As we previously reported, the D.C. Circuit issued its long-awaited decision in the ACA International case earlier this year, which was quickly followed by a Federal Communications Commission (FCC) public notice (Notice) seeking comments so as to define an automatic telephone dialing system (ATDS), now that the FCC’s expansive ATDS definition from 2015 (the 2015 FCC Order) has been invalidated. Given the unquestionable impact, Manatt’s TCPA compliance and class action defense group continues to monitor developments in the TCPA/ATDS landscape since ACA International was decided in March 2018. Accordingly, this and future editions of TCPA Connect will contain a brief summary of significant available decisions (i.e., those in the dispositive motion context) addressing whether a calling system is an ATDS, as well as any noteworthy petitions to or filings with the FCC on that issue.

As of this edition, there have been over 20 decisions citing ACA International, each with varying degrees of treatment and analysis. However, only a handful of those have addressed whether the calling system at issue would be deemed an ATDS in accordance with the ACA International decision in any meaningful way, and while they all turn on the issue of “human intervention,” no clear trend has developed based on the opinions thus far. Brief summaries of those opinions follow:

AUTODIALER FOUND

• Swaney v. Regions Bank, No. 2:13-CV-00544-JHE, 2018 WL 2316452 (N.D. Ala. May 22, 2018): The plaintiff alleged that she received unauthorized texts from the defendant (her bank) on her cellphone. Adopting a magistrate’s report and recommendation to grant summary judgment to the plaintiff over the defendant’s objections, the district judge noted that (1) while the D.C. Circuit had invalidated certain portions of the 2015 FCC Order, the panel did not invalidate “the portion of the [2015] Order reaffirming the FCC’s 2003 determination [i.e., the 2003 FCC Order] that, ‘while some predictive dialers cannot be programmed to generate random or sequential phone numbers, they still satisfy the statutory definition of an ATDS’”; and (2) per the 2003 FCC Order, “[t]o determine whether a dialer is a predictive dialing system, and therefore an ATDS, ‘the primary consideration … is whether human intervention is required at the point in time at which the number is dialed.’” (Emphasis added.) Thus, because the plaintiff at bar had “presented sufficient evidence to demonstrate that the system at issue has the capacity to dial numbers (i.e., send text messages) without human intervention,” the district judge ruled that the system was an ATDS within the meaning of the TCPA. The district court opinion does not discuss how or why “capacity” evidence presented was “sufficient” but the magistrate’s report suggests that the system at issue was largely if not completely automated, given the nature of the text messages (e.g., automatic low-balance, zero-balance and overdraft fee alerts).
• Reyes v. BCA Fin. Servs., Inc., No. 16-24077-CIV, 2018 WL 2220417 (S.D. Fla. May 14, 2018): In this case, the parties agreed that the defendant (a debt collector that allegedly made collection calls to the plaintiff) used a “predictive” dialing system along with an “interactive voice response”—but the facts also suggested that the dialing system was “incapable of generating random or sequential phone numbers (and instead dials from a fixed set of numbers supplied by separate debt-collection software)” and, consequently, the parties disputed whether the system was an ATDS. Replying primarily on ACA International and one post-ACA International case (Marshall v. CBE Group, discussed below) for guidance, the district court granted summary judgment in favor of the plaintiff on the ATDS issue, holding that “the [] predictive dialer [at issue], as [defendant] use[d] it, is an ATDS under the TCPA.” (Emphasis in original.) The court supported its ruling by noting that, among other things, (1) the parties did not dispute that the dialing system at issue was a predictive dialer or that the dialer automatically dialed phone numbers without human intervention, and (2) the defendant “presented no facts or evidence that it used a manual-clicker application or point-and-click function or similar human-intermediary utility before placing a call using [its] predictive dialer” and thus its system did not have the “human element” like the one at issue in Marshall.

