Circuit Split Pronounced by District Court’s Application of Statutory Definition of an ATDS
While recent TCPA coverage has focused on the Ninth Circuit’s landmark ruling in Marks v. Crunch, a subsequent ruling from a New Jersey District Court serves has a reminder that (thankfully) the Ninth Circuit remains an “ATDS” definition outlier. For more on Marks, please see Dorsey’s coverage here and Dorsey partner Scott Goldsmith’s interview with Law360 here.
To recap, the TCPA prevents calls to cell phones made using an “automatic telephone dialing system” (“ATDS”) without the express consent of the “called party.” An ATDS is defined 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.” 47 U.S.C. § 227(a)(1).
In March, the D.C. Circuit Court of Appeals struck down a 2015 FCC ruling that broadly interpreted the definition of an ATDS to include predictive dialers and really any software-enabled dialing device that has the latent capacity to dial automatically. ACA Int’l v. FCC, 885 F.3d 687 (D.C. Cir. Mar. 16, 2018) (“ACA International”). Courts have subsequently struggled to uniformly apply ACA International and have come to different conclusions as to the functionality required to qualify as an ATDS. These disparate rulings were punctuated recently by the Ninth Circuit ruling in Marks where the Ninth Circuit held equipment need only “dial automatically from a stored list.” The statutorily required use of a “random or sequential number generator” was cast aside.
In Fleming v. Associated Credit Servs., No. 16-3382 (KM) (MAH), 2018 U.S. Dist. LEXIS 163120 (D.N.J. Sep. 21, 2018), the Court faithfully applied the statutory definition of an ATDS. Specifically, the Court granted summary judgment for the defense because the uncontroverted evidence showed that the LiveVox HCI system used did not dial “numbers from a list that was  randomly or sequentially generated when the list was created[.]”
To get there, the Court joined several other Courts (including Marks) to find that the D.C. Circuit Court of Appeal’s ruling in ACA International necessarily invalidated the 2003 and 2008 FCC Declaratory Rules that applied to predictive dialers. With the prior FCC predictive dialer rulings out of the way, Fleming applied the recent Third Circuit decision Dominguez v. Yahoo, Inc., which held in favor of Defendant Yahoo on summary judgment finding that the system at issue was not an ATDS because it did not have the “present capacity” to generate random or sequential telephone numbers and dial those numbers. See Dominguez v. Yahoo, Inc., 894 F.3d 116, 121 (3d Cir. 2018)
This analysis led to the ultimate question before the Court: “Does a system that dials numbers from a list that was not randomly or sequentially generated when the list was created qualify as an ATDS?” With “only the statutory text to guide” him, Judge McNulty was “convinced that the answer is no.”
Following Marks, Courts in the Ninth Circuit will be forced to reach a different conclusion. For now it seems that this split in authority is only likely to grow until the FCC weighs in on the post-ACA International definition of an ATDS.