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Ninth Circuit Compounds ATDS Confusion in TCPA, Causing FCC to Seek Further Comment

10/8/18

By: Matt Foree
As we previously discussed in the ACA International decision, the U.S. Court of Appeals for the D.C. Circuit recently rejected the Federal Communications Commission’s (“FCC”) guidance concerning the definition of automatic telephone dialing system (ATDS), one of the key components of liability in the Telephone Consumer Protection Act (“TCPA”).  Among other things, the TCPA prohibits using an ATDS to make calls to a cellular telephone without consent.  Since the D.C. Circuit’s ruling, courts have wrestled with the analysis of what qualifies as an ATDS, which has created a patchwork of decisions.  Some courts determined that the FCC’s pre-2015 guidance on the topic is no longer relevant.  Other courts have relied on that previous FCC guidance in their rulings.
On September 20, 2018, the U.S. Court of Appeals for the Ninth Circuit added to the confusion.  In the Marks v. Crunch San Diego, LLC case, the court analyzed a device called the Textmunication system, which is a web-based marketing platform used to send promotional text messages to a list of stored telephone numbers.  In analyzing whether the device was an ATDS, the court determined that the FCC’s pre-2015 guidance on the definition of an ATDS were no longer binding. Therefore, it determined that only the statutory definition of ATDS remains, such that it analyzed the device at issue under the definition in the TCPA. The statute provides that an ATDS is “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.”
The court struggled with the statutory language, finding that it is ambiguous on its face, such that it turned to other aids in interpreting it. Among other things, the court looked at the “context and structure of the statutory scheme.”  In doing so, it determined that, although Congress focused on regulating the use of equipment that dialed blocks of sequential or randomly generated numbers, the statutory language extended to equipment that made automatic calls from lists of recipients.  Therefore, reading the ATDS definition in context and with a view to its “place in the overall statutory scheme,” the Ninth Circuit concluded 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.”  Accordingly, the court read the statute to provide that ATDS means “equipment which has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers.”
In May of this year, the FCC had previously sought comment on the contours of the ATDS definition in light of the ACA International decision.  Significantly, on October 3, 2018, after the Marks ruling, the FCC requested further comment on interpretation of ATDS in light of the Marks decision. Specifically, the FCC sought further comment on how to interpret and apply the statutory definition of ATDS in light of the Marks decision, as well as how that decision might impact the analysis of the ACA International case.  Comments are due October 17, 2018, with reply comments due on October 24, 2018.
If you have any questions regarding the current status of ATDS analysis, the Marks decision, or the FCC’s request for further comment, please contact Matt Foree at mforee@fmglaw.com.