During the past decade, there has been an explosion in class action litigation under the Telephone Consumer Protection Act (TCPA),1 a well-intended statute meant to address abusive telemarketing practices. As of late, many of these suits are based on calls or text messages to cell phones. The TCPA prohibits non-emergency calls (interpreted by the FCC to include text messages) to a cell phone made using an “automatic telephone dialing system” without the prior express consent of the called party.2 A perceived ambiguity in what type of equipment qualifies as an “automatic telephone dialing system” has fueled these litigation fires and has led to hundreds of cases being filed against companies that do not use telemarketing equipment but communicate with their users or facilitate their users’ communications via text message. An end to the litigation explosion in this area may be just around the corner as federal appellate courts consider the issue.
The Conflicting Authority
The TCPA defines “automatic telephone dialing system” as “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.”3 Congress purposefully included the “using a random or sequential number generator” limitation because it meant to regulate only the particular kinds of automated calling technologies that were used by telemarketers to make unsolicited phone calls to unwilling recipients—equipment that could generate and dial random or sequential phone numbers.4 Congress was concerned that through the use of dialing systems that could generate and dial random phone numbers, or sequential phone numbers (555-1111, 555-1112, 555-1113, etc.), intrusive telemarketing calls might reach unlisted numbers, hospitals, or emergency organizations.5 Likewise, Congress was concerned that telemarketers might “dial numbers in sequence, thereby tying up all the lines of a business and preventing outgoing calls.”6
Properly giving meaning to each term used by Congress in this definition, and consistent with congressional intent, numerous courts have construed the definition of “automatic telephone dialing system” as requiring that the equipment used to place the calls or send the texts have an existing capacity to generate and dial random or sequential telephone numbers.7
Other district courts, however, have concluded that the equipment at issue need not have a capacity to generate and dial random or sequential phone numbers to qualify as an “automatic telephone dialing system.” These courts reason that when deciding whether a “predictive dialer”—a specific type of telemarketing dialing equipment used to time live telemarketing calls predicting when a telemarketer will be available to be connected with the consumer who answers—falls within the definition of an ATDS, the FCC somehow expanded the statutory definition of “automatic telephone dialing system” to encompass any system capable of placing calls or sending texts to stored lists of numbers without human intervention.8
The Opportunity for Appellate Courts to Provide Much Needed Clarification
In Dominguez v. Yahoo!, Inc.,9 the district court properly concluded that to qualify as an “automatic telephone dialing system,” the equipment at issue must have the present capacity to generate random or sequential telephone numbers. Because the undisputed evidence reflected that the defendant’s system lacked that capacity, the court granted summary judgment for the defendant. The plaintiff has appealed this decision to the Third Circuit.10 The appeal has been fully briefed and is directed at the proper interpretation of “automatic telephone dialing system” under the TCPA.
In Sterk v. Path, Inc.,11 the district court concluded that equipment qualifies as an “automatic telephone dialing system” if it merely can dial numbers from a stored list without human intervention. Following that decision, the case was assigned to a new judge who granted the defendant’s motion to certify the prior judge’s decision for immediate appeal to the Seventh Circuit. In so doing, the new judge concluded that there are substantial grounds for disagreement as to whether the prior judge properly construed the term “automatic telephone dialing system” under the TCPA.12 The parties are now awaiting a decision from the Seventh Circuit as to whether it will agree to take the appeal.
The Third Circuit will soon decide the proper scope of an “automatic telephone dialing system” under the TCPA, and the Seventh Circuit also may do so. Hopefully, these courts will take the opportunity to give meaning to each word used by Congress and further congressional intent by limiting the scope of an “automatic telephone dialing system” to include only equipment that has the capacity to generate and dial random or sequential telephone numbers. This clarification is necessary to stem the tide of opportunistic TCPA class action litigation against innovative companies that communicate with their users via text but do not engage in telemarketing and take such companies outside the scope of the statute.
1 47 U.S.C. § 227.
