Consumer Finance Insights
October 9, 2018

Ninth Circuit Issues Opinion on TCPA ATDS Definition

On September 20, 2018, the Ninth Circuit issued an opinion finding that the Telephone Consumer Protection Act’s (TCPA’s) “automatic telephone dialing system” (ATDS) definition is vague and ambiguous, and interpreting the statutory definition anew.  More specifically, in Marks v. Crunch San Diego, LLC, the court interpreted the TCPA’s ATDS definition broadly to include equipment that dials telephone numbers from a list regardless of whether those numbers were randomly or sequentially generated.

To state a claim under the TCPA’s cellphone provision 47 U.S.C. § 227(b)(1)(A)(iii), a plaintiff must plead and prove, among other things, that he or she received a call or text sent from an ATDS.  The TCPA defines an ATDS as 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.”  The Federal Communications Commission (FCC) had issued guidance over the past decade interpreting and expanding that definition.  As we explained in our post regarding the D.C. Circuit’s opinion in ACA International (and as the Ninth Circuit affirmed in Marks), that guidance is no longer valid and the statutory language alone governs.  Courts that have considered how to interpret the statutory language have reached different conclusions about whether the equipment at issue must generate random or sequential telephone numbers or whether merely storing numbers to be called is sufficient.

In Marks, plaintiff alleged that he received text messages from a gym after signing up for a membership.  In support of his cellphone provision claim, plaintiff claimed that he did not consent to these messages and that they were sent using an ATDS.  At summary judgment, defendant demonstrated that the text messages plaintiff received were sent using equipment that stored telephone numbers of customers and potential customers.  Once those numbers were stored on the system, defendant could send messages to them by creating the messages and setting the date and time for their transmission.  The Southern District of California granted summary judgment because it concluded defendant’s equipment did not generate numbers randomly or sequentially.  While the case was on appeal, the D.C. Circuit issued its opinion in ACA.

In reversing the Southern District, the Ninth Circuit explained that ACA invalidated all historic FCC guidance regarding the TCPA’s ATDS definition.  As a result, the court looked to the statute’s plain language, but found the ATDS definition ambiguous.  Ultimately, the Ninth Circuit interpreted the definition to include both (1) equipment which has the capacity to “store numbers to be called” and (2) equipment which has the capacity to “produce numbers to be called, using a random or sequential number generator.”  Whichever definition applies, the equipment must also have the capacity to dial numbers automatically “even if the system must be turned on or triggered by a person.”  The court then found that there was a dispute of fact about whether defendant’s system met that its new standard and remanded the case.

Consequently, on October 3, 2018, the FCC sought comment on what constitutes an ATDS in order to determine how to interpret and apply the statutory definition.  Comments are due by October 17, and replies by October 24, 2018.