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Rikki, Don’t Autodial That Number! – Ninth Circuit Doesn’t Want You To Call Nobody Else (in violation of the TCPA)

Class action plaintiffs’ attorneys may argue that a recent ruling by the Ninth Circuit expands the scope of liability under the Telephone Consumer Protection Act (“TCPA”) to include calls or text messages sent on all modern telephone equipment, including personal smartphones. Marks v. Crunch San Diego, LLC, — F.3d —-, 2018 WL 4495553 (9th Cir. Sept. 20, 2018).

The TCPA generally prohibits calls to cell phones using an Automatic Telephone Dialing System (“ATDS”) without sufficient prior express consent. A violation results in a statutory penalty of $500 per call, or up to $1,500 per call for a knowing or willful violation. In TCPA class actions, it is common for exposure to be in the many millions of dollars.

There has been much dispute about what constitutes an ATDS under the TCPA. In 2015, the Federal Communications Commission (“FCC”) broadly interpreted ATDS to include equipment that has the potential capacity to autodial, an interpretation that some argued included personal cell phones. Early in 2018, the D.C. Circuit in ACA International v. FCC, 885 F.3d 687 (D.C. Cir. 2018) invalidated the FCC’s 2015 interpretation of ATDS as too broad. In Marks, the Ninth Circuit weighed in on the statutory definition of an ATDS for the first time since the D.C. Circuit’s decision.

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.” Phone numbers are captured and stored in the Textmunication platform in one of three ways: (1) an operator manually enters a phone number into the system; (2) a current or potential customer may respond to a marketing campaign with a text (which automatically provides the individual’s phone number); or (3) a customer may provide a phone number by filling out a consent form on a Textmunication client’s website. 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. Notably, the district court’s decision was issued before the D.C. Circuit’s opinion in ACA International, which struck down the FCC’s 2015 definition of ATDS as too expansive.

On appeal, the Ninth Circuit reversed the district court and held that the TCPA’s definition of ATDS includes not only 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. The Ninth Circuit started with the plain language reading of the TCPA, which defines an ATDS 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.” As the Marks Court noted, this statutory definition “naturally raises two questions: (i) when does a device have the ‘capacity’ to perform the two enumerated functions; and (ii) what precisely are those functions?”

Focusing on the second issue, the Court 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 and looking to the legislative history for guidance, the Court 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 Court 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.

In light of Marks, aggressive class action plaintiffs’ attorneys may argue that text messages or calls from a personal smartphone qualify as ATDS, triggering potential strict liability under the TCPA for a statutory penalty of $500 per call/text sent without sufficient consent.

Copyright © 2019, 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...

312-499-6349
Lisa Yun, Trial Practice, Bankruptcy, Attorney, Sheppard Mullin, Law Firm,
Associate

Lisa Yun is an associate in the Business Trial Practice Group in the firm's San Diego office.

Ms. Yun practices in the area of general business litigation and bankruptcy law.  She has experience representing financial institutions in civil and bankruptcy proceedings.  Ms. Yun has also successfully represented clients in class action claims involving the federal Telephone Consumer Protection Act (TCPA).

619-338-6541
Shannon Z. Petersen, Business Trial Legal Specialist, Sheppard Mullin
Partner

Shannon Z. Petersen is a partner in the Business Trial Practice Group in the firm’s Del Mar office and is co-chair of the firm’s consumer class action defense team and the firm’s TCPA class action defense team.

Areas of Practice

Dr. Petersen has substantial trial experience as a business litigator, including consumer class action defense. He has successfully represented clients in claims involving the federal Telephone Consumer Protection Act (TCPA), the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Acting (FCRA), the Truth in Lending...

619-338-6656