The Ever-Evolving Interpretation of an ATDS: Where Are We Now? (No, Really!)

by Dorsey & Whitney LLP

On May 5, 2018, a broad range of 18 industry groups led by the U.S. Chamber of Commerce, including ACA International and members of the financial services industry, petitioned the FCC to seek clarity on the definition of an automatic telephone dialing system (“ATDS”) in light of the D.C. Circuit’s March 16, 2018 decision in ACA Int’l v. FCC, which vacated the FCC’s prior ATDS interpretation as unreasonable, arbitrary, and capricious.

The petitioners urge the FCC to: (1) “confirm that to be an ATDS, equipment must use a random or sequential 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.” The Petition requests that the FCC make clear that both functions—“using” a random or sequential number generator to store or produce numbers and “dialing” those numbers without human intervention, must be actually—not theoretically—present and active in a device at the time the call is made. Finally, the Petition requests that the FCC “make clear that if human intervention is required in generating the list of numbers to call or in making the call, then the equipment in use is not an ATDS.”

Without the FCC’s guidance, courts post-ACA Int’l have been left to their own devices. The results so far present a mixed bag, with a little bit of something for everyone. Here is the play-by-play:

As Dorsey’s team reported in Back to Basics: What is an “ATDS,” Really?, predictive dialers generally have been considered to qualify as an ATDS under the TCPA, but ACA Int’l wipes the slate clean on exactly what qualifies as an ATDS, harkening back to the actual statutory definition set out in 47 U.S.C. § 227(a)(1): 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. See 47 U.S.C. § 227(a)(1). After all, not all predictive dialing equipment has the capacity to dial randomly or sequentially.

In the first post-ACA Int’l ATDS-related ruling, the District of Nevada found that that a manual clicker application combined with a LiveVox cloud-based system did not qualify under the statutory definition of ATDS (another win for LiveVox products). Marshall v. CBE Grp., Inc., No. 2:16-cv-02406-GMN-NJK, 2018 U.S. Dist. LEXIS 55223 (D. Nev. Mar. 30, 2018). In doing so, the Marshall court construed ACA Int’l as calling into question the FCC’s prior 2003 and 2008 rulings as to what constitutes an ATDS, in addition to the FCC’s treatment of the subject in its 2015 Omnibus.

But just yesterday, the Southern District of Florida leaned the opposite way, granting a motion for summary judgment in favor of the plaintiff, and holding that the defendant’s Noble predictive dialer constituted an ATDS where used in conjunction with debt collection software that loaded call lists into the dialer without human intervention. Reyes v. BCA Fin. Servs., No. 16-24077-CIV (S.D. Fla. May 14, 2018). The Reyes court found that the FCC’s prior 2003 and 2008 rulings on predictive dialers remained valid in the wake of ACA Int’l. In what some might consider a “selective” reading of Marshall, the Reyes court reasoned that the equipment in question in Marshall involved a manual clicker application, and therefore the Marshall court’s ruling turned on the human intervention element.

And if we weren’t on a roll already, the District of Arizona has weighed in too, with an impeccably timed counter. Herrick v. LLC, No. CV-16-00254-PHX-DJH (D. Az. May 14, 2018). The Herrick court granted summary judgment in favor of defendant GoDaddy, finding that GoDaddy did not use an ATDS to send the text in question, because the 3Seventy platform at issue “lacked the capacity to become a device that could randomly or sequentially generate numbers to be dialed.” Calling the FCC’s ATDS interpretations “defunct,” the Herrick court fell back on statutory construction. The Herrick court first found that the text platform in question did not meet the statutory definition of ATDS. Then, in a slight variation on Marshall’s belt-and-suspenders approach, it went on to clarify that “even if the Court were to find that the inability to randomly or sequentially generate telephone numbers did not disqualify the 3Seventy platform from being an ATDS, its inability to dial numbers without human intervention would.” The twist: the Herrick court pointed out that, owing to ACA Int’l, it was not bound by the FCC’s 2015 rejection of the “human intervention test,” and found of its own accord that “a device will only constitute an ATDS if it can dial numbers (or send text messages) ‘without human intervention.’”

So there you have it folks—any way you want it, really. The definition of what constitutes an ATDS is as much up in the air as ever. And let’s not forget the TCPA shot clock running in the background; as courts continue to issue ATDS decisions going both ways, we await the FCC’s guidance on the matter. Not to mention, the question remains: will the FCC act before or after Commissioner Clyburn’s departure?

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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