The key question in many Telephone Consumer Protection Act lawsuits is whether the equipment used to call the plaintiff constitutes an autodialer—that is, an "automatic telephone dialing system" or ATDS—within the meaning of the statute. TCPA practitioners have been awaiting the FCC's guidance regarding the definition of an autodialer. Last spring, the D.C. Circuit set aside the FCC's expansive definition of that term as arbitrary and capricious. (See our report on the D.C. Circuit's ruling in ACA International.) Since then, the FCC has been working on its new definition.

The Ninth Circuit apparently couldn't wait. In Marks v. Crunch San Diego, LLC (pdf), a Ninth Circuit panel held that an ATDS is any "device that stores telephone numbers to be called," "whether or not the numbers were not generated by a random or sequential number generator."

The Ninth Circuit panel's decision

In Marks, the plaintiff alleged that the defendant, Crunch Fitness, had sent him three text messages. The parties disputed whether the messages were sent using an autodialer, although they agreed that the equipment couldn't generate random or sequential numbers to be dialed. Instead, to send a text message, the employee would have to select the recipients' phone numbers from a list of customers.

The case thus turned on the statutory definition of an autodialer: "equipment that 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 Ninth Circuit panel expressed the view that the definition's language was unclear as to whether the phrase "using a random or sequential number generator" modified (i) both the verbs "store" and "produce" or (ii) just the second verb, "produce."

But the panel concluded that the definition should be interpreted to cover equipment that can "store" telephone numbers regardless of whether the equipment "us[es] a random or sequential number generator." Specifically, the panel held that "the term [ATDS] means equipment which has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers."

The panel believed that the TCPA's authorization of calls made with prior express consent supported a broader reading of the term ATDS that covers storing a list of numbers; according to the court, "[t]o take advantage of this permitted use, an autodialer would have to dial from a list of phone numbers of persons who had consented to such calls, rather than merely dialing a block of random or sequential numbers." In other words, the Ninth Circuit panel believed that the "prior express consent" defense to liability under the TCPA would be superfluous if an ATDS were defined more narrowly to cover only calls placed through use of a random or sequential number generator.

The panel also noted that, although Congress had amended the TCPA in 2015, it had not legislatively overturned the FCC's prior orders adopting a broad view of what counts as an autodialer.

Implications of the Ninth Circuit's ruling

The Ninth Circuit panel's decision in Marks is unfavorable for businesses that communicate with consumers. Plaintiffs' lawyers are already touting the decision as opening the door to more TCPA lawsuits in the Ninth Circuit. But the panel's decision will not be the last word on the subject.

First, the panel's decision is directly contrary to the Third Circuit's decision in Dominguez ex rel. Himself v. Yahoo, Inc. (pdf), in which that court rejected a TCPA claim because there was no genuine dispute of fact that the defendant's device lacked the ability to "generat[e] random or sequential telephone numbers and dial[] those numbers." The reading in Dominguez is far closer to the plain meaning of the statutory text, in our view.

Second, the panel's decision is also inconsistent with the D.C. Circuit's decision earlier this year in ACA International. In that case, which involved an administrative challenge to the FCC's definition of an autodialer, the D.C. Circuit had noted the existence of this very issue. One of the reasons that that court set aside the FCC's definition of an autodialer was that the FCC "appears to be of two minds" about whether equipment "must itself have the ability to generate random or sequential numbers to be dialed" or if it is "enough if the device can call from" a list provided to the device, as apparently happened in Marks. But rather than hold that TCPA's language mandates one particular answer, the D.C. Circuit had remanded for the FCC to take another shot at adopting a reasonable and non-arbitrary definition—and in particular, a definition that wouldn't result in all smartphones being autodialers. (The D.C. Circuit had found that possibility under the FCC's prior interpretation to be deeply troubling.) The interpretation that the Marks panel adopted—one that treats any device that can dial from a preselected list of numbers as an autodialer—is difficult to square with the D.C. Circuit's view that "ordinary calls from any conventional smartphone" shouldn't trigger TCPA liability.

Last week, the FCC has taken the unusual step of seeking public comment regarding how to define an autodialer "in light of the recent decision in Marks," its seeming inconsistency with ACA International, and the need for the FCC to "address these two court holdings."

Given the split in authority, readers should stay tuned for future developments regarding this issue. A petition for rehearing en banc (pdf) has already been filed.

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