Manatt’s Continuing Coverage on Significant Post-ACA International Developments

TCPA Connect

While the Telephone Consumer Protection Act (TCPA) continues as a hotbed of consumer litigation, there is still much uncertainty surrounding the proper definition of an automatic telephone dialing system (ATDS) under the TCPA after the D.C. Circuit’s almost two-year-old landmark decision in ACA International (ACA), which struck down the Federal Communication Commission’s (FCC) previous overly expansive 2015 definition.

Indeed, a deep circuit split between the Second Circuit and Third Circuit on the one hand and the Ninth Circuit on the other remains steadfast; other circuits (most notably the Seventh Circuit) have not weighed in, and the FCC has not issued any new guidance to help clear up the debate. On top of all that, the parties have yet to file a petition for certiorari in the recent Duguid v. Facebook case from the Ninth Circuit—which not only reaffirmed that court’s decision in Marks v. Crunch San Diego but also struck down part of the TCPA (the government “debt collector exemption”) as unconstitutional under the First Amendment—that could allow the Supreme Court to resolve this controversy and define what really constitutes an ATDS once and for all. Thus, the post-ACA ATDS debate rages on and there is no immediate end in sight.

Since our last update, we have observed no significant shift on how the district courts are interpreting ACA or defining an ATDS—although there was a slight uptick this month in volume—with district courts in the Ninth Circuit consistently following the plaintiff-friendly decisions in Marks, and others either following Marks or, to a slightly greater extent, the Second Circuit’s opinion in King v. Time Warner Cable and/or the Third Circuit’s opinion in Dominguez v. Yahoo, both of which arguably favor the defendants. Moreover, still a little over half of the district court cases we have reported on have found that there was an ATDS when applying ACA (though plaintiffs seem to be surviving dismissal a little more often than in previous months); a little over a third have held that ACA invalidated all prior FCC orders defining an ATDS (though many have declined to discuss this issue at all); and about one-fifth have found that human intervention was a deciding factor as opposed to just the 2015 order discussed in ACA. The Second Circuit continues to lead the way with the most number of post-ACA district-level decisions, followed closely behind by the district courts of the Seventh and Eleventh Circuits, where there have been no appellate-level decisions to guide them to date, and with the district courts in the Ninth Circuit right on their respective heels.

As part of our continuing coverage in this area, Manatt’s TCPA team monitors and reports on significant developments at the FCC and on noteworthy (i.e., dispositive or class certification-related) federal district- and appellate-level decisions interpreting, applying or otherwise evaluating ACA in ways that may impact our readers. To read all our previous articles on post-ACA developments, please click here.

Summary of Recent Decisions

There have been no new appellate decisions since our last update (still only four have been issued—two from the Ninth Circuit and one each from the Second and Third Circuits) and only four new significant district-level opinions: one from the Second Circuit, one from the Fourth Circuit, one from the Seventh Circuit and one from the Eleventh Circuit. A key point summary of these new district court opinions follows.

Simon v. Ultimate Fitness Group, LLC, No. 19 CIV. 890 (CM), 2019 WL 4382204 (S.D.N.Y. Aug. 19, 2019)

Applying King, U.S. District Judge Caroline Mahon denied the defendant’s Rule 12(b)(6) motion to dismiss, ruling that the plaintiff had plausibly alleged use of an ATDS to send text messages. In this regard, however, Judge Mahon applied only pre-ACA (and thus pre-King) case law, noting that (i) “the use of a ‘short code telephone number’ plausibly indicates that the Defendant used an ATDS” and (ii) “courts have found that if the texts are of an ‘impersonal, generic nature,’ they plausibly indicate the use of an ATDS.” Consequently, even though the plaintiff in this case did not describe the content of the text messages at issue beyond merely referring to them as “spam advertisements and/or promotional offers” in her complaint, Judge Mahon held that this allegation alone “plausibly suggest[ed] impersonal, generic messages.” Judge Mahon also found in the plaintiff’s allegations that she received “several unsolicited text messages over a period of two months from a variety of numbers,” including a short code to be “most persuasi[ve]” and sufficient to survive dismissal at the pleadings stage.

To read the full decision in Simon v. Ultimate Fitness Group, LLC, click here.

Morgan v. Deck Capital, Inc., No. 3:17-CV-00045, 2019 WL 4093754 (W.D. Va. Aug. 29, 2019)