NO AUTODIALER FOUND

• Herrick v. GoDaddy.com LLC, No. CV-16-00254-PHX-DJH, 2018 WL 2229131 (D. Ariz. May 14, 2018): The plaintiff sued claiming he received unwanted text messages from the defendant, a web-based services and product company. Siding with the defendant, the district judge found the D.C. Circuit’s “statement on the proper ‘capacity’ inquiry [to be] both instructive and in line with [prior] Ninth Circuit precedent”—specifically, the statement in the ACA International opinion suggesting that courts should “focus ‘less on labels such as ‘present’ and ‘potential’ and more on considerations such as how much is required to enable the device to function as an autodialer.’” (Emphasis added). Along those lines, the district judge ruled that (1) if “the Court f[ound] the undisputed facts support GoDaddy’s contention that [its] Platform lacked the ability to operate as an autodialer at the time the text message was sent, the Court w[ould] also investigate whether a dispute of material fact exists as to ‘how much’ would be required to enable such capacity”; (2) “[i]f ATDS capacity could be enabled merely upon touching a button,’ such fact w[ould] preclude summary judgment” in this case; and (3) “[h]owever, if more [wa]s needed [to give the system that capacity], the [defendant’s] Platform w[ould] not be considered an autodialer for purposes of the statute.” (Emphasis added.) The court also held that (1) “[b]roadening the definition of an ATDS to include any equipment that merely stores or produces telephone numbers in a database” as the plaintiff had suggested “would improperly render the limiting phrase ‘using a random or sequential number generator’ [in the TCPA] superfluous”; (2) the “FCC has repeatedly confirmed that the defining characteristic of an autodialer is the ability to ‘dial numbers without human intervention’”; and (3) “[w]hat constitutes the amount of ‘human intervention’ required to take a device out of the category of an autodialer is a mixed question of fact and law.” Then, applying various pre-ACA International Ninth Circuit and other precedent, the judge ultimately ruled that the platform at issue was not an ATDS because (1) the “[n]umbers that were called could only be inputted into the [] Platform by a preprogrammed file or list provided by the user [whereas] the Platform could not randomly or sequentially generate these numbers by itself”; (2) “[a]lthough it may be theoretically plausible that the [defendant’s] Platform could be reprogrammed to have this capacity, it is undisputed that to enable such capability, a user would have to do much more than simply press a button”; and (3) “the alleged human intervention [was] not limited to GoDaddy’s collection and transmission of numbers” and instead it “also had to then log into the system, create a message, schedule a time to send it, and perhaps most importantly, enter a code to authorize its ultimate transmission.”
• Marshall v. CBE Grp., Inc., No. 216CV02406GMNNJK, 2018 WL 1567852 (D. Nev. Mar. 30, 2018): The defendant allegedly used a manual-clicker application in conjunction with a predictive dialer (LiveVox) to make 189 outbound calls to the plaintiff’s cellphone. Denying the plaintiff’s motion for summary judgment, the district court rejected the plaintiff’s argument that the FCC’s previous orders defined predictive dialers as ATDSs as a matter of law, reasoning that “the D.C. Circuit explicitly rejected this ‘expansive’ interpretation of the TCPA [in ACA International], particularly as that definition pertained to systems that may not, in fact, have the capacity to dial randomly or sequentially.” The court also rejected the plaintiff’s argument “that notwithstanding the ACA Int’l ruling, the 2015 FCC Order, as well as the 2003 FCC Order, remain[ed] binding [on the court]” and reasoned that, even if the plaintiff was right, those orders “emphasized the significance of the ‘human intervention’ element to the ATDS analysis.” Ultimately, the court found “that the overwhelming weight of authority … hold[s] that ‘point-and-click’ dialing systems, paired with a cloud-based pass-through service [like those at issue], do not constitute an ATDS as a matter of law in light of the clicker agent’s human intervention.”

