District Courts Rule on ATDS Post-ACA International

by Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP

Four recent rulings on what constitutes an automatic telephone dialing system (ATDS), after the U.S. Court of Appeals, D.C. Circuit struck down the Federal Communications Commission’s (FCC) interpretation, have produced mixed results, indicating the courts are still working through interpretation issues stemming from the formative ACA International decision.

Siding with the defendant—Maddox v. CBE Group, Inc.

The defendant asked the court to reconsider whether the defendant’s dialers constitute ATDSs under the TCPA, whether the defendant used an artificial or prerecorded voice during any of the calls made without plaintiffs’ prior express consent and whether the defendant reasonably relied on a third party’s prior express consent in calling the plaintiffs in light of the opinion.

Adopting a narrower read of what constitutes an ATDS, a Georgia federal court granted summary judgment in favor of a defendant with calling equipment that required human intervention to place calls.

In December 2016, an Internet service provider referred Bria Maddox’s account to CBE Group, Inc., for collection, providing CBE with her cellphone number. CBE then placed a total of 120 calls to Maddox’s cellphone between Dec. 22, 2016, and Feb. 24, 2017. On Feb. 28, 2017, Maddox sent CBE a letter of her intent to litigate, alleging violations of both the Telephone Consumer Protection Act (TCPA) and Fair Debt Collection Practices Act (FDCPA). She then filed suit.

CBE moved for summary judgment, arguing that it could not be liable under the TCPA because the calls were not made with an ATDS. All the calls CBE made to Maddox were done through its Manual Clicker Application (MCA), which requires human intervention—a manual “click”—to initiate a call.

All calls are initiated by CBE agents, via the MCA, and the system does not use any predictive or statistical algorithm to engage in predictive dialing, minimize the time CBE agents wait between calls or minimize the occurrence of a consumer answering a call when no CBE agent is available, the defendant explained, and the technology used by the company does not have the capacity to autodial or produce numbers to be called using a random or sequential number generator.

U.S. District Judge Steve C. Jones held that CBE’s system did not qualify as an ATDS within the meaning of Section 227(a)(1) of the statute.

“Looking to the language of section 227(a)(1), it seems the essential feature of an ATDS is that it uses ‘a random or sequential number generator,’” the court said. “Quite obviously, Defendant’s system did not generate Plaintiff’s 10-digit telephone number using a truly random or sequential number generator. Instead, Defendant’s system draws from a set list of actual phone numbers, which is how Defendant knew Plaintiff’s phone number was associated with her … debt.”

The court acknowledged that the FCC has “taken a rather different approach to interpreting section 227(a)(1),” reviewing the agency’s rulings on the issue as well as the D.C. Circuit decision in ACA International. There, the federal appellate panel struck down the FCC’s overly expansive definition of an ATDS found in its 2015 ruling.

“While ACA International was decided by the D.C. Circuit, the Court is persuaded that the decision is binding in this Circuit as well,” Judge Jones wrote. In light of that decision, he relied on the FCC’s 2003 interpretation of Section 227(a)(1), which focuses on whether a system can “dial numbers without human intervention.”

“Here, the undisputed fact is that CBE used a MCA, which requires human intervention,” the court said. Maddox argued that human intervention required CBE’s agents to manually dial each ten-digit telephone number to initiate a call, but the court said this position went too far.

“The FCC’s interpretation requires ‘human intervention,’ not that agents dial all ten digits of a phone number manually,” the court wrote. “Under Plaintiff’s sweeping interpretation, any phone with a speed-dial feature—i.e., nearly all phones—would qualify as an ATDS. This is the very kind of ‘unreasonably, and impermissibly, expansive’ interpretation that led the ACA International court to overturn the FCC’s 2015 Order.

“The focus is on whether the system can automatically dial a phone number, not whether the system makes it easier for a person to dial the number. Defendant’s system requires human intervention. Additionally, the system does not use any kind of predictive or statistical algorithm to engage in predictive dialing or minimize waiting times. For these reasons, it does not qualify as an ATDS, and Defendant is entitled to summary judgment on Plaintiff’s TCPA claims.”

To read the order in Maddox v. CBE Group, Inc., click here.

Siding with the plaintiff—McMillion v. Curtis

In another recent post-ACA International case, this time decided by Judge Yvonne Gonzalez Rogers in the Northern District of California, a defendant’s motion for reconsideration in light of the ACA International decision was denied.

ACA International

The court declined to do so, sticking with prior Ninth Circuit rulings. On the ATDS issue, “plaintiffs assert that the DAKCS/VIC dialer [used by Curtis] can dial eighty phone numbers per minute and the Global Connect dialer can dial approximately 60,000 phone numbers in a twelve-hour period.” Siding with the plaintiffs on that front, the court ruled that “[t]he D.C. Circuit’s decision in ACA International may influence a future ruling by the Ninth Circuit regarding the TCPA, but it does not itself constitute a change in the controlling law.

First, ACA International invalidated only the 2015 FCC Order—the court discusses but does not rule on the validity of the 2003 FCC Order or the 2008 FCC Order. See ACA International, 885 F.3d 687 (D.C. Cir. 2018) at 703 (finding that the FCC’s 2015 ruling, in describing the functions a device must perform to qualify as an autodialer, fails to satisfy the requirement of reasoned decision making and noting that it may be permissible for the FCC to adopt either interpretation).

