Category - "Automatic Telephone Dialing System"

District of Connecticut Rejects ATDS Allegations in Complaint Against Subway

The District of Connecticut recently dismissed a TCPA action against the Subway Franchisee Advertising Fund Trust (“Subway”) because plaintiff failed to allege that Subway used an ATDS to send text messages to her cell phone.  Soliman v. Subway Franchisee Advertising Fund Trust Ltd., No. 3:19-cv-592, 2022 WL 2802347 (D. Conn. July 18, 2022).  The court held that “[t]he TCPA is clear:  a device is not an automatic telephone dialing system merely because it generates random or sequential index numbers that are used in turn to select which numbers to call from a stored list.”  Id. at *3 (emphasis in original).  The ruling serves as yet another example of a dialing technology that does not meet the definition of an ATDS following the U.S. Supreme Court’s decision in Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 1171 (2021).

In Soliman, plaintiff alleged that she received a text message from Subway offering her a free bag of potato chips.  Id. at *1.  Plaintiff further alleged that she replied “STOP” to unsubscribe from the text messages but claimed that Subway texted her again a few days later.  Id. at *1.  Plaintiff subsequently filed a two-count class action lawsuit against Subway for negligently and intentionally violating the TCPA.  Id.  Subway filed a Rule 12(b)(6) motion to dismiss.  Id.

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Proposed Federal TCPA Legislation Offers a New and Broad ATDS Definition

On July 12, 2022, Representatives Raja Krishnamoorthi, D-Ill., and Katie Porter, D-Calif. introduced H.R. 8334 in the U.S. House of Representatives, which was referred to the Committee on Energy and Commerce. The bill would amend the Telephone Consumer Protection Act (the “TCPA”), 47 U.S.C. § 227, to, among other things, “prohibit the use of automated telephone equipment to send unsolicited text messages.”

The TCPA presently defines “automatic telephone dialing system” (or “ATDS”) as equipment that has the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator . . . to dial such numbers.”  The law generally prohibits any person from making nonconsensual telemarketing or other types of telephone calls to a cell phone number using an ATDS.

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ATDS Status Turns on Capability of Dialing Equipment, Not Actual Use, Third Circuit Holds—But Liability Turns on Actual Use, Not Mere Capability

Last week, the U.S. Court of Appeals for the Third Circuit concluded that the TCPA’s definition of “automatic telephone dialing system” (or “ATDS”) includes all dialing equipment with the present ability to generate random or sequential phone numbers and dial those numbers, regardless of whether the equipment’s owner actually uses those “ATDS functionalities.” But, importantly, a caller must actually use such functionalities in order to violate the statute’s prohibition on making autodialed phone calls, the Court further held.

In other words, a dialing system’s status as an ATDS turns on the system’s present capabilities, not how it is used. But whether a defendant is liable for using an ATDS turns on how the system is used, not just what it can do. Thus, the Court read the ATDS definition broadly but the liability provision narrowly, in a ruling that will give some comfort to companies that use their dialing equipment to contact customers or prospects from set lists, rather than to randomly generate phone numbers to be called indiscriminately.

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Eighth Circuit Finds That System That Sends Texts to Stored Numbers is Not an ATDS, Rejects Plaintiffs’ Interpretation of Footnote 7 in Facebook v. Duguid

Last week, the Eighth Circuit affirmed a finding that a dialing system does not qualify as an ATDS if it randomly selects numbers from a stored list. See Beal v. Truman Road Dev. (8th Cir. Mar. 24, 2022). The decision explains that dialing equipment is not an ATDS if it does not produce those numbers (either randomly or sequentially) in the first place, and is notable for flatly rejecting a misreading of Facebook v. Duguid that plaintiffs have been peddling for nearly a year now.

The court’s analysis turns on the mechanics of the dialing system and plain language of the statute. The defendants were drinking establishments that use the “Txt Live” platform to send promotional text messages to numbers that were manually entered by the defendant’s employees. Specifically, the platform allowed employees to filter down to a target list of recipients based on demographic factors, select the number of potential customers to receive the message, draft or select the content of the message, and then send messages to designated recipients. To do so, it “shuffles the target contacts using a numerically based randomizer. If the number of people who meet the filtered criteria exceed the number of people to whom the message will be sent, Txt Live selects the recipients at the top of the randomized list first.” Id. at 3.

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Personal Cell Phones May Qualify as “Residential Telephones” Subject to DNC Rules, but Calls Made to a Pre-produced List Are Not ATDS Calls, Texas Northern District Holds

Last week, the U.S. District Court for the Northern District of Texas held that mobile phones may qualify as “residential telephones” when used (as the Complaint alleged) primarily for “personal, family, and household use,” and thus be subject to the TCPA’s do-not-call rules (47 C.F.R. §§ 64.1200(c) & (d)).  This issue has sewn disharmony among federal district courts and may draw attention from higher courts.  But the court also joined the growing number of courts following Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021), that have agreed that calls specifically directed to persons on a pre-produced list (like plaintiff) are not calls made using a “random or sequential number generator” and thus are not subject to the TCPA’s prior express consent requirement for calls made using an ATDS.

