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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).
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.
On August 19, the U.S. District Court for the Western District of Michigan held that a Pennsylvania-based student loan servicing agency violated the TCPA by calling the plaintiffs’ cell phones over 350 times using an automatic telephone dialing system (autodailer) after consent was revoked. According to the opinion, after revoking consent to receive calls via an autodialer, two plaintiffs asserted that the servicer called their cell phones collectively over 350 times in violation of the TCPA and moved for summary judgment seeking treble damages for each violation. In response, the loan servicer argued that the system used to make the calls does not meet the statutory definition of an autodialer under the TCPA and disputed the appropriateness of treble damages.
The court, in disagreeing with the loan servicer, concluded that the system used by the loan servicer to make the calls qualified as an autodialer. The court applied the logic of the U.S. Court of Appeals for the 9th Circuit in Marks v. Crunch San Diego, LLC (covered by InfoBytes here), stating that it was not bound by the FCC’s interpretations of an autodialer, based on the D.C. Circuit’s ruling in ACA International v. FCC, and therefore, “‘only the statutory definition of [autodialer] as set forth by Congress in 1991 remains.’” The court noted that there was “no question” that the system used by the loan servicer “stores telephone numbers to be called and automatically dials those numbers,” which qualifies the system as an autodialer. However, the court determined that the loan servicer did not violate the statute “willfully or knowingly,” noting that at the time of the calls it was not clear from the FCC whether the system being used was an autodialer. As a result, the court awarded statutory damages, but not the treble damages sought by the plaintiffs.
On June 13, the U.S. Court of Appeals for the 9th Circuit overturned the dismissal of a TCPA putative class action against a social media company, concluding the plaintiff adequately alleged the company sent text messages using an automated telephone dialing system (autodialer) in violation of the TCPA and holding that the “debt-collection exception” excluding calls “made solely to collect a debt owed to or guaranteed by the United States” from TCPA coverage is an unconstitutional restriction on speech. The consumer alleged that he that he had received a text message indicating that his account was accessed from an unrecognized device, although he allegedly was not a user of the social media site and never consented to the alerts.
On appeal, the company challenged the adequacy of the TCPA allegations and, alternatively, argued that the TCPA violates the First Amendment. The 9th Circuit concluded the plaintiff plausibly alleged the company’s text message system fell within the definition of autodialer under the TCPA— using the definition from its September 2018 decision in Marks v. Crunch San Diego, LLC. The appellate court rejected the company’s argument that an “expansive reading” of Marks would encapsulate any smartphone within the definition of autodailer and that the definition should not apply to “purely ‘responsive messages’” such as the text messages in question. The appellate court also agreed with the company— citing to the 4th Circuit’s recent decision in AAPC v. FCC, covered by InfoBytes here— that an exclusion under the TCPA that allows debt collectors to use an autodialer to contact individuals on their cell phones when collecting debts owed to or guaranteed by the federal government violates the First Amendment’s Free Speech Clause. However, the appellate court held that the debt collection exception is severable from the TCPA, and, therefore, declined to strike down the law it its entirety as the company requested.
On June 12, the U.S. District Court for the Northern District of Illinois denied an auto financing company’s renewed motion for summary judgment and request for reconsideration, concluding that the company’s calling system falls within the definition of automatic telephone dialing system (autodialer) under the TCPA.
According to the opinion, two separate class actions were filed alleging that the company violated the TCPA when making calls to consumers regarding outstanding auto loans by using an autodailer. In April 2016, the company filed a motion for summary judgment, arguing, among other things, that the calling system it uses does not constitute an autodialer under the TCPA, and moved to stay the proceedings until the D.C. Circuit issued its ruling in a related case, ACA International v. FCC. The court denied the motions but stated that it would “revisit any issues affected by [the ACA International] decision as needed.” In March 2018, the D.C. Circuit issued its ruling in ACA International, concluding that the FCC’s 2015 interpretation of an autodialer was “unreasonably expansive.” (Covered by a Buckley Special Alert here.)
The company then filed the renewed motion for summary judgment and request for reconsideration of the earlier decision. The court denied the motion, concluding that the company’s calling system was an autodialer under the TCPA as a matter of law, because the system automatically dialed numbers from a set customer list. The court applied the logic of the 9th Circuit in Marks v. Crunch San Diego, LLC (covered by InfoBytes here), stating that it was not bound by the FCC’s interpretations of an autodialer based on ACA International, and “[a]s such, ‘only the statutory definition of [autodialer] as set forth by Congress in 1991 remains.’” After reviewing the legislative history of the TCPA, the court determined that “[g]iven Congress’s particular contempt for automated calls and concern for the protection of consumer privacy,” the autodialer definition “includes autodialed calls from a pre-existing list of recipients,” rejecting the company’s argument that an autodialer must have the capacity to generate telephone numbers, not just pull from a preexisting list. Additionally, the court concluded that the system “need not be completely free of all human intervention” to fall under the definition of autodialer.
On March 29, the U.S. District Court for the Northern District of Illinois granted a telecommunication company’s summary judgment motion in a putative TCPA class action involving text messages. The plaintiff asserted that the company sent him text messages asking survey questions, even though he did not consent and was registered on the Do Not Call list. The company argued that it did not use an automated dialing system (autodialer) to send the text messages to the plaintiff. The court agreed. Citing to the D.C. Circuit’s decision in ACA International v. FCC and analyzing the definition of an autodialer under the TCPA, the court concluded that the system used by the company to send the text messages was not an autodialer because it could not “generate telephone numbers randomly or sequentially.” The court also rejected the consumer’s argument that the system had “the capacity” to generate numbers randomly by selecting numbers to dial from a compiled list of accounts, noting that the TCPA “does not support a reading where ‘using a random or sequential number generator’ refers to the order numbers from a list are dialed.”