Second, even if the D.C. Circuit had vacated the 2003 and 2008 FCC orders, ACA International has no bearing on pre-existing Ninth Circuit precedent. In 2009, the Ninth Circuit held that for a dialing system to be an ATDS, it “need not actually store, produce, or call randomly or sequentially generated telephone numbers, it need only have the capacity to do it.” Meyer v. Portfolio Recovery Assocs., 707 F.3d 1036, 1043 (9th Cir. 2012).

The defendant also asked the district court to stay the case pending the outcome of the Marks v Crunch San Diego appeal in the Ninth Circuit. The court declined to do so.

To read the order in McMillion v. Curtis, click here.

Siding with the plaintiff—Sessions v. Barclays Bank Delaware

In a putative TCPA class action filed in the Northern District of Georgia, U.S. District Judge Leigh Martin May denied a defendant’s Rule 12(c) motion for judgment on the pleadings based in part on the ACA International case. There, the plaintiff alleged, among other things, that the defendant “use[d] contact center software which connects to its telephony hardware that together constitute a dialing system with the capacity to store telephone numbers, generate telephone numbers from a stored database to be called either at random or in a sequence, and to dial such numbers” and that the “system has the capacity to dial thousands of numbers in a short period of time from its stored database of numbers without human intervention.” The judge had stayed the case in September 2017, waiting to see how the D.C. Circuit ruled in ACA International. Once ACA International was decided but prior to discovery, the defendant moved for a judgment on the pleadings, which Judge May denied in June 2018.

In making her decision, Judge May surveyed some of the other post-ACA International district court opinions. She noted that some courts—like the District of Arizona in Herrick—have found that “all of the FCC’s [prior] rulings with regard to definitions of an [automatic telephone dialing system, or] ATDS were vacated and thus courts can rely only on the statutory language alone.” Yet other courts—including the Northern District of Georgia in Maddox discussed above and the Southern District of Florida in Reyes—have held that other FCC orders defining some functions of an ATDS (for example, the FCC’s 2003 Order, which defined a “predictive dialer” as “equipment that dials numbers and, when certain computer software is attached, also assists telemarketers in predicting when a sales agent will be available to take calls”) are still in effect.

Rather than adopting the reasoning in the Maddox case, Judge May adopted the District of Arizona’s reasoning in Herrick and held that all of “the FCC’s prior orders with regard to interpretations of ‘capacity’ and descriptions of the statutorily enumerated functions a device must perform to be an ATDS were vacated in ACA International.” Turning to the defendant’s motion, the judge found that the plaintiff’s allegations were sufficient to allege that the defendant had used an ATDS within the meaning of the TCPA. In particular and relying primarily on pre-ACA International opinions, Judge May held that “Plaintiff repeatedly allege[d] that Defendant called her cell phone using an ATDS” and that “[a] number of courts have found that alone is enough.” She also disagreed with the defendant’s interpretation of the TCPA statutory requirement that “using a random or sequential number generator” means that the ATDS equipment must have “the ability to ‘generate and then dial random or sequential numbers.” Thus, because the exact system used by the defendant was unknown at that stage of the litigation, Judge May accepted the plaintiff’s allegations as true as required, denied the defendant’s motion and lifted the stay on discovery.

To read Sessions v. Barclays Bank Delaware click here.

Siding with the plaintiff—Ammons v. Ally Financial, Inc.

Chief Judge Waverly D. Crenshaw from the Middle District of Tennessee relied on ACA International to grant a plaintiff’s motion for summary judgment, ruling that the defendant’s phone system was an automatic telephone dialing system (ATDS). There, the plaintiff and her daughter purchased a car, during which the plaintiff had provided her cellphone number. In addition to whether the plaintiff had provided and later revoked her “prior express consent” within the meaning of the TCPA, the parties also disagreed as to whether the defendant’s calling system was an ATDS.

After walking through the FCC’s prior interpretations of an ATDS (i.e., the 2003, 2008 and 2015 FCC orders) and pondering whether any of those orders still had any import, Judge Crenshaw held that “[i]n the wake of ACA International, this Court joins the growing number of other courts [e.g., Maddox discussed above] that continue to rely on the interpretation of § 227(a)(1) [of the TCPA] set forth in prior FCC rulings” and expressly rejected the District of Arizona’s holding in Herrick, which ruled that ACA International vacated all prior FCC interpretations of an ATDS like the Northern District of Georgia did in the Sessions case discussed above. Consequently, Judge Crenshaw applied pre-ACA International case law and held that “the primary consideration [in defining a calling system as an ATDS] is whether human intervention is required at the point in time at which [Ammons’] number [was] dialed.”

Turning to the case at bar, while the defendant argued that human intervention was involved in the calls at issue after connection, Judge Crenshaw held that “[a]s a matter of common sense, having operators standing by, to use an old phrase, to take a connected call is not ‘human intervention’ in the dialer’s initiation of calls.” Thus, because the defendant had stipulated “that agents [we]re available to intervene in calls [only] after they have been initiated by the [defendant’s] predictive dialer,” the dialer was an ATDS within the meaning of Section 227(a)(1) of the TCPA.

To read Ammons v. Ally Financial, Inc. click here.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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