RECENT FCC PETITIONS

On May 3, 2018, the U.S. Chamber of Commerce, U.S. Chamber Institute for Legal Reform and 16 other entities comprising various trade, banking and financial services organizations filed a petition with the FCC seeking a declaratory ruling (Petition) that would ostensibly give guidance on the correct definition of an ATDS in light of ACA International, which struck down the 2015 FCC Order’s prior expansive ATDS definition. In particular, “Petitioners ask that the Commission (1) confirm that to be an ATDS, equipment must use a random or sequential number generator to store or produce numbers and dial those numbers without human intervention, and (2) find that only calls made using actual ATDS capabilities are subject to the TCPA’s restrictions.” Even more specifically, on the first point, the petitioners want the FCC to “clarify that if human intervention is required in generating a list of numbers to call or in making a call, then the equipment in use is not automatic and therefore not an ATDS.” On the second point, the petitioners want the FCC to interpret the phrase “make any call … using [an ATDS]” as used in the TCPA “to mean that a device’s ATDS capabilities must actually be used [as opposed to being theoretically able] to place a call for TCPA’s restrictions to attach.” In support, the petitioners argue that the FCC’s guidance is needed, among other reasons and in pertinent part, because (1) the FCC’s “implementation of the [TCPA] and numerous court decisions over the years have fostered a whirlwind of litigation not against abusive callers and scammers, but against legitimate businesses attempting to lawfully communicate with their customers”; (2) prior “[i]nterpretations by the courts and the FCC have strayed far from the statute’s text, Congressional intent, and common sense”; (3) the FCC’s prior, now-invalid definition of the “capacity” of an ATDS from the 2015 FCC Order “included not only devices that can generate random or sequential numbers but also those that cannot,” such as “devices that, though they do not currently auto dial, could be modified to do so in the future”; (4) the “D.C. Circuit’s decision [in ACA International] is an opportunity to rationalize the [current] dysfunctional TCPA landscape” and therefore “[t]he FCC should expeditiously resolve legal uncertainty and bring common sense back to the statute by adopting a construction of what constitutes an ATDS that conforms to the statutory language and congressional intent”; (5) “[a] device must [itself] be able to generate numbers in either random order or sequential order to satisfy the definition [or o]therwise, the device cannot do anything ‘using a random or sequential number generator’” as the TCPA requires; (6) the “ability to store or produce telephone numbers to be called, alone, is insufficient; the clause ‘using a random or sequential number generator’ modifies this phrase, requiring that the phone numbers stored or produced be generated using a random or sequential number generator” and the “the device must be able to dial those numbers”; (7) the TCPA “uses the present tense to limit the use of equipment that ‘has the capacity’ to perform the ATDS function and makes no reference to potential or theoretical capabilities” and, therefore, the FCC “should also make clear that both functions must be actually—not theoretically—present and active in a device at the time the call is made”; and (8) the FCC “should hold that devices that require alteration to add auto dialing capability are not ATDS” and instead “the capability must be inherent or built into the device for it to constitute an ATDS.” Overall, the Petition represents a commonsense approach to defining an autodialer in light of the ACA International decision, which invalidates the FCC’s 2015 interpretation of “capacity” to include the potential capacity to autodial even if the system is not presently being used in such a capacity. At its core, the Petition seeks to move autodialers from the theoretical realm into reality, asking the FCC to make clear that autodialers include only those systems that can, at the time a call is made and without human intervention, actually store or produce telephone numbers to be called using a random or sequential number generator, generate numbers in random or sequential numbers, and dial such numbers. The simple fact that a device could be modified to do so in the future would not be sufficient. Noticeably absent from the Petition, however, is any attempt to define how much “human intervention” should be enough before a device is not deemed an ATDS, which is something that the courts have wrestled with too—although, when fairly read, the Petition suggests that any human intervention, no matter how trivial or insignificant, would disqualify the device or system as an ATDS. While the FCC might agree with the “actual versus theoretical” aspect of the Petition, it seems unlikely that the FCC will say that any level of human involvement automatically means no ATDS. Thus far, the foregoing Petition is the only petition for a declaratory ruling that has been made post-ACA International. However, we expect a flurry of comments in response to the FCC’s Notice (which incidentally does not mention the Petition) in the coming months.