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FCC narrows “autodialer” definition
On June 25, the FCC narrowed the Commission’s definition of an “autodialer,” providing that “if a calling platform is not capable of originating a call or sending a text without a person actively and affirmatively manually dialing each one, that platform is not an autodialer and calls or texts made using it are not subject to the TCPA’s restrictions on calls and texts to wireless phones.” The FCC reiterated that only sequential number generators or other systems that can store or produce numbers to be called or texted at random are the only technologies considered to be autodialers. The FCC further noted that whether a system can make a large number of calls in a short period of time does not factor into whether the system is considered an autodialer, and that message senders may avoid TCPA liability by obtaining prior express consent from recipients. The FCC issued the ruling in response to an alliance’s 2018 petition, which asked the FCC to clarify whether the definition of an autodialer applied to peer-to-peer messaging (P2P) platforms that, among other things, allow organizations to text a large number of individuals and require a person to manually send each text message one at a time. The FCC declined to rule on whether any particular P2P text platform is an autodialer due to the lack of sufficient factual basis.
The FCC issued a separate declaratory ruling the same day reiterating that the TCPA requires autodialer or robocall senders to obtain prior express consent before making any texts or robocalls, stressing that the “mere existence of a caller-consumer relationship does not satisfy the prior-express-consent requirement for calls to wireless numbers, nor does it create an exception to this requirement.” The ruling was issued in response to a health benefit company’s 2015 petition, which asked the FCC to exempt health plans and providers, as well as certain non-emergency, urgent health care-related calls, from the prior consent requirement as long as the company permitted consumers to opt out after the fact.
As previously covered by InfoBytes, several appellate courts have issued conflicting decisions with respect to the definition of an autodialer.
District court holds text system is not an autodialer under 7th Circuit definition
On June 15, the U.S. District Court for the Southern District of Indiana granted a motion for summary judgment in favor of a collection agency and another company (collectively, “defendants”) with respect to the plaintiff’s TCPA allegations, holding that the system used to send text messages to class members’ cell phones is not an automatic telephone dialing system (autodialer). According to the opinion, the plaintiff filed the class action alleging, among other things, that the defendants violated the TCPA by sending unsolicited text messages using an autodialer to cell phones after the recipients replied with “stop.” The parties submitted cross-motions for summary judgment, which were stayed pending the outcome of the U.S. Court of Appeals for the Seventh Circuit decision in Gadelhak v. AT&T Servs., Inc. As previously covered by InfoBytes, the 7th Circuit held in February that to be an autodialer under the TCPA, the system must both store and produce phone numbers “using a random or sequential number generator.” After reviewing the cross-motions in light of the 7th Circuit decision, the court concluded that the system used by the defendants is not an autodialer under the controlling definition because the defendants’ system sends text messages to cell phone numbers from stored customer lists. Notwithstanding the fact that neither party disputes that the text messages sent to the class members post-“stop” message were without their consent, the court granted summary judgment in favor of the defendants because the text messages were not sent using an autodialer.
9th Circuit upholds TCPA liability for reassigned number
On June 2, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s judgment in a TCPA action against a bank, concluding that consent from the person intended to call does not exempt the bank from liability under the TCPA. According to the opinion, the bank’s vendors made over 180 automated calls to a child’s cell phone in attempt to collect past-due payments from a customer who used to have the same cell phone number, which had since been reassigned to the child’s mother. The customer of the bank had given consent to be called, but the mother and child had not. After a three-day jury trial, the jury returned a verdict in favor of the plaintiff on the TCPA claim, concluding that the bank could not escape liability under the TCPA because the customer it intended to call had given consent, and awarding $500 in statutory damages for each of the 189 unwanted calls, for a total of $94,500.
On appeal, the 9th Circuit affirmed the district court’s judgment after the jury trial. The appellate court noted it was “agreeing with other circuits,” on liability when it concluded that the district court “properly instructed the jury that consent from the intended recipient of the call was not sufficient.” Moreover, the appellate court held that the district court properly instructed the jury on the definition of “automatic telephone dialing system,” based on the panel’s decision in Marks v. Crunch San Diego, LLC (covered by InfoBytes here). Lastly, the appellate court also issued an opinion affirming the district court’s award of attorneys’ fees to the plaintiff.
