Another District Court Rejects FCC Prior Orders on ATDS in Light of ACA International

One of the central issues before the D.C. Circuit in ACA International v. FCC was whether the FCC’s vague and expansive definition of an ATDS would withstand judicial scrutiny. It did not, and as we explained at the time the decision was issued, the D.C. Circuit set aside not only the portion of the FCC’s July 2015 Declaratory Ruling and Order pertaining to ATDS, but also the FCC’s prior rulings dating back to 2003. Following ACA International, and while the FCC considers how to amend its now-invalidated prior rulings, the plaintiffs’ bar has attempted to narrow the reach of ACA International, arguing that the D.C. Circuit set aside only the 2015 Declaratory Ruling and Order, and that the validity of the FCC’s prior rulings was not under review. Just as the D.C. Circuit rejected this argument, district courts across the country continue to reject this argument, most recently a federal district court in the Central District of California.

In Washington v. Six Continents Hotels, Inc., the plaintiff alleged that the defendant violated the TCPA by sending him numerous unsolicited text messages through the use of a predictive dialer. The case was stayed during the pendency of ACA International, but following the D.C. Circuit’s decision, the court lifted the stay and the defendant moved to dismiss the complaint arguing that the plaintiff failed to allege facts showing that the defendant used an ATDS to contact the plaintiff. Specifically, the defendant argued that the D.C. Circuit’s decision in ACA International “set aside the broad definition of an ATDS used by the FCC in rulings since 2003, necessitating a return to the plain language of the statute,” and that the complaint should be dismissed because the plaintiff alleged “no facts that show that [the defendant’s] equipment satisifie[d] the plain text definition of an ATDS.” In opposition, the plaintiff argued that the D.C. Circuit’s decision only set aside the FCC’s treatment of ATDS in its 2015 Declaratory Ruling and Order and that previous rulings by the FCC were still in effect and were binding on the court.

At the outset, the court acknowledged that the D.C. Circuit’s decision in ACA International “has binding precedential effect nationwide.” As to the parties’ dispute on the reach of ACA International, the court found that the D.C. Circuit’s decision did indeed set aside the FCC’s treatment of an ATDS dating back to 2003. The court reasoned that the FCC’s previous rulings “‘left significant uncertainty about the precise functions an autodialer must have the capacity to perform,’” so “[e]liminating the 2015 ruling would do nothing to remedy the lack of clarity the D.C. Circuit found at issue.” In reaching this conclusion, the court joins a growing number of other courts that have found that the D.C. Circuit’s decision in ACA International extends beyond simply invalidating portions of the FCC’s 2015 Declaratory Ruling and Order. See Gonzalez v. Ocwen Loan Servicing, LLC, No. 18-340, 2018 WL 4217065 (M.D. Fla. Sept. 5, 2018); Keyes v. Ocwen Loan Servicing, LLC, No. 17-11492, 2018 WL 3914707 (E.D. Mich. Aug. 16, 2018) (currently on appeal); Pinkus v. Sirius XM Radio, Inc., No. 16-10858, 2018 WL 3586186 (N.D. Ill. July 26, 2018); Lord v. Kisling, Nestico & Redick, LLC, No. 17-1739, 2018 WL 3391941 (N.D. Ohio July 12, 2018); Session v. Barclays Bank Delaware, 317 F. Supp. 3d 1208 (N.D. Ga. 2018); Herrick v. LLC, 312 F. Supp. 3d 792 (D. Az. 2018) (currently on appeal).

Ultimately, the court determined that the plaintiff had alleged sufficient facts to withstand a motion to dismiss. The plaintiff alleged that the defendant acquired his number and stored it in a database connected to its dialing system, which it used to send him text messages automatically and without human intervention. He further alleged that the defendant’s dialing system had the present capacity to generate both random and sequential numbers, which can be stored in its system. As for the messages, the plaintiff alleged that they were repetitive, impersonal, and template based. Based on these allegations, the court determined that the plaintiff “alleged the specific factual aspects of Defendant’s system that qualified it as an ATDS, as well as providing factual examples of the functionality of this system that support the inference that such a system is an ATDS.”

Despite the court’s ruling that the plaintiff alleged sufficient facts to establish a TCPA claim, the court’s analysis of the import of the D.C. Circuit’s decision highlights the fact that courts are increasingly (with some exceptions) adopting the view that the D.C. Circuit’s decision in ACA International invalidated more than just the FCC’s 2015 Order. While a number of courts are interpreting the statute more narrowly in terms of the type of equipment that satisfies the statutory definition of an ATDS, until the FCC amends its prior rulings, this question is subject to inconsistent and/or conflicting interpretations.

Justin O. Kay

About the Author: Justin O. Kay

Justin Kay advises and defends business clients regarding their interactions and communications with consumers. He appears regularly on behalf of clients before federal and state courts, federal agencies and independent self-regulatory bodies, such as the National Advertising Division of the Better Business Bureau. Justin’s practice focuses on defending clients in the growing number of complex class actions arising under federal and state consumer protection and privacy laws such as the federal Telephone Consumer Protection Act, the Illinois Biometric Information Privacy Act and the California Consumer Privacy Act. He is a deputy leader of the litigation practice group.

John S. Yi

About the Author: John S. Yi

John Yi represents clients in civil and criminal litigations in federal court, as well as investigations and enforcement actions by the Federal Trade Commission (FTC), the U.S. Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and other federal and state regulatory bodies. For clients in health care and other sectors, he handles a full array of antitrust issues. John has helped secure merger clearances from federal regulators and defended clients’ interests in suits alleging a variety of anticompetitive conduct. He has assisted companies with internal investigations and compliance strategies. John also has experience handling all aspects of civil litigation, including discovery, settlement, dispositive motions, trial advocacy and appellate work. John also defends a number of class action cases with a wide variety of claims, including issues arising under federal and state antitrust laws, the Telephone Consumer Protection Act (TCPA) and the Fair Credit Reporting Act (FCRA).

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