Ninth Circuit Rules an ATDS Need Only Have the Capacity to “Store Numbers to Be Called” and Dial “Automatically”

In Marks v. Crunch San Diego, No. 14-56834, 2018 U.S. App. LEXIS 26883 (9th Cir. Sept. 20, 2018), a three judge panel found “the term ‘automatic telephone dialing system’ 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 automatically (even if the system must be turned on or triggered by a person)[.]”  The only other requirement, according to the Ninth Circuit, is that the equipment have the capacity to dial “automatically.”

By way of background, the TCPA prohibits the use of an ATDS to make any call to a number assigned to a cellular service (other than for an emergency purpose) using an ATDS or an artificial or prerecorded voice without the prior express consent of the called party.  The statute defines an ATDS as equipment that has the “capacity” to perform the following functions: “store or produce telephone numbers to be called, using a random or sequential number generator,” and “to dial such numbers” presumably without human intervention.  47 U.S.C. § 227(a)(1).

In the underlying case, the defendant sent three unsolicited text messages to the plaintiff’s cell phone advertising its gym membership.  The plaintiff thereafter filed a putative class action alleging that the messages were sent using an ATDS “which has the capacity to send text messages to cellular telephone numbers from a list of telephone numbers automatically and without human intervention.”  The defendant moved for summary judgment alleging it did not use an ATDS because the equipment “presently lacked a random or sequential number generator, and did not have the potential capacity to add such a feature,” and the district court agreed.   Not so fast said the Ninth Circuit.

The Court first held that the D.C. Circuit’s recent ruling in ACA International vacated all prior FCC rulings pertaining to the definition of an ATDS.  That gave the Court a “clean slate” from which to interpret the definition of an ATDS.  In reversing the district court’s ruling, the Ninth Circuit held the statutory definition was ambiguous and looked to the “context and structure” of the TCPA’s statutory scheme. The Court determined that “Congress intended to regulate devices that make automatic calls.”

The Court thus held that an 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 automatically (even if the system must be turned on or triggered by a person).”  (emphasis added).  In other words, equipment need only have “the capacity to dial stored numbers automatically.”

The Court rejected the argument that an ATDS must be “fully automatic,” because in its view, “Congress made clear that it was targeting equipment that could engage in automatic dialing, rather than equipment operated without any human oversight… Common sense indicates that human intervention of some sort is required before an autodialer can begin making calls, whether turning on the machine or initiating its functions.  Congress was clearly aware that, at the very least, a human has to flip the switch on an ATDS.”

Importantly, the Court expressly did not reach the question whether a device needs to have “the current capacity to perform the required functions or just the potential capacity do so.”

The Ninth Circuit vacated the district court’s summary judgment ruling and held the plaintiff’s evidence of an ATDS was sufficient to survive summary judgment.

The FCC can effectively overturn Marks when it issues its anticipated TCPA ruling—assuming it reaches a contrary interpretation.  In the meantime, Marks will remain binding precedent in the Ninth Circuit.

Scott Goldsmith

Scott Goldsmith

Scott brings the tenacity of a former prosecutor to his representation of clients in high-stakes commercial litigation and class action defense. Having tried over twenty cases through final jury verdict, and over one hundred fifty evidentiary hearings, Scott understands that effective advocacy requires creativity, composure, and thorough preparation.

Divya Gupta

Divya Gupta

Divya Gupta is a commercial litigator Partner with one of the nation’s most knowledgeable Telephone Consumer Protection Act (TCPA) defense-teams. She is experienced in handling complex cases in state and federal courts, both in-house and as outside counsel. Divya is particularly skilled in defending banks, finance companies, and other lenders in both individual and class action TCPA cases. Divya also has experience advising major financial institutions on TCPA compliance matter and regarding the applicability of the TCPA to new and emerging products and services. Likewise, she is further adept in handling matters involving the Fair Credit Reporting Act (FCRA).

Alexandra Krasovec

Alexandra Krasovec

Alex is a member of one of the nation’s most prominent and knowledgeable Telephone Consumer Protection Act (TCPA) defense teams. She has defended financial institutions and businesses of varying sizes against individual TCPA claims and nationwide class actions. Always staying on the forefront of TCPA developments, Alex works with this team of litigators to craft arguments and strategies aimed at curtailing the reach of the TCPA, both in court and through policy efforts before the Federal Communications Commission.

Navdeep K. Singh

Navdeep K. Singh

Navdeep has a wide array of experience in general business and commercial litigation, including class actions and complex, multi-party litigation across multiple jurisdictions. He is well-versed in litigation involving a number of consumer protection laws, including the Telephone Consumer Protection Act (TCPA), FTC regulations and unfair trade practices acts. Navdeep has also previously represented pharmaceutical and insurance companies in mass tort litigation nationwide, and has also defended some of the nation’s largest commercial banks and financial institutions in state and federal courts across the country.

You may also like...