District court allows class autodialer claims to proceed against mortgage lender
On May 18, the U.S. District Court for the Eastern District of Michigan denied a request to dismiss a putative class action concerning alleged violations of the TCPA, ruling that the plaintiff plausibly alleged the mortgage lender (defendant) sent unsolicited texts through the use of an automatic telephone dialing system (autodialer). The plaintiff claimed, among other things, that (i) the texts came by way of SMS short codes, which are “reserved for automatically made text messages”; (ii) the messages were generic and non-personal; (iii) the messages followed a similar calling pattern; and (iv) the plaintiff continued to receive them after opting out. The defendant countered that the claims should be dismissed because the plaintiff’s argument is “devoid of plausible allegations” under the TCPA that it used an autodialer that has the capacity to produce telephone numbers using a random or sequential number generator. However, the court determined that, in the absence of direction from the U.S. Court of Appeals for the Sixth Circuit “as to the kind of supporting factual allegations that must be included to sufficiently allege the [autodialer] element of a TCPA case,” the court will follow other district courts that have allowed TCPA suits to continue if the plaintiff sufficiently alleges facts to plausibly support a finding that an autodialer was used.
District court says $267 million robocall verdict is not unconstitutionally excessive
On April 17, the U.S. District Court for the Northern District of California issued an order granting in part and denying in part several motions pertaining to a class action lawsuit, which accused a debt collection agency (defendant) of violating the TCPA, FDCPA, and the California Rosenthal Fair Debt Collection Practices Act by using repeated robocalls and pre-recorded voices messages to collect debt. As previously covered by InfoBytes, last September the court entered a $267 million final judgment against the defendant, consistent with a jury’s verdict that found the defendant liable for violating the TCPA by making more than 500,000 unsolicited robocalls using autodialers. Under the terms of the judgment each class member was awarded $500 per call. The defendant argued that the award was unconstitutionally excessive and violated due process, and requested that the court reduce the per violation amount. The court was unpersuaded and upheld the judgment, stating that the defendant failed to identify (and the court could not find) any “Ninth Circuit authority on how a district court should reduce damages that are found to be unconstitutionally excessive.” While acknowledging that the award was “significant,” the court stated that it also “evidences the fervor with which the United States Congress was attempting to regulate the use of autodialers for non-consensual calls” and that “the unilateral slashing of an award does not only ignore the plain words of the statute, the task is devoid of objectivity.” Among other actions, the court granted the defendant’s request to amend the final judgment to reflect that allegations concerning “willful and/or knowing violations of the TCPA” were dismissed with prejudice and that the defendant succeeded at summary judgment on the FDCPA and state law claims. However, the court denied the defendant’s request to release any surplus or residue amounts not distributed to a class member back to the company. The court also approved the class counsel’s motion for more than $89 million in attorneys’ fees and non-taxable costs of $277,416.28, and awarded the named plaintiff a $25,000 service award.
2nd Circuit joins 9th Circuit in broadening the definition of an autodialer under TCPA
On April 7, the U.S. Court of Appeals for the Second Circuit vacated a district court’s order granting summary judgment in favor of a defendant in a TCPA action. The decision results from a lawsuit filed by a plaintiff who claimed to have received more than 300 unsolicited text messages from the defendant through the use of an autodialer after the plaintiff texted a code to receive free admission to a party. The defendant countered that the programs used to send the text messages were not autodialers because they “required too much human intervention when dialing,” and therefore did not fall under the TCPA. The district court granted the defendant’s motion for summary judgment, agreeing that the defendant’s programs were not autodialers because a human being determined when the text messages are sent.
On appeal, the 2nd Circuit concluded that while human beings do play some role in the defendant’s systems, “[c]licking ‘send’ does not require enough human intervention to turn an automatic dialing system into an non-automatic one.” According to the appellate court, “[a]s the FCC additionally clarified in 2012, the statutory definition of an [autodialer] ‘covers any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists.’” (Emphasis in the original.) “The FCC’s interpretation of the statute is consistent with our own, for only an interpretation that permits an [autodialer] to store numbers—no matter how produced—will also allow for the [autodialer] to dial from non-random, non-sequential ‘calling lists.’ . . . What matters is that the system can store those numbers and make calls using them.”