In only the second post-ACA district-level opinion from the Fourth Circuit that Manatt has reported on, Senior District Judge Norman K. Moon, applying Dominguez and King, denied a defendant’s motion for summary judgment, holding that there was a genuine issue of material fact as to whether the defendant’s dialing system qualified as an ATDS. According to Judge Moon, (i) “[m]ost courts recognize that in addition to having the capacity to ‘store and produce telephone numbers to be called using a random or sequential number generator,’ an ATDS must have the ability to ‘dial numbers without human intervention’” and (ii) “dialing systems that require the caller to manually enter the telephone number to be called are generally found not to qualify as ATDSs.” In this regard, there was no dispute that the call at issue was placed by the defendant’s sales department on a phone in “Manual Touch Mode,” whereby the customer database used to store the phone numbers called “automatically populates an agent’s next phone number, the agent must manually key in the populated number, and the call will not be initiated unless the phone number is correctly input by the agent and the agent clicks ‘Dial.’” However, the defendant’s other departments also used a dialer that included other dialing modes, such as “Power Mode,” “Progressive Mode” and “Predictive Mode,” that did have “the capacity to store and produce numbers using a random or sequential number generator and then automatically dial such numbers,” which, according to Judge Moon, “almost certainly would qualify as ATDSs.” Consequently, because the parties disputed whether the phone with “Manual Touch Mode” used to make the call at issue was its own “system” or whether it was part of a “larger system that include[d] the other modes that do qualify as ATDSs” (noting that the latter, if true, would make the system an ATDS), Judge Moon held that a genuine dispute of fact remained, thus precluding summary judgment.

To read the full decision in Morgan v. Deck Capital, Inc., click here.

Brown v. Ocwen Loan Servicing LLC, No. 8:18-CV-136-T-60AEP, 2019 WL 4221718 (M.D. Fla. Sept. 5, 2019)

Relying primarily on a previous decision from a different district judge in the same court that Manatt has reported on (Gonzalez v. Ocwen Loan Servicing), U.S. District Judge Tom Barber recognized that, after ACA, (i) “the definition of an ATDS would not include a predictive dialer that lacks the capacity to generate random or sequential telephone numbers and dial them; but it would include a predictive dialer that has that capacity” and (ii) “a device [has] the capacity to generate random or sequential telephone numbers only if the device has the ‘present ability’ to do so.” Because the defendant’s dialer in that case was “not capable of generating and dialing random or sequential numbers,” Judge Barber agreed that it did not qualify as an ATDS. However, the court ultimately did not grant summary judgment in the defendant’s favor because the parties disputed how many calls were placed using an artificial or prerecorded voice, which Judge Barber correctly noted are “independently actionable from calls made using an ATDS” under the TCPA.

To read the full decision in Brown v. Ocwen Loan Servicing LLC, click here.

Smith v. Premier Dermatology, No. 17 C 3712, 2019 WL 4261245 (N.D. Ill. Sept. 9, 2019)

In Smith, U.S. District Judge Jorge Alonso recognized that, “[a]fter ACA International, neither the [FCC’s] 2015 ruling nor the FCC’s prior orders addressing the definition of an ATDS are binding.” Turning to the definition of an ATDS, the plaintiffs urged the court to apply the Marks definition from the Ninth Circuit, arguing that an ATDS should be defined as “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.” In this regard, Judge Alonso, quoting the FCC’s 2003 order, noted that “[t]here is a certain allure to the conclusion in Marks, to the extent one agrees that a ‘particular problem’ Congress sought to ‘alleviate’ in the TCPA was … ‘an increasing number of automated ... calls to certain categories of numbers,’ regardless of how the numbers were generated.” Ultimately rejecting Marks, Judge Alonso held that “[t]he 2003 order is no longer binding or in force, and with only the bare statutory language for guidance” and, therefore, it could not “agree with plaintiffs that the plain text of the statutory definition can bear their [and the Ninth Circuit’s] proffered interpretation.” Consequently, citing a prior decision from that court that Manatt has reported on (Pinkus v. Sirius XM Radio) and that was following Dominguez, Judge Alonso ruled that “the plain text of the statutory definition provides that an ATDS is a device that (1) stores or produces telephone numbers that (2) were randomly or sequentially generated and (3) dials them automatically.” Thus, because there was no dispute that the defendant’s text message system could not “use randomly and sequentially generated phone numbers, the system d[id] not qualify as an ATDS,” and the court granted summary judgment in the defendant’s favor.

To read the full decision in Smith v. Premier Dermatology, click here.

A Numerical Overview of Post-ACA International Cases

At the time of publication of this edition of TCPA Connect, the overall landscape of post-ACA case law breaks down as follows (changes reflected in bold):

Case Law by FCC Order Validity

  • 15 cases say all FCC orders invalidated
  • 32 cases say only some/part of FCC orders invalidated

Case Law by Circuit

  • 1 case from the First Circuit district courts
  • 19 cases from the Second Circuit district courts and 1 from the Second Circuit
  • 8 cases from the Third Circuit district courts and 1 from the Third Circuit
  • 2 cases from the Fourth Circuit district courts
  • 1 case from the Fifth Circuit district courts
  • 6 cases from the Sixth Circuit district courts
  • 12 cases from the Seventh Circuit district courts
  • 2 cases from the Eighth Circuit district courts
  • 11 cases from the Ninth Circuit district courts and 2 from the Ninth Circuit
  • 3 cases from the Tenth Circuit district courts
  • 12 cases from the Eleventh Circuit district courts

Case Law by Appellate Level

  • 4 appellate-level cases (Second, Third and Ninth Circuits)

Case Law by Autodialer Decision

  • 36 cases where autodialer was found
  • 28 cases where autodialer was not found
  • 11 cases where human intervention was a deciding factor in determining that the system was not an ATDS

To read all our previous articles on post-ACA International developments, please click here.