In Hunsinger v. Alpha Cash Buyers, LLC, 3:21-cv-1598-D, 2022 WL 562761 (N.D. Tex. Feb. 24, 2022), the plaintiff alleged that, over the course of last year, he received eight unsolicited phone calls and six SMS text messages on his cell phone from a number he didn’t recognize.  Hunsinger picked up one of the calls and spoke with a representative for the defendant, to whom Hunsinger gave his email address.  Hunsinger subsequently received several calls and texts from the defendant referring to Hunsinger’s conversation with the representative and asking if he was still interested in a transaction.  These calls and texts were sent using an ATDS, Hunsinger alleged.  At all relevant times, Hunsinger’s number was on the national DNC list.  Id. at *1.

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Northern District of California Confirms That Assigning “Random or Sequential IDs” to Previously Generated Numbers Is Not Autodialing

In the wake of the Supreme Court’s April 2021 Facebook v. Duguid decision, plaintiffs prosecuting class actions across the nation have been searching hard to mine other potential ambiguities in the TCPA to support allegations about the use of an ATDS. One area of focus has been on whether that term – which is defined as equipment that can “store or produce telephone numbers to be called, using a random or sequential number generator” – applies to equipment that assigns random or sequential identifiers to stored numbers that were not randomly or sequentially generated.

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District Courts Find ATDS Allegations Implausible Following Facebook

Courts in the Southern District of California and District of Arizona recently added to the line of decisions addressing ATDS pleading requirements in the wake of the Supreme Court’s landmark ruling in Facebook v. Duguid.  Declining to infer that targeted text messages warranted an inference that the sender used an ATDS, the courts in Wilson v. rater8, LLC, et al., No. 20-cv-1515, 2021 WL 4865930 (S.D. Cal. Oct. 18, 2021), and DeClements v. Americana Holdings LLC, No. CV-20-00166-PHX-DLR, 2021 WL 5138279 (D. Ariz. Nov. 4, 2021), dismissed plaintiffs’ complaints for failure to sufficiently allege the use of an ATDS.

In Wilson v. rater8, the plaintiff filed a class action alleging that defendants violated the TCPA by sending him, after a medical examination, a text asking him to provide feedback regarding his examining physician.  2021 WL 4865930.  The plaintiff alleged that the text was sent using an ATDS.  The court granted defendants’ motion to stay pending the outcome of the Supreme Court’s decision in Facebook.  Following that ruling, defendants moved to dismiss, arguing that plaintiff did not allege sufficient facts to support the claim that an ATDS was used.

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Sixth Circuit rejects Creasy line of cases, holding TCPA claims arising between November 2015 and July 2020 are viable

The Sixth Circuit recently became the first federal court of appeals to weigh in on whether plaintiffs can bring TCPA claims for conduct occurring between November 2015 and July 2020—the respective dates on which the unconstitutional government debt exception was passed and the Supreme Court’s decision in Barr v. AAPC declared it unconstitutional and severed it from the statute. Some district courts, such as the District of Louisiana in Creasy v. Charter Communications, Inc., 2020 WL 5761117 (E.D. La. Sept. 28, 2020), have concluded plaintiffs cannot—reasoning that the TCPA was void while an unconstitutional provision was part of it. As covered in our prior posts, district courts have come down on both sides of the issue—leading to significant confusion.

Enter the Sixth Circuit’s decision in Lindenbaum v. Realgy, LLC, No. 20-4252, 2021 WL 4097320 (6th Cir. Sept. 9, 2021), which considered the Chief Judge of the Northern District of Ohio’s decision that dismissed a putative class action arising from prerecorded calls.

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FCC TCPA Actions Mid-Year Review

After adopting orders reflecting the majority of implementation deadlines set by the TRACED Act and the Supreme Court’s highly anticipated TCPA decision interpreting the statutory definition of automatic telephone dialing system in the first half of 2021, all eyes are on what the FCC has planned. Midsummer seems like a good time for a year-to-date review to track where the FCC has been and where it is headed next in its TCPA oversight and enforcement roles.

STIR/SHAKEN Call Authentication Framework

Last week, the FCC adopted its January 2021 proposal and issued a Report and Order establishing what the FCC describes as “a fair and consistent process” that a voice service provider can use to challenge a decision by the STIR/SHAKEN framework Governance Authority to strip that provider of the “digital token” that authenticates calls on that provider’s Internet-Protocol (IP) networks.

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Does Unused “Capacity” Make a Dialer an ATDS? District Court Says “No” in Ruling on Pleading Requirements After Facebook

Three months after the Supreme Court’s landmark Facebook ruling, a growing number of trial courts have grappled with interpreting and applying the High Court’s directive.  One of the more interesting decisions came out of the Eastern District of Michigan recently.  In Barry v. Ally Fin., Inc., No. 20-cv-12378, 2021 WL 2936636, at *1-7 (E.D. Mich. July 13, 2021), the district court dismissed a putative TCPA class action on the grounds that the plaintiff failed to allege use of an ATDS.  More significantly, the district court interpreted Facebook to hold that to be an ATDS, the dialing system must actually use a random or sequential number generator to call the plaintiff, and not merely have the capacity to do so.

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