The 2nd Circuit’s opinion is consistent with the 9th Circuit’s holding in Marks v. Crunch San Diego, LLC (covered by InfoBytes here). However, these two opinions conflict with holdings by the 3rd, 7th, and 11th Circuits, which have held that autodialers require the use of randomly or sequentially generated phone numbers, consistent with the D.C. Circuit’s holding that struck down the FCC’s definition of an autodialer in ACA International v. FCC (covered by a Buckley Special Alert).
11th Circuit reverses dismissal of “shotgun” FDCPA, FCRA, TCPA pleadings
On March 16, the U.S. Court of Appeals for the Eleventh Circuit partially reversed a district court’s dismissal of a lawsuit against several defendants for alleged violations of the FDCPA, the FCRA, and the TCPA, holding that the plaintiff’s third amended complaint was not filled with “shotgun pleadings.” The matter revolves around several statutory and common-law claims arising from the defendants’ allegedly-unlawful debt collection attempts, which were dismissed multiple times by the district court as “shotgun pleadings.” In her third amended complaint—which alleged 10 causes of action—the plaintiff contended, among other things, that the defendants failed to respond to letters she sent to dispute the alleged debt and failed to notify credit reporting agencies (CRA) of the dispute. The plaintiff also alleged that certain defendants called her cell phone multiple times using an automatic telephone dialing system. The district court entered final judgment in favor of all the defendants, minus the CRA defendant, stating, among other things, that the plaintiff continued to “‘lump the defendants together. . .and provide generic and general factual allegations as if they applied to all defendants.’”
On appeal, the 11th Circuit concluded that the district court erred in dismissing six of the 10 counts as shotgun pleadings. “While not at all times a model of clarity, [the third amended complaint] is reasonably concise, alleges concrete actions and omissions undertaken by specific defendants, and clarifies which defendants are responsible for those alleged acts or omissions,” the appellate court wrote. However, the appellate court agreed that the district court correctly dismissed two counts for failing to state a claim related to claims concerning one of the defendant’s alleged attempts to collect delinquent tax payments owed to the IRS. According to the appellate court, since “tax obligations do not arise from business dealings or other consumer transactions they are not ‘debts’ under the FDCPA.’”
7th Circuit: Dialing system that cannot generate random or sequential numbers is not an autodialer under the TCPA
On February 19, the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s ruling that a dialing system that lacks the capacity to generate random or sequential numbers does not meet the definition of an automatic telephone dialing system (autodialer) under the TCPA. According to the 7th Circuit, an autodialer must both store and produce phone numbers “using a random or sequential number generator.” The decision results from a lawsuit filed by a consumer alleging a company sent text messages without first receiving his prior consent as required by the TCPA. However, according to the 7th Circuit, the company’s system—the autodialer in this case—failed to meet the TCPA’s statutory definition of an autodialer because it “exclusively dials numbers stored in a customer database” and not numbers obtained from a number generator. As such, the company did not violate the TCPA when it sent unwanted text messages to the consumer, the appellate court wrote.
Though the appellate court admitted that the wording of the provision “is enough to make a grammarian throw down her pen” as there are at least four possible ways to read the definition of an autodialer in the TCPA, the court concluded that while its adopted interpretation—that “using a random or sequential number generator” describes how the numbers are “stored” or “produced”—is “admittedly imperfect,” it “lacks the more significant problems” of other interpretations and is thus the “best reading of a thorny statutory provision.”
The 7th Circuit’s opinion is consistent with similar holdings by the 11th and 3rd Circuits (covered by InfoBytes here and here), which have held that autodialers require the use of randomly or sequentially generated phone numbers, as well as the D.C. Circuit’s holding in ACA International v. FCC, which struck down the FCC’s definition of an autodialer (covered by a Buckley Special Alert here). However, these opinions conflict with the 9th Circuit’s holding in Marks v. Crunch San Diego, LLC, (covered by InfoBytes here), which broadened the definition of an autodialer to cover all devices with the capacity to automatically dial numbers that are stored in a list.
