Ninth Circuit Expands the Definition of an ATDS

The very first clause in the TCPA is the definition of an Automatic Telephone Dialing System, which the statute defines 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.” 47 USC 227(a)(1). Notwithstanding this limited definition, the Ninth Circuit today ruled in Marks v. Crunch San Diego, LLC that an ATDS means more than what the statute says. It did so by reordering the aforementioned definition’s words and replacing a conjunctive “and” with a disjunctive “or,” and holding that the term ATDS actually “means equipment which has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person).” (emphasis added). By separating and reordering these clauses to de-couple the “random or sequential number generator” requirement from the storage requirement, the Ninth Circuit appears to have re-introduced (at least in the Ninth Circuit, and at least for now) the same over breadth and uncertainty that the D.C. Circuit appeared to rectify with its decision in ACA International.

To arrive at this surprising conclusion, the Ninth Circuit began with four pieces of history.

The Ninth Circuit started with the TCPA’s legislative history, invoking the oft-quoted lines from Senator Fritz Hollings that “[c]omputerized calls are the scourge of modern civilization. They wake us up in the morning; they interrupt our dinner at night; they force the sick and elderly out of bed; they hound us until we want to rip the telephone right out of the wall.” (The Ninth Circuit did not address the fact that the overwhelming majority of TCPA suits today do not address calls to landline telephones, but rather calls to cellular phones, which can be silenced or placed in “do not disturb” mode while still identifying the caller and/or allowing calls only from certain contacts, functions not readily available in 1991.)

After addressing the legislative history, the Ninth Circuit turned to the TCPA’s regulatory history, noting that in a series of rulings from 2003 to 2015, “the FCC determined that predictive dialers and other new technology qualified as an ATDS, even if they did not generally generate or store random or sequential numbers.” (The Ninth Circuit did not address, however, as we discussed here, that the FCC is actively considering how to interpret the term in light of the ACA International decision, having issued a Public Notice in May for which the comment period closed in June.)

The Ninth Circuit then addressed the TCPA’s appellate history, noting that the D.C. Circuit in ACA International invalidated the FCC’s determinations from 2003-2015.

Finally, the Ninth Circuit addressed the litigation history of the case before it, noting that (i) the defendant had prevailed on summary judgment below based on the district court’s finding that (consistent with the language of the statute) an ATDS “necessarily includ[es] a random or sequential number generator;” and (ii), that the Ninth Circuit had ordered supplemental briefing in this matter regarding the impact of ACA International.

With the history addressed, the Ninth Circuit moved into the analysis, and the analysis opened favorably: “Because the D.C. Circuit vacated the FCC’s interpretation of what sort of device qualified as an ATDS, only the statutory definition of ATDS as set forth by Congress in 1991 remains.” As we recently blogged about here, this is consistent with the growing (but not exclusive) holding reached by many district courts throughout the country that the ACA International decision addressed more than just the FCC’s 2015 Declaratory Ruling.

However, the Ninth Circuit’s decision quickly departed from those prior district court rulings (and even from the Ninth Circuit’s prior holding in Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (9th Cir. 2009), in which the Ninth Circuit stated that the TCPA is “clear and unambiguous”), and held that “the statutory text is ambiguous on its face.” Looking therefore to the “context and structure of the statutory scheme,” as well as to Congress’s 2015 amendments to the TCPA, the Ninth Circuit determined that an ATDS “means equipment which has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person).” The Ninth Circuit acknowledged that the Third Circuit had reached a different conclusion in Dominguez v. Yahoo, Inc. (a ruling we discussed here), but dismissed the Third Circuit’s decision as “unpersuasive.”

In so holding, the Ninth Circuit also rejected the argument that “a device cannot qualify as an ATDS unless it is fully automatic, meaning that it must operate without any human intervention whatsoever.” Specifically, the Ninth Circuit held that so long as the numbers are dialed automatically, it is irrelevant that there is some human intervention (such as turning on the machine or entering the numbers into the system).

Given the potential significance of this decision (including the fact that in the Ninth Circuit, every smart phone is arguably an ATDS, an outcome the D.C. Circuit specifically identified in ACA International as “an unreasonably expansive interpretation of the statute”), we expect that the defendant (and amici) will seek further review. The ruling may also accelerate the FCC’s own efforts to address this and other TCPA-related issues now pending before the Commission.

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.

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