Consumer Finance Insights
December 5, 2018

District of Minnesota Rejects Marks, Grants Defendant Summary Judgment in TCPA Case

On November 13, 2018, the District of Minnesota rejected the Ninth Circuit’s expansive interpretation of the Telephone Consumer Protection Act’s (TCPA’s) automatic telephone dialing system (ATDS) provision in Marks v. Crunch San Diego, LLC.  In Roark v. Credit One Bank, N.A., No. 16-cv-00173 (D. Minn. Nov. 13, 2018), the court instead turned to the language of the statute itself and found that the equipment at issue did not satisfy that definition.  Moreover, the court found that defendant had relied in good faith on consent it had received from the previous owner of plaintiff’s phone number and therefore could not be held liable under the TCPA.

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.  The TCPA’s ATDS definition and the FCC’s related guidance have been the subject of numerous opinions, including the D.C. Circuit’s March 2018 opinion in ACA International and the Ninth Circuit’s September 2018 opinion in Marks.  As we explained in our post regarding ACA (and as the Ninth Circuit affirmed in Marks), the FCC’s ATDS guidance is no longer valid and the statutory language alone governs.  But 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 Roark, a customer of Credit One provided his or her telephone number and consent to calls as part of the account setup process and used that phone to speak to Credit One representatives over the years.  After that customer failed to make some payments, Credit One began calling the number, which had since been transferred to plaintiff.  Credit One called 140 times, but plaintiff never answered.  On 136 of those calls, Credit One did not leave a message.  On the remaining four calls, Credit One left a prerecorded message.  On its motion for summary judgment, Credit One argued (1) that its telephone equipment, although it was admittedly a predictive dialer, was not an ATDS because it could not generate numbers randomly or dial them sequentially; and (2) that it could not be held liable for its prerecorded messages because it had relied in good faith on the consent it received from its customer—the former owner of the phone number.

Accepting Credit One’s arguments, the court first recognized that the FCC’s prior guidance regarding the ATDS definition had been vacated by ACA.  The court then turned to Marks, and concluded that the Ninth Circuit’s expansive ATDS definition ran afoul of the statutory definition.  The court found that the evidence showed that defendant’s system was, at most, a predictive dialer, but that it was not an ATDS because it lacked the capacity to generate random numbers to be called or to dial numbers sequentially.  As a result, the court found that Credit One could not be held liable for the 136 calls that resulted in no communication at all.  The court also found that Credit One could not be liable for the four calls made using prerecorded messages.  In reaching that conclusion, the court found that Credit One had relied in good faith on consent it received from the previous owner of the phone number and that it had no basis to conclude that the number had changed hands.

Courts continue to grapple with the impact of the ACA decision and on the proper interpretation of the ATDS provision.  We will continue to monitor decisions closely.