Ninth Circuit Court of Appeals Creates Circuit Split With Broad Autodialer Ruling

On Behalf of | Oct 9, 2018 | TCPA

No company using modern technology to communicate with their customers was unhappy when the D.C. Circuit Court of Appeals rejected the FCC’s overly broad interpretation of what equipment qualifies as an “automatic telephone dialing system” (“ATDS” or, colloquially, an “autodialer”) under the TCPA. But it is equally true that the D.C. Circuit’s ruling created a vacuum behind it: without a single, nationwide standard from the FCC, the various federal courts that need to decide the many TCPA cases in front of them have had to develop their own interpretation of what technology meets the statutory definition of an ATDS.

And while the trial courts have not been entirely consistent in their holdings, the two federal appeals court decisions on the issue—the Second Circuit’s King decision and, even better yet, the Third Circuit’s Dominguez opinion—were both a welcome tightening of the FCC’s now-rejected, seemingly limitless standard. In Dominguez, the Third Circuit (which covers Pennsylvania, New Jersey, and Delaware) took Congress at its word in holding that technology is a regulated ATDS only if the calling device is currently capable of “randomly or sequentially generat[ing] telephone numbers, and dial[ing] those numbers.” In light of that interpretation, Yahoo prevailed because its text messages were sent to users based on a defined set of criteria, and thus not in a fashion that was randomly or sequentially generated.

So encouraged by those two positive outcomes on the East Coast, those of us in the TCPA trenches were cautiously optimistic that the Ninth Circuit would rule similarly in the long-pending Marks v. Crunch case. (The facts of Marks are essentially beside the point; he allegedly received three unsolicited text messages from his gym.) But, alas, our hopes have been dashed.

The Marks opinion did set off on the right foot. Unlike some trial courts that have held that the D.C. Circuit’s ACA decision did not also invalidate the FCC’s 2003 and 2008 rulings that predictive dialers are an ATDS, the Ninth Circuit agreed with Crunch that the D.C. Circuit’s opinion also invalidated the FCC’s earlier rulings that were embodied in the 2015 Order that the D.C. Circuit vacated in relevant part. That is, the Ninth Circuit found that it was not bound to follow the FCC’s earlier holdings that predictive dialers are an ATDS under the TCPA.

But with that blank slate, the Ninth Circuit panel proceeded to rewrite what it found to be an ambiguous definition supplied by Congress. Congress gave us the following definition of ATDS: “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 USC 227(a)(1). To the Third Circuit and various other courts, we can read that italicized portion in only one way: you have to store or produce the numbers you call with a “random or sequential number generator.” The equipment, therefore, has to generate the numbers. So if you upload a curated list of phone numbers, that should not qualify as an ATDS.

The Ninth Circuit rejected that interpretation. It flatly held that the “statutory definition of ATDS includes a device that stores telephone numbers to be called, regardless of whether or not those numbers have been generated by a random or sequential number generator.” Put differently, the court held that equipment qualifies as an ATDS if it has “the capacity to dial stored numbers automatically.” In the process, the Ninth Circuit explicitly rejected the Third Circuit’s holding in Dominguez, which the Ninth Circuit derided as “unpersuasive” insofar as it was rooted in an “unreasoned assumption.”

There is no denying the Ninth Circuit’s opinion’s significance. It is binding law in the federal trial courts in populous states like California, Oregon, Washington, and Arizona. It clearly creates a direct conflict with another Court of Appeals decision. Crunch may seek “en banc” review (review by the entire Ninth Circuit). It may also pursue a Supreme Court appeal. But in light of the FCC’s active dockets on various issues surrounding the TCPA, which could moot the conflict, the Supreme Court may be unlikely to take the appeal. (Given the impending midterm elections, FCC action on a hot-button topic like this is unlikely in the near term.) In short: stay tuned, as the post-ACA vacuum has us all in for a bumpy ride until we get some nationwide guidance from the FCC, Congress, or both.

By Joe Bowser

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