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

TCPA Connect

Well over a year has passed since the ACA International (ACA) decision from the D.C. Circuit changed the face of litigation in the Telephone Consumer Protection Act (TCPA) world by striking down the Federal Communication Commission’s (FCC) 2015 automatic telephone dialing system (ATDS) guidance, and courts remain hopelessly split on what constitutes an ATDS with no immediate relief in sight. Federal district judges are still issuing opinions interpreting ACA, with district courts in the Ninth Circuit consistently following the plaintiff-friendly decision Marks v. Crunch San Diego, and others either following Marks or, to a 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 defendants (depending on the underlying facts, of course). The Second, Third and Ninth Circuits remain the only significant appellate-level opinions on ACA (though the Ninth Circuit just recently reaffirmed Marks in the Duguid v. Facebook case, and the FCC has yet to issue any guidance defining an ATDS in the post-ACA world.

We have observed no significant shift in how the district courts are interpreting ACA since our last update—i.e., 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 there has been a slight uptick in this regard in favor of plaintiffs surviving dismissal); about a third have held that ACA invalidated all prior FCC orders defining an ATDS; and about one-fifth have found that human intervention was a deciding factor as opposed to just the 2015 order discussed in ACA. The volume of district court decisions on ACA has, however, slowed somewhat over the past couple of months, which may be the result of the Fourth Circuit’s and Ninth Circuit’s recent decisions finding one of the TCPA exemptions (the so-called “debt-collection exemption” for government debt collectors) to be a content-based restriction on speech in violation of the First Amendment to the U.S. Constitution. These two undoubtedly key decisions could, in theory, lead to a showdown in the Supreme Court on the constitutionality of the entire TCPA itself and, as such, could moot any further discussion of the impact of the ACA decision, at least in the short term.

Since our last update, there have been no new appellate decisions and only six new district court opinions: one from the Second Circuit, one from the Fourth Circuit, three from the Seventh Circuit and one from the Eleventh Circuit. While the volume of opinions from district courts in the Seventh Circuit—particularly the Northern District of Illinois—has continued to steadily increase, the volume of opinions from district courts in other circuits has not, and the Seventh Circuit itself and other Circuit Courts of Appeals have still refrained from weighing in, though there are various cases on appeal. While there was a significant district court opinion on ACA from the Fourth Circuit for us to report on in this edition, there have still been no significant decisions on ACA at the district court level in the Fifth Circuit, which is particularly noteworthy considering the volume of TCPA cases filed there (second only to the Ninth and Seventh Circuits). And while further analysis is beyond the scope of this article, we have noted that litigants are still seeking to stay their cases because of ACA—arguing that the court should stay the case until the circuit split is resolved and/or the FCC provides guidance—with varying degrees of success.

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

Update on Marks: As noted above, the Ninth Circuit recently reaffirmed its controversial holding in the Marks case in Duguid v. Facebook, Inc., 2019 WL 2454853 (9th Cir. June 13, 2019). However, since that decision also struck down a part of the TCPA (the so-called “debt collection exemption”) as an unconstitutional restriction on free speech, that opinion is covered in full detail elsewhere in this edition of TCPA Connect.

To read more, our article on Duguid can be found here.

Kloth-Zanard v. Bank of America, No. 3:15-CV-1208 (MPS), 2019 WL 1922070 (D. Conn. Apr. 30, 2019). Following the Second Circuit’s opinion in King v. Time Warner Cable Inc.,U.S. District Judge Michael P. Shea of the District of Connecticut granted summary judgment in favor of the defendants because the plaintiff did not submit any evidence to suggest that the caller used an ATDS—specifically, a device with the capacity to produce numbers using a random or sequential number generator—to call her. Defining “capacity” under the TCPA, Judge Shea, quoting from King, ruled that the term “should be interpreted to refer to a device’s current functions, absent any modifications to the device’s hardware or software” and “include[s] devices whose autodialing features can be activated . . . by the equivalent of the simple flipping of a switch.”

To read the full decision in Kloth-Zanard v. Bank of America, click here.

Hudson v. Ralph Lauren Corp., No. 18 C 4620, 2019 WL 1953106 (N.D. Ill. May 1, 2019). Weighing in on a Rule 12(b)(6) motion in a text message case, U.S. District Judge Sara L. Ellis of the Northern District of Illinois ruled that the plaintiff had sufficiently pleaded the use of an ATDS. Defendants urged Judge Ellis to apply the definition of an ATDS from a prior decision from the same district in Pinkus v. Sirius XM Radio, Inc., 319 F. Supp. 3d 927 (N.D. Ill. 2018), specifically that “an ATDS must have the capacity to generate telephone phone numbers, either randomly or sequentially, and then to dial those numbers.” Along those lines, Judge Ellis held that “to qualify as an ATDS, the defendant need not have deployed the device’s capacity to generate telephone numbers randomly or sequentially as long as the device has the present ability to do so.” Judge Ellis ultimately ruled, however, that the plaintiff had survived dismissal because he had alleged that “Defendants used equipment with the ability to store or produce cellular telephone numbers to be called using a random or sequential number generator and to dial such numbers without human intervention,” as evidenced by “the high volume of text messages, the generic and impersonal nature of the messages, and Defendants’ use of an SMS code.” Though the defendants argued that the plaintiff “need[ed] [to] allege more to demonstrate the device could generate random or sequential numbers after ACA International,” Judge Ellis held that the defendants did “not provide any basis for raising the pleading standard for an ATDS” and that “at the motion to dismiss stage, [the plaintiff] need not include such specific allegations about the type of machine Defendants used, particularly considering that plaintiffs do not typically have access to details of the type of machine used before engaging in discovery.” While Judge Ellis also acknowledged that “[a]fter ACA International, courts have split on the proper definition for an ATDS and whether ACA International invalidated the FCC’s prior 2003 and 2008 interpretations of an ATDS or left those intact,” she did not weigh in on this split.

