Following ACA Int’l, Third Circuit Holds that Yahoo!’s Email-to-Text System is not an ATDS

The Third Circuit recently affirmed the Eastern District of Pennsylvania’s finding that Yahoo!’s email-to-text alert system does not qualify as an automatic telephone dialing system (“ATDS”). (Our previous discussions of this case are here, here, and here.) Following the District of Columbia Circuit’s decision in ACA Int’l v. FCC, 885 F.3d 687 (D.C. Cir. 2018), the Third Circuit held that the system at issue must be analyzed using a “present capacity” standard and that the plaintiff had failed to present any evidence to show that, under this standard, the system could function as an autodialer.

Last year, the district court reaffirmed its entry of summary judgment in favor of Yahoo! after the Third Circuit remanded with instructions to provide a fuller explanation as to whether the system at issue constituted an ATDS in light of the FCC’s 2015 Declaratory Ruling. The district court rejected the plaintiff’s argument that Yahoo!’s email-to-text alert system—which was subscribed to by the previous owner of plaintiff’s cell phone number, and which sent the plaintiff’s phone number a text message each time the prior user received an email—qualified as an autodialer. See Dominguez v. Yahoo!, Inc., No. 13-1887, 2017 U.S. Dist. LEXIS 11346 (E.D. Pa. Jan. 27, 2017). Specifically, the district court held that “(1) the [FCC’s] 2015 Declaratory Ruling should not apply in this case under principles of retroactivity, (2) under the applicable ‘present capacity’ standard, the Email SMS Service did not qualify as an autodialer, (3) in the alternative, even if the 2015 Declaratory Ruling were applicable in this case, [the plaintiff] had not presented any evidence that [the service] had the latent or potential capacity to generate random numbers because [his] expert reports did not satisfy the standard for admissibility under Daubert, and (4) even if [his] expert reports were admissible, [the plaintiff] had failed to provide evidence that the Email SMS Service was capable of both generating random and sequential numbers and dialing those numbers.” Dominguez v. Yahoo!, Inc., No. 17-1243, 2018 U.S. App. LEXIS 17436, at * 4 (3d Cir. June 26, 2018). The plaintiff once again appealed.

In affirming the grant of summary judgment to Yahoo!, the Third Circuit observed that “[t]he decision in ACA International has narrowed the scope of this appeal.” Id. at *5. In particular, because that decision found that the term “capacity” should not be interpreted to include “any latent or potential capacity” when analyzing whether a system constitutes an ATDS, the plaintiff could “no longer rely on his argument that the Email SMS Service had the latent or potential capacity to function as an autodialer.” Id. Rather, “[t]he only remaining question” was whether the plaintiff “provided evidence to show that the Email SMS Service had the present capacity to function as an autodialier.” Id. at *5-6 (emphasis added).

In analyzing this question, the court focused on the four expert reports offered by the plaintiff, and found that two of those reports did not discuss present capacity, but instead focused on the moot “latent or potential capacity” issue. Additionally, those reports, along with a third, proposed changes that could have been made to Yahoo!’s system so that it could “generate wireless numbers randomly or sequentially.” Id. at *7. The court held that these “reports [were] founded upon the exact type of hypothesizing that is foreclosed by ACA International,” and, as a result, they were properly excluded. Id.

As for the fourth report, although it purported to address “present capacity,” the court found that it lacked “any explanation of how the Email SMS System actually did or could generate random telephone numbers to dial.” Id. at *8. Thus, because it did “not shed light on the key factual question actually at issue in this case—whether the Email SMS System functioned as an autodialer by randomly or sequentially generating telephone numbers, and dialing those numbers—” the court held that the fourth report lacked “fit or relevance and was therefore properly excluded” as well. Id. at *9.

As a result of these findings, the Third Circuit concluded that the plaintiff could not “point to any evidence that creates a genuine dispute of fact as to whether the Email SMS Service had the present capacity to function as an autodialer by generating random or sequential telephone numbers and dialing those numbers.” Id. at *9. Therefore, “[t]he TCPA’s prohibition on autodialers is . . . not the proper means of redress” for any harm the plaintiff allegedly suffered. Id. at *10.

This conclusion and the Third Circuit’s underlying analysis highlight the weighty impact of ACA International and exemplify the clear and straightforward results that are possible now that the haze of “latent or potential capacity” has been removed from ATDS determinations.