December 9, 2018

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Ninth Circuit Opens Door for More Expansive Meaning of ATDS in TCPA Cases

In the recent case of Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018) the Ninth Circuit broadly interpreted the TCPA’s definition of automatic telephone dialing system (often referred to as ATDS) to include devices with the capacity to dial stored numbers automatically. The device at issue in Marks is called the “Textmunication” system, which the Court described as “a web-based marketing platform designed to send promotional text messages to a list of stored telephone numbers.” The defendant, Crunch Fitness, had communicated with current and prospective gym members by sending them text messages via the Textmunication system. The plaintiff, Jordan Marks, had signed up for a gym membership and subsequently received three text messages over an 11-month period. Marks sued Crunch Fitness and alleged that the text messages violated the TCPA.  The district court granted summary judgment in favor of Crunch Fitness after concluding that the Textmunication system did not constitute an ATDS because it presently lacked a “random or sequential number generator” and did not have the potential to add this feature.

The Ninth Circuit reversed. On appeal, the Ninth Circuit analyzed whether, in order to be an ATDS, a device must dial numbers [1] generated by a random or sequential number generator or [2] if a device can be an ATDS if it merely dials numbers from a stored list.” Finding the statutory language ambiguous, the Court looked to the legislative history and concluded that “equipment that made automatic calls from lists of recipients was also covered by the TCPA.” In reaching this conclusion, the Court also rejected Crunch Fitness’s argument that a device cannot be an ATDS unless it is fully automatic, i.e., can operate without any human intervention whatsoever. The Ninth Circuit deemed it “common sense” that “human intervention of some sort is required before an autodialer can begin making calls, whether turning on the machine or initiating functions.”

On this basis, the Ninth Circuit found that the Textmunication’s ability to dial numbers automatically determined the outcome of the appeal, even though humans (rather than machines) were required to add phone numbers to the Textmunication platform.

Putting it Into Practice: We expect to see class action plaintiffs’ attorneys argue that Marks expands the scope of liability under the TCPA to include calls or text messages sent on all types of modern telephone equipment, including everyday smartphones. The holding of Marks will likely make district courts even less inclined to grant motions to dismiss TCPA claims for failing to allege use of an ATDS, since the definition of that term includes devices that can automatically dial stored numbers.  

Copyright © 2018, Sheppard Mullin Richter & Hampton LLP.

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About this Author

David M. Poell, business law Lawyer, Sheppard Mullin
Associate

David Poell is an associate in the Business Trial Practice Group in the firm’s Chicago office with an emphasis in the areas of consumer privacy and class action litigation.

Areas of Practice

A large portion of Mr. Poell’s practice is devoted to defending companies against class and individual actions brought under various state and federal consumer protection statutes, including the Telephone Consumer Protection Act (TCPA) and the Fair and Accurate Credit Transactions Act (FACTA), as well as other consumer-privacy and unfair business practices laws and...

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