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March 19, 2019 Articles

The Evolving Definition of an Auto-Dialer under the TCPA

The ACA International ruling and its aftermath raise more questions than answers.

By Mark E. Rooney

What is an “automatic telephone dialing system” (ATDS or auto-dialer)? The answer to this increasingly debated question has broad implications for consumers and American businesses.

The Telephone Consumer Protection Act (TCPA) prohibits, among other things, the use of an ATDS to contact consumers on their mobile phones, without their express consent. Companies who wrongly use an ATDS are subject to statutory fines of at least $500 for every call made or text sent to a consumer, and these penalties can be privately enforced through consumer litigation. In an age when businesses easily can (and regularly do) call and text their customers’ cell phones, TCPA litigation has expanded dramatically.

Recently, the Federal Communications Commission (FCC) and some courts have considered how the definition of auto-dialer applies to new communications technologies—and, therefore, whether companies using those technologies can be subject to TCPA liability.

The FCC’s 2015 Order

The present controversy can be traced to the FCC’s 2015 declaratory ruling and order—a sprawling, 138-page order addressing 21 different requests for review filed by various businesses and trade organizations seeking clarity on aspects of the TCPA.

Among other things, the FCC’s order examined the definition of auto-dialer. Under the statute, an ATDS is defined as equipment that has (1) “the capacity to store or produce telephone numbers to be called, using a random or sequential number generator” and (2) the ability “to dial such numbers.” 47 U.S.C. § 227(a)(1). The FCC determined that the reference to dialing equipment’s “capacity” should not be limited to the equipment’s “present capacity” but instead should be viewed as a function of the equipment’s “potential functionalities.” FCC Order, 30 FCC Rcd. 7961, 7974 ¶ 16 (2015).

The FCC also reaffirmed a 2003 order concluding that predictive dialers—which may not themselves generate random or sequential numbers to be called—qualify as auto-dialers. The FCC noted that a dialer does not necessarily need to operate “without human intervention,” although the FCC simultaneously stressed that such ability is a “basic function[]” of an ATDS. Id. at 7975–76.

Review of the FCC Order: ACA International v. FCC

Within a month of the FCC’s order, industry participants petitioned the U.S. Court of Appeals for the D.C. Circuit for review, challenging the FCC’s interpretation of an ATDS and other issues. The cases were consolidated, and the court issued its opinion on March 16, 2018, in ACA International v. FCC. 885 F.3d 687 (2018).

The court struck down the FCC’s broad definition of ATDS, calling it “expansive” and “untenable.” Id. at 696, 698. The court reasoned that the FCC’s reliance on a dialer’s “potential” capabilities turns every ordinary smartphone into an ATDS: “It cannot be the case that every uninvited communication from a smartphone infringes federal law, and that nearly every American is a TCPA-violator-in-waiting, if not a violator-in-fact.” Id. at 698.

The court also set aside the FCC’s interpretation relating to the precise number-generating capabilities of an ATDS. The court observed that the FCC appears to want it both ways—its order at times insists that an ATDS must be capable of generating and dialing random or sequential numbers, but other portions of the FCC’s order (including the reaffirmation of its 2003 order on predictive dialers) make room in the definition of ATDS for dialers without that functionality. See id. at 701–02. “It might be permissible for the Commission to adopt either interpretation,” noted the court. “But the Commission cannot, consistent with reasoned decisionmaking, espouse both competing interpretations in the same order.” Id. at 703.

The Ninth Circuit’s Marks Decision

On September 20, 2018, the U.S. Court of Appeals for the Ninth Circuit issued a decision in Marks v. Crunch San Diego, LLC, holding that a “web-based marketing platform designed to send promotional text messages to a list of stored telephone numbers” counts as an ATDS. 904 F.3d 1041, 1048 (9th Cir. 2018). That is, the ability to communicate automatically from a stored list of numbers, even without employing a random or sequential number generator, may trigger TCPA liability.

Marks is one of the first major court decisions examining the definition of auto-dialer since the D.C. Circuit invalidated many of the FCC’s prior interpretations. Indeed, the Ninth Circuit observed that, after ACA International, “the FCC’s prior orders [on the definition of an ATDS] are no longer binding on us” and “only the statutory definition of ATDS as set forth by Congress in 1991 remains.” 904 F.3d at 1049.

The Ninth Circuit found the plain text of the TCPA ambiguous and therefore appealed to “the context and the structure of the statutory scheme.” Id. at 1051. Among other things, the court noted Congress’s 2015 amendments to the TCPA, which affected one section of the statute but left untouched the definition of auto-dialer. Congress, the court reasoned, was presumably aware of the FCC’s prior interpretation of an ATDS (which covered dialers using stored lists of numbers); by not amending the definition of auto-dialer in 2015, Congress gave the FCC’s interpretation “its tacit approval.” Id. at 1052.

In a footnote, the court distinguished a U.S. Court of Appeals for the Third Circuit case that presumed, after ACA International, that an ATDS must use a random or sequential number generator. Id. n.8 (discussing Dominguez ex rel. Himself v. Yahoo, Inc., 894 F.3d 116 (3d Cir. 2018)).

Beyond Marks

The ACA International ruling and its aftermath raise more questions than answers on the definition of auto-dialer. Must a system have the present capacity to generate random or sequential phone numbers? Does reliance on a stored list of numbers trigger TCPA liability? Did ACA International vitiate all of the FCC’s prior orders relating to the definition of an ATDS, or just some?

Already, district courts are wrestling with these and other issues. See, e.g.Maes v. Charter Comm’n, No. 18-cv-124, 2018 WL 5619199 (W.D. Wis. Oct. 30, 2018). In addition, the FCC has sought new public comments on the definition of auto-dialer, and it extended the comment period deadline after the Ninth Circuit’s Marks decision. Trade associations and a variety of other groups have weighed in. Members of Congress have sent letters to FCC Chairman Ajit Pai urging the FCC to revisit the ATDS definition through new rulemaking.

About the only thing that is clear right now is the need for more clarity. Businesses, consumers, and their respective interest groups are bracing themselves for even more developments as litigants, the courts, Congress, and the FCC deliberate. Stay tuned.

Mark E. Rooney is the principal and founder of The Rooney Firm PLLC in Washington, D.C., and is a cochair of the Consumer Litigation Committee’s Subcommittee on TCPA and FDCPA Litigation.


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