District Court allows TCPA action to proceed, citing 9th Circuit autodialer definition as binding law
On January 17, the U.S. District Court for the District of Arizona denied a cable company’s motion to stay a TCPA action, disagreeing with the company’s arguments that the court should wait until the FCC releases new guidance on what constitutes an automatic telephone dialing system (autodialer) before reviewing the case. A consumer filed a proposed class action against the company, arguing that the company violated the TCPA by autodialing wrong or reassigned telephone numbers without express consent. The company moved to stay the case, citing the FCC’s May 2018 notice (covered by InfoBytes here), which sought comments on the interpretation of the TCPA following the D.C. Circuit’s decision in ACA International v. FCC (setting aside the FCC’s 2015 interpretation of an autodialer as “unreasonably expansive”). The company argued that the FCC would “soon rule on what constitutes an [autodialer], a ‘called party,’ in terms of reassigned number liability, and a possible good faith defense pursuant to the TCPA,” all of which would affect the company’s liability in the proposed class action. The court rejected these arguments, citing as binding law Marks v. Crunch San Diego, LLC, a September 2018 decision from the U.S. Court of Appeals for the 9th Circuit that broadly defined what constitutes an autodialer under the statute (covered by InfoBytes here), and therefore, determining there was nothing to inhibit the court from proceeding with the case. As for the FCC’s possible future guidance on the subject, the court concluded, “there seems little chance that any guidance from the FCC, at some unknown, speculative, future date, would affect this case.”
On November 29, the U.S. District Court for the District of New Jersey partially denied a company’s motion to dismiss proposed class action allegations that it violated the TCPA when it used an automatic telephone dialing system (ATDS) to send unsolicited text messages to customers’ cell phones that resulted in additional message and data charges. According to the opinion, the company sent three text messages to the plaintiff who responded to two of them. The first message gave the plaintiff the option to send “STOP” to opt out or “HELP” to receive assistance. Because the plaintiff texted “HELP” in response, the court found that the plaintiff consented to receiving the company’s second message; the court found that the third follow-up message was permissible because it was a single “confirmatory message” sent after the plaintiff texted “STOP” after receiving the second follow-up message. However, the court determined that the plaintiff satisfied the burden of showing at this stage in the proceedings that the first text message was sent from a company with whom he had no prior relationship and had not provided consent. “When an individual sends a message inviting a responsive text, there is no TCPA violation,” the judge ruled. “The TCPA prohibits a party from using an ATDS ‘to initiate any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party,’ unless the call falls within one of the statute’s enumerated exemptions.”
The court further denied the company’s motion to stay pending the FCC’s interpretation of what qualifies as an ATDS in light of the decision reached by the D.C. Circuit in ACA International v. FCC, stating, among other things, that the company “has not established the FCC proceedings will simplify or streamline the issues in this matter” and that the plaintiff is entitled to discovery concerning the company’s communication devices.
On November 13, the U.S. District Court for the District of Minnesota held that a bank’s predictive dialing systems do not violate the Telephone Consumer Protection Act (TCPA), granting summary judgment for the bank. According to the opinion, a customer of a national bank changed his phone number and his previous number was reassigned to the plaintiff in the case. The customer did not inform the bank he had changed his phone number, and between September 2015 and December 2015, the bank called the plaintiff’s cell phone 140 times. The plaintiff subsequently informed the bank he was not a customer and the bank ceased calling the cell phone number. In January 2016, the plaintiff filed a complaint alleging the company violated the TCPA by placing auto-dialed calls to his cell phone. The court stayed the action pending the result of the D.C. Circuit case ACA International v. FCC (covered by a Buckley Sandler Special Alert), which narrowed the FCC’s 2015 interpretation of “autodialer” under the TCPA.
In reviewing cross-motions for summary judgment, the court disagreed with the plaintiff that the company’s predictive dialing systems qualified as an autodailer under the TCPA. Citing to ACA International, the court noted that predictive dialers are not always autodialers under the Act, the equipment must have the capacity to randomly or sequentially generate numbers to dial, and the plaintiff failed to provide sufficient evidence to prove the systems has this capability. Moreover, the court rejected the plaintiff’s argument that it should follow the 9th Circuit, which recently broadened the definition of autodialer under the TCPA (covered by InfoBytes here), concluding that other courts’ narrow interpretations were more persuasive (InfoBytes coverage available here).
On October 30, the U.S. District Court for the Western District of Wisconsin denied a company’s motion to dismiss allegations that it violated the TCPA when it used a predictive dialer to try to collect a debt from the plaintiff. According to the opinion, the plaintiff alleged the company called him repeatedly without permission in an attempt to collect a debt using a predictive dialer. The company moved to dismiss because the plaintiff did not allege that the company used an autodialer with the ability to dial random or sequential phone numbers, which the company argued was required by the TCPA. The court found that a predictive dialer is an autodialer under the TCPA even if it does not generate random or sequential numbers. This conclusion was based on a 2003 FCC ruling, which stated that predictive dialers are autodialers “even if the device does not dial random or sequentially generated numbers.” The court further noted that the decision reached by the D.C. Circuit in ACA International v. FCC—which set aside the FCC’s 2015 interpretation of an autodialer as unreasonably expansive—did not invalidate the FCC’s 2003 order. (See previous Buckley Sandler Special Alert on ACA International here.) Based on this analysis, the court concluded that the plaintiff had established the three elements necessary to allege a TCPA violation.
- Hank Asbill to discuss "The federal fraud sentencing guidelines: It's time to stop the madness" at a New York Criminal Bar Association webinar
- Daniel P Stipano to moderate "Digital identity: The next gen of CIP" at the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference