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District Court Offers Clarification to Autodialer Definition in Telephone Consumer Protection Act

Client Alert

Author: A. Michael Pratt

1/18/2019
District Court Offers Clarification to Autodialer Definition in Telephone Consumer Protection Act

Does a predictive dialer qualify as an “automatic telephone dialing system” (ATDS), thereby triggering the application of the Telephone Consumer Protection Act of 1991 (TCPA)?1 Posed more narrowly, what technologies or functions used in a telemarketing or “textmunication” dialing system qualify that system as an ATDS? This is one of the most hotly contested consumer protection issues vexing both the federal courts and the Federal Communications Commission (FCC).

Federal courts — including district courts within the Third Circuit — are split about the continued validity of declaratory orders issued by the FCC in 2003 and 2008 suggesting that predictive dialers are included within the definition of an ATDS. The divergent judicial positions arose after the U.S. Court of Appeals for the District of Columbia vacated a 2015 FCC order with an even more expansive administrative interpretation of ATDS. Without regulatory guidance, the courts are now further split about the plain language meaning of an ATDS as set forth in the statute.2

The unresolved statutory question is whether the definition of ATDS requires the calling or texting device to “have the ability to generate random or sequential telephone numbers to be dialed, or whether it will be enough if the device can call from a database of telephone numbers generated elsewhere.”3 More precisely, does the statutory definition of ATDS also envelop predictive dialers that have only the limited functionality to dial manually stored numbers, and that do not have the functionality to dial random or sequential generated numbers?

A court in the Eastern District of Pennsylvania recently issued an opinion that may provide some guidance in resolving this question, at least within the Third Circuit. In Richardson v. Verde Energy USA, Inc., No. 15-6325, 2018 BL 467912 (E.D. Pa. 2018), the district court sought to clarify what it described as the Third Circuit’s “ambiguous” opinion in Dominguez v. Yahoo, Inc., 894 F.3d 116 (3d Cir. 2018). The Third Circuit in that case ruled that it would “interpret the statutory definition of an autodialer as it had prior to the issuance of the 2015 Declaratory Ruling.” The circuit court then held that an automatic telephone dialing device “must” have the ability to generate random or sequential numbers and dial them in order to qualify as an ATDS.4 The district court found that the Third Circuit’s opinion in Dominguez provided no direct guidance about the continued validity of the FCC’s 2003 and 2008 orders.

In the absence of clear direction from the Third Circuit, the district court performed an independent analysis concerning the binding effect of the FCC’s orders. The district court concluded first that the District of Columbia Circuit’s invalidation of the FCC’s 2015 order, by implication, also invalidated the FCC’s prior orders. The district court then went a step further to offer its opinion on the statutory interpretation of an ATDS. While ultimately concluding that it was compelled to follow Third Circuit precedent, the district court made clear its view that Dominguez was decided incorrectly. The district court noted, “[i]f the Court were writing on a blank slate, it would likely follow the course chartered by the Ninth Circuit in” Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018). In Marks, the Ninth Circuit explicitly rejected the Dominguez holding by declining to follow the “Third Circuit’s unreasoned assumption that a device must be able to generate random or sequential numbers in order to qualify as an ATDS.”

It remains an open question whether the Third Circuit will heed the district court’s admonition and adopt the Ninth Circuit’s position if the issue ever again works its way up through the circuit. Until that time, it is possible the U.S. Supreme Court will accept an opportunity to weigh in and resolve the federal court split. The Ninth Circuit has granted a stay of its decisional mandate in Marks until February 4, 2019 to permit the defendant to file a petition for writ of certiorari to the Supreme Court.5

Stay tuned.

Endnotes

1 See 47 U.S.C. § 227 (a)(1) (defines “automatic dialing system” as “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.”) Predictive dialers may be defined generally as devices that “automatically [dial] a list of numbers that had been preprogrammed and stored in the dialer, or were downloaded from a computer database.” See Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1045 (9th Cir. 2018) (citing FCC 2003 Order at 14,090).

2 See ACA Int’l v. Fed. Commc’ns Comm’n, 885 F.3d 687 (D.C. Cir. 2018).

3 See Richardson v. Verde Energy USA, Inc., No. 15-6325, 2018 BL 467912 (E.D. Pa. 2018) (citing ACA Int’l, 885 F.3d at 701).

4 In Dominguez, the Third Circuit reversed the trial court’s denial of Yahoo’s motion for summary judgment, ruling instead that a disputed issue of fact existed regarding whether Yahoo’s text messaging service was presently capable of “generating random or sequential telephone numbers and dialing those numbers.” Following the Dominguez holding, the district court in Richardson granted the defendant’s motion for partial summary judgment, ruling that the “predictive dialer” system used by the defendant’s telemarketing firm was not an ATDS because of its limited functionality.

5 In light of the Marks and ACA International decisions, the FCC issued a Public Notice on October 3, 2018 reopening the comment period and seeking further comment about the definitional interpretation of an ATDS under the TCPA.

A. Michael Pratt is a member of the firm’s Trial and Dispute Resolution Practice Group, a seasoned and trial-ready team of advocates who help clients analyze and solve their most emergent and complex problems through negotiation, arbitration and litigation.

The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.

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