District court denies auto lender’s “de minimis” $4 million TCPA class action settlement
On February 14, the U.S. District Court for the Eastern District of Pennsylvania denied the approval of a proposed $4 million class action settlement in a TCPA case based on a “confluence of a number of negative factors,” including that the court believed the defendant—a subprime auto lender—would be able to withstand a significantly higher judgement to compensate consumers allegedly harmed by its use of an automatic telephone dialing system. The complaint alleged that the defendant allegedly placed automated and prerecorded phone calls to class members on their cellphones in violation of the TCPA. In 2018, the parties reached a preliminary settlement that would give each of the 67,255 class members who opted into the settlement roughly $35.
In denying the approval, the court cited three primary concerns with the proposed settlement: “first, the lack of information available to counsel to inform their view and advise the class of the strengths and weaknesses of the case given the early posture in which the parties reached agreement; second, the emphasis on [the defendant’s] inability to pay more than $4 million when no underlying financial information was provided to the class members, compounded by the [c]ourt’s belief, after in camera review of the financials, that this statement is inaccurate; and third, the [c]ourt’s skepticism that $4 million is a fair settlement in this case, given that it will result in a de minimis per claimant recovery of $35.30.” Arguing that “de minimis class action recoveries, such as TCPA recoveries, may not be worth the costs they impose on our judicial system,” the court also noted that the TCPA provides for a private right of action and statutory damages of $500 for each violation (or actual monetary loss—whichever is greater), and does not impose a cap on statutory damages in class actions. Moreover, the court argued that the $35.30 that each class member would receive would likely not even cover the cell phone bill for one class member for one month and is, among other things, “simply trivial in light of a possible recovery of $500.”
11th Circuit offers new autodialer definition under TCPA
On January 27, the U.S. Court of Appeals for the Eleventh Circuit issued a split opinion on the definition of an automatic telephone dialing system (autodialer) within the context of the TCPA. The TCPA defines an autodialer 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.” According to the 11th Circuit, “to be an auto-dialer, the equipment must (1) store telephone numbers using a random or sequential number generator and dial them or (2) produce such numbers using a random or sequential number generator and dial them.”
In the first case, a Florida plaintiff filed the putative class action complaint alleging a hotel chain used an autodialer to call her cell phone without her consent. (Previously covered by InfoBytes here.) The hotel moved for summary judgment, arguing that the system did not qualify as an autodialer under the TCPA because it required a hotel agent to click “Make Call” before the system dialed the number. The court agreed, concluding that the defining characteristic of an autodialer is “the capacity to dial numbers without human intervention,” which the court noted remains unchanged even in light of the D.C. Circuit decision in ACA International v. FCC (covered by a Buckley Special Alert here). In the second case, a plaintiff contended a loan servicer placed 35 calls to her cell phone about unpaid student loans. However, in this instance, the district court ruled that the company used an autodialer because the system did not require human intervention and had the capacity to automatically dial a stored list of numbers. Additionally, the court ruled that 13 of the 35 calls were willful violations of the TCPA.
On appeal, the appellate court affirmed the district court’s ruling in the first case, concluding that the hotel calling system, which required human intervention before a call was placed and “used randomly or sequentially generated numbers,” did not qualify as an autodialer under the TCPA. The appellate court, however, partially affirmed and partially reversed the district court’s ruling in the second case, holding that while 13 of the calls received by the plaintiff were placed using an artificial or prerecorded voice (a separate violation of the TCPA), the phone system used in this case did not qualify as an autodialer because it did not use random or sequentially generated numbers. One of the judges stated in a partial dissent, however, that she read the TCPA to cover equipment that only has the capacity to dial and not produce random numbers, similar to the phone system used by the loan servicer. The 11th Circuit’s opinion is consistent with the D.C. Circuit’s holding in ACA International, which struck down the FCC’s definition of an autodialer; however it conflicts with the 9th Circuit’s holding in Marks v. Crunch San Diego, LLC (InfoBytes coverage here), which broadened the definition of an autodialer to cover all devices with the capacity to automatically dial numbers that are stored in a list.