Manatt’s Continuing Coverage of Significant Post-ACA International Developments - May 2019

Manatt, Phelps & Phillips, LLP

One year after the ACA International (ACA) decision from the D.C. Circuit changed the face of litigation in the Telephone Consumer Protection Act world by striking down the Federal Communication Commission’s 2015 automatic telephone dialing system guidance, courts remain split on what constitutes an ATDS. This past month alone, there has been a flurry of ACA-related activity in the courts. To add fuel to the fire, the FCC has not issued any new guidance on the topic, thus leaving the TCPA litigation world in a state of confusion. Notably, at present we have had appellate-level opinions from only the Second, Third and Ninth circuits. However, the First Circuit got its first post-ACA ATDS decision coming from Massachusetts, so perhaps a decision from that appellate court may not be far behind. A little over half of the district court cases we have reported on have found that there was an ATDS when applying ACA, about a third have held that ACA invalidated all prior FCC orders defining an ATDS, and about one-fifth have found that human intervention was a deciding factor as opposed to just the 2015 order discussed in ACA. There still have been no district- or appellate-level cases defining an ATDS since ACA from the Fourth and, most notably, Fifth circuits, and while opinions from district courts in the Seventh Circuit experienced a slight uptick this past month, there are still surprisingly few opinions from courts within that circuit, considering the number of TCPA cases filed there. The district courts in the Second and Ninth circuits have led the way in issuing ATDS-related decisions, along with the district courts in the Eleventh Circuit where, for whatever reason, there still has been no appellate opinion post-ACA.

As part of our continuing coverage in this area, Manatt’s TCPA Team monitors and reports on significant developments at the FCC, and on noteworthy (i.e., dispositive or class certification-related) federal district- and appellate-level decisions interpreting, applying or otherwise evaluating ACA in ways that may impact our readers. To read all our previous articles on post-ACA developments, please click here.

Case Law by Circuit

Update on Marks: As previously reported, given that the parties in Marks v. Crunch San Diego, LLC, settled before the Supreme Court could take up the case, the Ninth Circuit’s decision remains binding on 64.3 million people (or approximately 20% of the population of the United States). At least one case from the District of Nevada (discussed below) found the existence of an ATDS as a matter of law based on the Marks decision, whereas district courts in other circuits, such as the Second, Seventh and Eleventh, continue to juggle the conflicting rulings of the Ninth and D.C. circuits. For their part, district courts within the Seventh Circuit appear to have taken a firm stance on the issue of the use of predictive dialers alone being insufficient to state a claim for a TCPA violation. Given the considerable deference generally afforded to plaintiffs at the pleading stage and specifically in the context of pleading a TCPA violation, most cases discussed below where a challenge was made to a pleading were unsuccessful for the defendant, even where the plaintiff’s allegations appeared to be light. Additionally, when ruling on a motion to dismiss, district courts have almost uniformly declined to require plaintiffs to plead, with any specificity, the type of telephone system the defendant allegedly used to initiate the subject contact. However, Manatt will continue to monitor the progression of these cases for evidence-based determinations by district and appellate courts on the existence of an ATDS.

Folkerts v. Seterus, Inc., No. 17 C 4171, 2019 WL 1227790 (N.D. Ill. Mar. 15, 2019). In the Northern District of Illinois, Judge Lee, granting summary judgment in favor of the defendant on the plaintiffs’ TCPA claims, held that the defendant’s Avaya Proactive Contact System along with SynTelate software did not constitute an ATDS because individuals were required to manually punch in numbers produced by the system. The parties’ dispute arose from the defendant’s inadvertent attempts to collect on a mortgage loan after the plaintiffs had already discharged the subject property in a bankruptcy proceeding. Judge Lee found that even if the defendant’s SynTelate system could automatically dial numbers, as the plaintiffs contended, it did not have the present capacity to store and produce numbers to be called using a random or sequential generator, as defined by the TCPA. Relying on ACA, the court noted that the mere fact that the defendant’s telephone systems had the potential capacity to function as an ATDS was not sufficient to create liability.

To read the full decision in Folkerts v. Seterus, Inc., click here.

Metten v. Town Sports International, LLC, No. 18-CV-4226 (ALC), 2019 WL 1299939 (S.D.N.Y. Mar. 21, 2019). In Metten, Judge Carter of the Southern District of New York ruled that the plaintiff’s complaint pled sufficient allegations to make it plausible that the defendants used an ATDS to send her a text message. In a relevant part, the plaintiff alleged that the defendants sent her an unsolicited and generic text message from a “short code” number soliciting enrollment in the New York Sports Club, at which the plaintiff was not, and never had been, a member. The “short code” number was registered to a company that held itself out as having the ability to store and dial telephone numbers en masse without intervention by its clients. While the plaintiff did not specifically allege that the defendants used an ATDS to send her the text message, the court noted that it would nonetheless be impractical to require the plaintiff to know the specific technology used by the defendants at the pleading stage of litigation. At the pleading stage, the plaintiff needed to make only a showing that it is sufficiently plausible that the defendants used an ATDS. Here, the plaintiff satisfied that low burden.

