Kansas TCPA Ruling May Determine ATDS Cases in 10th Circuit

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Recently, the District Court of Kansas analyzed the definition of an automatic telephone dialing system (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”) in Hampton v. Barclays Bank Del. The Court concluded the TCPA only applies to equipment that randomly or sequentially generates telephone numbers to be called and does not apply to dialers that call from a list of numbers from a customer database.

Hampton’s complaint alleges Marketplace Loan Grantor Trust, Series 2016-LD1 (“Marketplace”) used an ATDS to call his cell phone without consent regarding his personal loan. Marketplace hired First Associates Loan Servicing, LLC (“First Associates”) to service the debt. First Associates uses a cloud-based calling system that does not use a random number generator or sequential number generator, nor does it have the capacity to do so. Rather, First Associates’ system uses phone numbers generated from a customer database. Moreover, the system does not use recorded messages or artificial voices, but rather live representatives make the calls.

Marketplace argued that since First Associates calling system did not use a random or sequential number generator, nor does it have the capacity to store numbers, the system was not an ATDS. Hampton argued that the calling system merely needed to have the capability for automatic dialing but had no proof First Associates’ system had such. Moreover, Hampton cited Marks v. San Diego Crunch from the Ninth Circuit, stating a device that can automatically dial numbers stored in a list, rather than numbers randomly or sequentially generated, is considered an ATDS. The Court concluded the TCPA does not apply to dialers that call from a list of numbers from a customer database for several reasons.

First, the Court agreed with the Seventh and Eleventh Circuits’ textual analysis of the TCPA’s definition of an ATDS. The TCPA defines an ATDS 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.” These courts decided the phrase “using a random or sequential number generator” modifies both “store” and “produce.” Producing numbers by using a random or sequential number generator excludes devices that solely dial numbers stored in a customer database. The Court contrasted Marks which didn’t reach a conclusion on the statutory language due to its ambiguity.

Next, the Court again agreed with the Seventh and Eleventh Circuits as to why the analysis in the Ninth Circuit regarding TCPA exemptions is not persuasive. The Court explains that it doesn’t make sense for the statute to exempt from liability calls to consenting recipients or calls about debts owed to the federal government if the statute was meant to cover exclusively randomly or sequentially generated numbers. The Court states the TCPA makes callers liable if they make calls using an ATDS or an artificial or prerecorded voice. So, using an artificial or prerecorded voice explains the exemptions.

The Court also notes the legislative history supports the interpretation that Congress wanted the statute to eradicate machines that dialed randomly or sequentially generated numbers. Marks never discusses the statute’s legislative history in this context.

Lastly, the Court stated the argument that Congress declined to amend the statute in 2015 after the FCC’s Order implied tacit approval of the Order is not convincing. The Court specified that congressional failure to act does not necessarily reflect approval of the status quo. At the time Congress amended the TCPA in 2015, the FCC’s interpretation of the law wasn’t settled.

There is a long history regarding the ever-changing definition of what constitutes an ATDS under the TCPA. This ruling from a Kansas court is consistent with the Third, Seventh, and Eleventh Circuits where a device that exclusively dials numbers in a database does not qualify as an ATDS for the purposes of the TCPA. In contrast, the Ninth and Second Circuits ruled that a system which stores phone numbers and dials them automatically presents a genuine issue of material fact whether that system is an ATDS.

This is yet another case decided before the U.S. Supreme Court hears its case in Facebook v. Duguid which will determine, whether an ATDS includes any device that can store and dial stored numbers.

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