circuit Court of Appeals for the District of Columbia Circuit in ACA International examined the 2015 FCC decision and “set aside the Commission’s explanation of which devices qualify as an ATDS.”  The D.C. Circuit found the FCC interpretation of an ATDS that included a device that “can call from a database of telephone numbers generated elsewhere” incompatible with the statutory definition that required an ATDS to generate the phone “numbers to be called, using a random or sequential number generator.”

The company moved to reconsider summary judgment in light of ACA International, arguing that its phone system was not an ATDS because it did not use a random or sequential number generator to store or produce phone numbers to be called.  In response, the plaintiff argued that there is nothing to reconsider because the District Court denied the summary judgment motion in 2014 based on the 2003, 2008, and 2012 FCC orders issued before the 2015 FCC decision that ACA International set aside.  The plaintiff maintained that the 2003, 2008, and 2012 FCC orders survived ACA International.  Thus, according to the plaintiff the 2003, 2008, and 2012 FCC orders remain in effect and still bind the District Court.

The District Court acknowledged that it “must apply the FCC’s definition of ATDS.”  The Court also agreed that the petitions in ACA International only sought review of the 2015 order.

Nevertheless, the Court observed that ACA International set aside the FCC’s “treatment of the qualifying functions of an ATDS” and “wiped the slate clean.”

Further, the Court noted that the 2015 FCC order “reaffirmed” its earlier orders. This necessarily “brought the entire agency definition of ATDS up for review in ACA International.”  The ACA International court plainly reviewed all “pertinent pronouncements” the FCC made concerning the ATDS definition of an ATDS.

Thus, the Court concluded that “the FCC’s prior orders are no longer binding.”

Here the company’s phone system did not have the capacity to generate random or sequential numbers to be dialed.  Instead, it only dialed numbers from a stored list. The TCPA requires that a dialing system has the capacity to store or produce telephone numbers, using a random or sequential number generator to qualify as an ATDS. 47 U.S.C. § 227(a)(1).

The Court found that the statute “is not ambiguous.”  Further, the phrase “using a random or sequential number generator” applies to the numbers to be called.  As such, phone lists created without random or sequential number generation capacity fall outside the statute’s ATDS definition.

Thus, trial court granted the motion to reconsider in light of ACA International, and because the company’s phone system is not an ATDS, and entered judgment in favor of the defendant company.

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