TCPA: Second Circuit Court of Appeals ATDS Decision and FCC Updates

The Telephone Consumer Protection Act (TCPA) has recently been a hot topic in courtrooms across America, as well as with the FCC. Both the Courts and the Federal Communications Commission (FCC) have sought to provide further clarification for TCPA infractions.

The Second Circuit Court of Appeals most recently ruled that the TCPA applies to “any system that calls or texts automatically from a list of numbers.” Finally, Duran v. La Boom Disco sheds light on one of the parts of the TCPA that has been under debate within the lower district courts for years: automated dialing systems.

What is an automatic dialing system?

When the TCPA was enacted in 1991, the definition of an Automated Telephone Dialing System (ATDS) seemed clear. At the time, consumers were not carrying mobile devices en-masse like they are today. An ATDS was defined as “equipment which has the capacity to store or produce telephone numbers to be called using a random or sequential number generator, and to dial such numbers.”

Predictive dialing technology arrived later. In 2003, the FCC issued an order that expanded the definition of an ATDS to include equipment that “dialed numbers from a database of numbers.” Though the TCPA used fairly plain language, the FCC focused on using a more liberal interpretation with a 2008 order.

The matter made it to the Federal Circuit Court of Appeals in D.C. in 2018. The defendant argued that the FCC’s broad interpretation would lead to every smartphone being considered an ATDS. The court failed to make a firm ruling. In Dominguez v. Yahoo Inc., the Third Circuit concluded that email SMS systems did not function as an ATDS because it required manual number entry, not random or sequentially generated numbers. Soon after, the Ninth Circuit went back to the FCC’s assessment in Marks v. Crunch San Diego LLC and held that an ATDS includes devices that can call numbers from a stored list.

For two years, it was difficult to predict how the courts would react to similar TCPA challenges. The Eleventh Circuit maintained in Glasser v. Hilton Grand Vacations Co LLC that predictive dialers are not considered ATDS because they do not use random or sequential number generators. The court also concluded it was acceptable to disregard prior FCC orders because they were vacated by the D.C. Circuit in the ACA Int’l ruling two years ago. A month later, the Seventh Circuit swiftly reached the same conclusion in Ali Gadelhak v. AT&T Services Inc.

The Ninth Circuit was all alone in their dissenting opinion.

Duran v. La Boom Disco Inc.

The Second Circuit threw their weight into the ring with Duran v. La Boom Disco Inc. by backing the Ninth Circuit opinion, agreeing that a predictive dialer is considered an ATDS. The numbers were generated by humans uploading numbers to text campaign programs that then sent out to recipients. These facts were not debatable.

“The statutory language leaves much to interpretation,” the court conceded. The focus was on the comma placement in: “equipment which has the capacity – (A) to store or produce telephone numbers to be called, using a random or sequential number generator.” The Second Circuit explained that there are two different ways to interpret the definition of an ATDS:

• An ATDS must both generate or produce numbers and then dial them automatically.
• An ATDS must have the capacity to store or produce numbers, using a random or sequential number generator.

They held in favor of the latter definition because the verbs “store” and “produce” come before the comma, whereas “using” comes after. Even if a person is sending out the call, the fact that the system stored those numbers qualifies it as a device covered under the TCPA.

The Second Circuit went a step further to consider how much human intervention is required to remove a device from the definition of an ATDS. The opinion in Duran held that the act of hitting “send” is not sufficient in constituting human intervention because one can send thousands of messages with a single click.

FCC Declaratory Rulings

Two months later, the FCC also provided a declaratory ruling and guidance regarding what constitutes an “auto-dialer” that calls or texts cell phones. The FCC stated that an auto-dialer must store or generate random or sequential phone numbers and call them without human intervention. They specifically clarified “that if a calling platform is not capable of originating a call or sending a text without a person actively and affirmatively manually dialing each one, that platform is not an autodialer and calls or texts made using it are not subject to the TCPA’s restrictions.” Now the question will be, does this help clarify or further muddy the waters at the court level?

The FCC further emphasized that persons who knowingly release their telephone numbers for a particular purpose have in effect given their permission to be called at the number which they have given for that purpose and TCPA liability is avoided by obtaining the recipient’s prior consent.