2 See id. § 227(b)(1)(A)(iii).
3 Id. § 227(a)(1) (emphasis added).
4 See, e.g., S. Rep. 102-178, at 2 (“[h]aving an unlisted number does not prevent those telemarketers that call numbers randomly or sequentially”); id. (“some automatic dialers will dial numbers in sequence, thereby tying up all the lines of a business and preventing any outgoing calls”).
5 See, e.g., 137 Cong. Rec. 35302 (November 26, 1991); H.R. Rep. No. 102-317, at 10 (1991) (“Telemarketers often program their systems to dial sequential blocks of telephone numbers, which have included those of emergency and public service organizations, as well as unlisted telephone numbers.”); S. Rep. No. 102-178, at 2 (1991); H.R. Rep. No. 101-633, at 3 (1990).
6 S. Rep. No. 102-178, at 1-2.
7 See, e.g., Dominguez v. Yahoo!, Inc., No. 13-1887, 2014 U.S. Dist. LEXIS 36542, at *19 (E.D. Pa. March 20, 2014) (granting summary judgment to defendant because it was undisputed that its system could not generate random or sequential phone numbers); Gragg v. Orange Cab Co., No. C12-0576RSL, 2014 U.S. Dist. LEXIS 16648, at *7-10 (W.D. Wash. February 7, 2014) (same); Stockwell v. Credit Mgmt., No. 30-2012-00596110, slip op. at 2 (Cal. Super. Ct. October 3, 2013) (granting summary judgment for defendant where plaintiff failed to rebut defendant’s evidence that it had no number generator); Hunt v. 21st Mortg. Corp., No. 2:12-cv-2697, 2013 U.S. Dist. LEXIS 132574, at *11 (N.D. Ala. September 17, 2013) (“The court therefore holds that, to meet the TCPA definition of an ‘automatic telephone dialing system,’ a system must have a present capacity, at the time the calls were being made, to store or produce and call numbers from a number generator”); Ibey v. Taco Bell Corp., No. 12-cv-0583-H, 2012 U.S. Dist. LEXIS 91030, at *9 (S.D. Cal. June 18, 2012) (dismissing TCPA claim for failure to plausibly plead use of ATDS; Plaintiff’s allegation that there ‘was no human intervention’ did not satisfy statutory requirements; “‘[A] system need not actually store, produce, or call randomly or sequentially generated numbers, it need only have the capacity to do it'”).
8 See Sterk v. Path, Inc., No. 13-c-2330, 2014 U.S. Dist. LEXIS 73507, *10-19 (N.D. Ill. May 30, 2014) (citing In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 (“2003 FCC Order“), 18 FCC Rcd. 14014, 14091-93 (July 3, 2003) and concluding that the defendant’s system was an ATDS because it could dial lists of numbers without human intervention); Legg v. Voice Media Grp., Inc., No. 13-cv-62044, 2014 U.S. Dist. LEXIS 67623, at *9-11 (S.D. Fla. May 16, 2014) (citing 2003 FCC Order at 14,091-93 and stating that in it “the FCC expanded [the ATDS] definition when it addressed the question of ‘predictive dialer'”); Fields v. Mobile Messengers America, Inc., No. 12-cv-05160, 2013 U.S. Dist. LEXIS 180277, at *10-11 (N.D. Cal. December 23, 2013) (citing 2003 FCC Order and concluding that it “broadened the definition of an ATDS beyond mere equipment that uses ‘random or sequential number generators” to cover any equipment with “the capacity to dial numbers without human intervention“(emphasis in original)).
9 No. 13-1887, 2014 U.S. Dist. LEXIS 36542 (E.D. Pa. March 20, 2014).
10 10 See Dominguez v. Yahoo! Inc. No. 14-1751 (3d Cir.).
11 No. 13-c-2330, 2014 U.S. Dist. LEXIS 73507 (N.D. Ill. May 30, 2014).
12 Sterk v. Path, Inc., No. 13-cv-2330 (N.D. Ill.), ECF No. 143.