TCPA Update: Autodialer Definition Broad, Narrowed, and Broad Again

by: Brian Schaller

The U.S. Court of Appeals for the Ninth Circuit has weighed in to the debate over what constitutes an automatic telephone dialing system ("autodialer" or "ATDS") for Telephone Consumer Protection Act ("TCPA") purposes, and their interpretation is not good news for those who make calls/texts as part of their business. In Jordan Marks v. Crunch San Diego LLC, the Ninth Circuit adopted an extremely broad definition of autodialer stating: “we conclude that the statutory definition of ATDS is not limited to devices with the capacity to call numbers produced by a 'random or sequential number generator,' but also includes devices with the capacity to dial stored numbers automatically (emphasis added).”[1]

Recent History of Autodialer Definition

                To understand the significance of defining autodialers to include devices with the capacity to dial stored numbers automatically, it is important to know the history and evolution of this fight over autodialers. Under the TCPA, in most circumstances, if the equipment a company uses to make a call/text to consumers is found to be an autodialer, then the calls/texts must comply with the statute. Compliance requires regulatory hurdles, including certain disclosures and consumer consents. Violating the TCPA can have severe consequences, with statutory damages at $500 per violation (that is per text/call), with the potential as high as $1,500 for each willful or knowing violation.

                In 2015, the FCC released the TCPA Omnibus Declaratory Ruling and Order  ("Order") which broadened the definition of autodialer to equipment/software that has the future capacity to dial randomly or sequentially. "[T]he capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities,” states the Order. (See InfoLawGroup 2015 article).  As then Commissioner, now FCC Chairman, Ajit Pai stated in his Dissenting Statement, under the Order “pretty much any calling device or software-enabled feature that’s not a “rotary-dial phone”—is an automatic telephone dialing system.” Note that the order focused on the capacity to dial randomly or sequentially and did not interpret the statutory definition of autodialer (in 47 U.S. Code § 227(a)(1)) to include the capacity to store numbers to be called.

Then, earlier this year, the D.C. Circuit Court in ACA International v. Federal Communications Commission, invalidated the FCC's broad interpretation of autodialer in its 2015 Order, ruling that the FCC overreached.[2] The D.C. Circuit Court held that the FCC's definition of an autodialer was an unreasonably expansive interpretation of the TCPA, and "would appear to subject ordinary calls from any conventional smartphone to the act's coverage."[3] As InfoLawGroup Partner Justine Gottshall wrote in March the ruling gave some protection to legitimate marketers interacting with their customers through more traditional calling methods (that do not actually use autodialers). As a result of the ACA decision, the scale had been slightly tipped to help defendants against the recent onslaught of TCPA cases.

With the Order's definition of autodialer vacated by the ACA decision, the courts can no longer rely on that definition, and now it is up to the courts to interpret what constitutes an autodialer. The initial Circuit Court decisions on this subject were good for defendants. In Dominguez ex rel. Himself v. Yahoo, Inc., the Third Circuit sided with the defendant, emphasizing that the system used to send texts did not have "the present capacity to function as an autodialer by generating random or sequential telephone numbers and dialing those numbers."[4] The Second Circuit, in King v. Time Warner Cable Inc., heavily relied on the analysis in ACA in its decision; and concentrated on the defendant's system's capacity to make random or sequentially generated calls.[5] The Second Circuit states that "Time Warner admits that its system has 'the capacity to store numbers' and dial them." However, this did not play significantly in the Second Circuit's discussion of the autodialer definition and decision to side with the defendant.

Then, last week, the Ninth Circuit split with the Third Circuit. In a footnote, the Ninth Circuit calls the Third Circuit's assumption that a device must be able to generate random or sequential numbers to be an autodialer as "unreasoned" and that "its published opinion is unpersuasive."[6] In order to come to its decision regarding the definition of autodialer, the court acknowledged that the statutory language is ambiguous, and "look[ed] at the context and the structure of the statutory scheme."[7] The court's plain reading of the definition in § 227(a)(1) and legislative history/intent was that an autodialer includes the capacity to dial stored numbers automatically. Note that the court did not return to the Order's definition of future capacity, instead coming up with an arguably broader definition that adds capacity to dial stored numbers automatically, in other words, capacity to store numbers to be called and to dial such numbers.

Full Circle-Now What?

So, we seem to have come full circle within the span of a few months, with the Ninth Circuit's definition of autodialer arguably including anything that is not a rotary-dial phone (remember FCC Chairman Pai's dissent to the Order). Almost every single home or cell phone has the capacity to dial stored numbers. With the Circuit split, the Supreme Court could decide to intervene to define autodialer. There is also the possibility of the FCC weighing in again. After the ACA decision the FCC sought comment on what constitutes an autodialer. Now, a dissenting voice in the Order, Pai, is the FCC Chairman and a newly interpreted autodialer definition by the FCC will likely be favorable for TCPA defendants. Congress could also intervene and pass a TCPA amendment clarifying the definition, but with the slow pace of Congress this may be a long-shot.

Key Takeaway

The definition of autodialer in the TCPA is in flux and uncertain. Given the high statutory damages, there are great risks to assuming that a system or phone used to call/text consumers is not an autodialer under the TCPA. As a result, businesses should thoroughly examine calling/texting campaigns to ensure that they are in complete compliance.

[1] No. 14-56834, 2018 WL 4495553, at *9 (9th Cir. Sept. 20, 2018)

[2] 885 F.3d 687, 703 (D.C. Cir. 2018)

[3] Id. at 692

[4] 894 F.3d 116, 121 (3d Cir. 2018)

[5] 894 F.3d 473, 475 (2d Cir. 2018)

[6] No. 14-56834, 2018 WL 4495553, at *9

[7] Id. at 8