Consumer Finance Insights
July 12, 2018

Third Circuit Affirms Summary Judgment Where ATDS Evidence Falls Short

On June 26, 2018, the Third Circuit affirmed summary judgment in favor of defendant Yahoo, Inc. in a putative Telephone Consumer Protection Act (TCPA) class action, Dominguez v. Yahoo, Inc., because plaintiff had failed to provide any relevant and admissible evidence that Yahoo’s systems met the TCPA’s automated telephone dialing system (ATDS) definition.  In reaching its conclusion, the Third Circuit relied upon the D.C. Circuit’s recent decision in ACA International v. FCC (which we covered here).

In Dominguez, plaintiff purchased a cellphone with a reassigned telephone number.  The prior subscriber had signed-up for text message alerts of emails received in his or her Yahoo email account.  After plaintiff received almost 30,000 text messages from Yahoo over 17 months, he filed a putative class action.

The Third Circuit’s June 26’s decision was its second in the case.  In 2015, the Court vacated the Eastern District of Pennsylvania’s previous summary judgment order because the Court concluded a material issue of fact remained regarding whether Yahoo’s systems constituted an ATDS.  The Court remanded with instructions to consider the ATDS evidence in light of the Federal Communications Commission’s (FCC’s) then newly-issued 2015 ATDS guidance concluding that equipment with the potential capacity (as well as the present capacity) to dial numbers randomly or sequentially met the TCPA’s statutory ATDS definition.  On remand, the District Court again granted Yahoo’s motion for summary judgment on the ATDS element.  While plaintiff’s appeal from that second adverse summary judgment order was pending, the D.C. Circuit struck down the FCC’s ATDS guidance in ACA.

After noting that the FCC’s “potential capacity” guidance had been struck down in ACA, the Third Circuit analyzed plaintiff’s ATDS evidence against the statutory ATDS definition, providing that an ATDS is “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 the face of the statutory definition and ACA, the Court concluded that three of plaintiff’s four expert reports on the ATDS issue had been rightly excluded by the District Court because they focused exclusively on what Yahoo’s systems might be able to do with alterations.  These, it concluded, were “founded upon the exact type of hypothesizing that is foreclosed by ACA International.”  Turning to plaintiff’s final expert report, the Court noted that it too was rightly rejected because it contained only overbroad and generalized assertions that failed to address the present functions of Yahoo’s systems.  Ultimately, the Court concluded that the District Court properly granted summary judgment because the undisputed evidence confirmed that the text messages plaintiff received were not randomly generated at all, but instead were intentionally sent to plaintiff’s number “because the prior owner of [plaintiff’s] telephone number had affirmatively opted to receive them.”