To read the full decision in Metten v. Town Sports International, LLC, click here.

Charles Singer v. Las Vegas Athletic Clubs, No. 217CV01115GMNVCF, 2019 WL 1338384 (D. Nev. Mar. 25, 2019). In Singer, Chief Judge Navarro of the District of Nevada ruled that the Nuxiba Technologies system used by defendant Las Vegas Athletic Clubs to contact plaintiff Singer concerning his defaulted membership fees constituted an ATDS in light of the Ninth Circuit’s binding decision in Marks v. Crunch San Diego, LLC. Because testimony revealed that the Nuxiba system had the present capacity to store numbers to be called and to dial such numbers, the court found that Marks controlled and the Nuxiba system constituted an ATDS as a matter of law. Accordingly, the court granted summary judgment in favor of the plaintiff on that issue. Notably, the parties briefed their cross-motions for summary judgment on the ATDS issue prior to the Ninth Circuit’s Marks decision.

To read the full decision in Charles Singer v. Las Vegas Athletic Clubs, click here.

James Karandreas v. Loancare, LLC, No. 618CV1411ORL40TBS, 2019 WL 1383296 (M.D. Fla. Mar. 27, 2019). Judge Byron of the Middle District of Florida denied defendant Loancare, LLC’s motion to dismiss the plaintiff’s complaint because the plaintiff’s allegation, on information and belief, that the defendant intentionally, knowingly and/or willfully harassed him by placing calls to him using an ATDS were sufficient to state a claim for violation of the TCPA. In response to Loancare’s argument that the predictive dialer it used did not constitute an ATDS after ACA, the court, relying on Gonzalez v. Ocwen Loan Servicing, LLC, found that it is possible for a predictive dialer to have the capacity to generate random or sequential telephone numbers and dial them, and that a predictive dialer with those capacities could constitute an ATDS pursuant to the TCPA.

To read the full decision in James Karandreas v. Loancare, LLC, click here.

Jiminez v. Credit One Bank, N.A., No. 17 CV 2844-LTS-JLC, 2019 WL 1409425 (S.D.N.Y. Mar. 28, 2019). Judge Swain of the Southern District of New York denied the defendant’s motion for summary judgment and granted the plaintiff’s motion for summary judgment, finding that the LiveVox system using Quick Connect to place calls, constituted a predictive dialing system within the meanings of the FCC’s rulings. Here, the defendant’s contracted third-party collection agent attempted to call plaintiff Jiminez using the LiveVox system to collect on her unpaid credit card balance after Jiminez defaulted on her account. The court discussed the ACA ruling and the district courts’ subsequent conflicting decisions concerning ACA’s effect on other FCC rulings on autodialer functions. The court declined to follow courts finding that the D.C. Circuit’s ruling invalidated other FCC rulings. Instead, the court stated that it was not persuaded that ACA invalidated all prior rulings on the ATDS definition. In granting summary judgment in favor of the plaintiff, the court found that the LiveVox system constituted a predictive dialing system within the FCC’s definition and an ATDS under the TCPA.

To read the full decision in Jiminez v. Credit One Bank, N.A., click here.

Ali Gadelhak v. AT&T Services, Inc., No. 17-CV-01559, 2019 WL 1429346 (N.D. Ill. Mar. 29, 2019). In yet another ruling out of the Northern District of Illinois, Judge Chang granted summary judgment in favor of defendant AT&T, finding that AT&T’s pre-programmed text messages sent to customers of its corporate affiliates containing a customer service survey and an advertisement for AT&T smartphones were not sent by an ATDS. The court found that the pertinent question was whether AT&T’s predictive dialing system lacked the capacity to generate numbers either randomly or sequentially and only dialed numbers from a predetermined list. The numbers stored by the system, the court found, must have been generated using a random or sequential number generator. In the case of AT&T’s system, the system could do neither and thus did not constitute an ATDS.

To read the full decision in Ali Gadelhak v. AT&T Services, Inc., click here.

Madeleine Yates v. Checkers Drive-In Restaurants, Inc. & Vibes Media, LLC, No. 17-CV-9219, 2019 WL 1437906 (N.D. Ill. Apr. 1, 2019). In Yates, Judge Coleman acknowledged the conflicting rulings of the D.C. Circuit and the Ninth Circuit concerning whether a device must generate random or sequential numbers to be dialed or whether a device may use a stored list of telephone numbers to constitute an ATDS within the TCPA’s definition. The court further acknowledged that courts within the Northern District of Illinois have generally rejected TCPA claims based on allegations concerning the use of a predictive dialer. However, plaintiff Yates alleged that the system used by the defendants to send her promotional text messages for a fast food restaurant contained features resembling both a predictive dialer and a system with the capacity to store, produce and dial random and sequential numbers. While Judge Coleman relied on a prior Northern District of Illinois case, Pinkus v. Sirius XM Radio, Inc., to find the allegations concerning a predictive dialer to be insufficient to prove a TCPA violation, the balance of the plaintiff’s allegations concerning the system’s capacity to store, produce and dial random and sequential numbers were sufficient, at least at the pleading stage, to state a claim that the defendant used an ATDS as defined by the TCPA.

To read the full decision in Madeleine Yates v. Checkers Drive-In Restaurants, Inc. & Vibes Media, LLC, click here.

James E. Shelton v. National Gas & Electric, LLC, No. 17-4063, 2019 WL 1506378 (E.D. Pa. Apr. 5, 2019). Judge Surrick of the Eastern District of Pennsylvania denied defendant National Gas & Electric, LLC’s motion to dismiss plaintiff Shelton’s TCPA claim based (in part) on his finding that the plaintiff’s allegations were sufficient to raise a plausible inference that the defendant used a predictive dialer with the present capacity to generate and dial phone numbers. The court noted the Third Circuit’s adoption in Dominguez v. Yahoo, Inc., of the D.C. Circuit’s interpretation of the FCC’s 2015 Order. However, given that the plaintiff did not identify the specific telephone system allegedly used by the defendant, and given the lack of any evidence of what telephone system was actually used by the defendant, the court followed the District of New Jersey’s decision in Wilson v. Quest Diagnostics Inc. and found that the plaintiff’s allegations were sufficient to state a claim for violation of the TCPA.

To read the full decision in James E. Shelton v. National Gas & Electric, LLC, click here.

Gonzales v. Hosopo Corporation, No. 18-10072-FDS, 2019 WL 1533295 (D. Ma. Apr. 9, 2019). Judge Saylor of the District of Massachusetts denied the defendants’ motion to dismiss, finding that the plaintiffs’ allegations made it sufficiently plausible that the device at issue in the case qualified as an ATDS. The court noted that the central question in the case—whether a device qualifies as an ATDS only if it can generate random or sequential numbers to be dialed—was not answered by the ACA ruling and acknowledged that district courts have split on this question since the D.C. Circuit’s decision. Given that the First Circuit has not yet taken up this question, the court discussed various district courts’ rulings, as well as the Ninth Circuit’s Marks ruling. The court ultimately determined that the interpretation in the Marks decision—that a device may qualify as an ATDS if it is incapable of generating random or sequential numbers to be dialed and if it is incapable of storing such numbers—is correct. The plaintiffs alleged that they heard sounds indicative of an ATDS, that the conversation appeared scripted and that the defendants used a “ViciDial predictive dialer.” The court found these allegations sufficient at this stage of litigation to overcome a motion to dismiss.

To read the full decision in Gonzales v. Hosopo Corporation, click here.

Scalercio-Isenberg v. Citizens Financial Group., Inc., No. 18-cv-9226 (JGK), 2019 WL 1585121 (S.D.N.Y. Apr. 11, 2019). Judge Koeltl of the Southern District of New York granted the defendant’s motion to dismiss a pro se plaintiff’s TCPA claims without prejudice, finding that the plaintiff’s ATDS allegations were insufficient to state a claim. The court found that the plaintiff’s conclusory allegations that the plaintiff received “automated” “robo calls” from the defendant did not plausibly allege that the defendant made calls using an ATDS as defined by the TCPA. The court stated that the term “ATDS” is highly technical as evidenced by the Second Circuit’s interpretation of the term in King v. Time Warner Cable Inc. The court did not expand on the definition of an ATDS, concluding simply that the plaintiff’s conclusory allegations in the complaint were insufficient to state a claim.

To read the full decision in Scalercio-Isenberg v. Citizens Financial Group., Inc., click here.

A Numerical Overview of Post-ACA International Cases

At the time of publication of this edition of TCPA Connect, the overall landscape of post-ACA case law breaks down as follows:

Case Law by FCC Order Validity

  • 11 cases say all FCC orders invalidated
  • 31 cases say only some/part of FCC orders invalidated
  • 1 case from the 1st Circuit district courts
  • 16 cases from the 2nd Circuit district courts and 1 from the 2nd Circuit
  • 7 cases from the 3rd Circuit district courts and 1 from the 3rd Circuit
  • 0 cases from the 4th Circuit district courts
  • 0 cases from the 5th Circuit district courts
  • 5 cases from the 6th Circuit district courts
  • 7 cases from the 7th Circuit district courts
  • 2 cases from the 8th Circuit district courts
  • 11 cases from the 9th Circuit district courts and 1 from the 9th Circuit
  • 2 cases from the 10th Circuit district courts
  • 10 cases from the 11th Circuit district courts

Case Law by Appellate Level

  • 3 appellate-level cases (2nd, 3rd and 9th circuits)

Case Law by Autodialer Decision

  • 26 cases where autodialer found
  • 22 cases where autodialer not found
  • 11 cases where human intervention was a deciding factor in determining that a system was not an ATDS

To read all our previous articles on post-ACA International developments, please see here.

 

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