To read the full decision in Hudson v. Ralph Lauren Corp., click here.

Melvin v. Ocwen Loan Servicing LLC, No. 8:18-CV-1911-T-36SPF, 2019 WL 1980605 (M.D. Fla. May 3, 2019). U.S. District Judge Charlene Edwards Honeywell of the Middle District of Florida denied a Rule 12(b)(6) motion to dismiss under ACA. As a threshold matter, Judge Honeywell noted that while the Eleventh Circuit has not ruled on this issue, district “[c]ourts within this circuit, including this one, have generally adopted the position that ACA voided and vacated the 2003 and 2008 FCC Orders’ interpretation of the statutory meaning of an ATDS” and that there are “several” cases on appeal on this front. Following two prior district court opinions within the Eleventh Circuit on ACA, Judge Honeywell ruled that the plaintiff had sufficiently alleged the use of an ATDS because he alleged that “Ocwen made over eighty calls, continued those calls after several demands to stop them, [and] he heard silence and a clicking sound once he answered the phones, which may suggest the use of an ATDS.”

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

Zeidel v. Nat’l Gas & Elec., LLC, No. 18 CV 06792, 2019 WL 2161546 (N.D. Ill. May 17, 2019). Applying ACA and prior decisions from the same district on ACA, U.S. District Judge John Z. Lee of the Northern District of Illinois denied a Rule 12(b)(6) motion to dismiss. Judge Lee ruled that a “device must have the present, as opposed to merely potential, capacity to function as an ATDS . . . , as well as the ability to produce numbers using a random or sequential number generator, as opposed to merely dialing numbers from a stored list.” In this regard, Judge Lee noted that “courts in this district have adopted differing views of the requirements for pleading a TCPA violation,” with some suggesting that “plaintiffs must allege only the use of an ATDS as defined in the statute, without supporting facts” while others have held that “alleging the mere statutory definition of an ATDS without further descriptive details is too conclusory to withstand a motion to dismiss” and requiring “a plaintiff to present additional facts supporting a reasonable inference that the defendant used an ATDS.” Judge Lee ruled that the plaintiff had pleaded sufficient facts to survive dismissal under both standards, noting that “[a]lthough the complaint d[id] recite the TCPA’s definition of an ATDS, it also include[d] further details about the content and nature of the calls, which support a reasonable inference that [the defendant] used an ATDS to make unauthorized calls to [plaintiff and other similarly situated individuals”—specifically, that the plaintiff alleged the defendant made “numerous” unsolicited calls, the generic and promotional nature of the content of the calls, and the use of “spoofed” caller ID numbers. Judge Lee also commented that “the difference between a predictive dialer and an ATDS is not readily apparent to a recipient of an automated call” and, consequently, that “a plaintiff need not provide specific, technical details about the device at issue at the pleading stage.”

To read the full decision in Zeidel v. Nat’l Gas & Elec., LLC, click here. For our more detailed analysis on Zeidel, click here.

Bader v. Navient Solutions, LLC, 18-CV-1367, 2019 WL 2491537 (N.D. Ill. June 14, 2019). Ruling in favor of the defendant on a Rule 12(c) motion for judgment on the pleadings, U.S. District Judge Sharon Johnson Coleman for the Northern District of Illinois held that the plaintiff did not sufficiently allege use of an ATDS under ACA. In particular, Judge Coleman held that the plaintiff did “not put forth any factual allegations that suggest [the defendant] dialed his number using equipment that had the capacity to generate random or sequential numbers” and that simply alleging that the defendant stored and dialed his number, while perhaps sufficient under prior FCC declarative rulings, was no longer sufficient under ACA. In that regard, Judge Coleman held that “ACA International establishes that [a plaintiff] must assert facts that make it plausible [the defendant] used equipment with the capabilities to generate numbers randomly in order to allege the use of an autodialer.”

To read the full decision in Bader v. Navient Solutions, LLC, click here.

Snow v. General Electric Co. et al., No. 5:18-CV-511-FL, 2019 WL 2500407 (E.D.N.C. June 14, 2019). Rejecting the Ninth Circuit’s broad, post-ACA International approach to defining an ATDS from the Marks case and adopting the Third Circuit’s narrower approach in Dominguez, U.S. District Judge Louise W. Flanagan of the Eastern District of North Carolina held that the TCPA “unambiguously incorporates a ‘random or sequential number generator’ into the definition of an ATDS.” As such, Judge Flanagan held that the “plaintiff must allege facts permitting an inference that defendants called her with equipment that has the capacity to store or produce numbers using a random or sequential number generator.” Consequently, Judge Flanagan granted the defendants’ Rule 12(b)(6) motion to dismiss, finding that “[b]ecause plaintiff alleges that the text messages she received were intended for the prior owner or holder of her reassigned [cellular telephone] number, a targeted recipient, and because of the alleged content of the messages, it [wa]s not reasonable to infer that the messages were sent with equipment ‘using a random or sequential number generator’” within the meaning of the TCPA.

To read the full decision in Snow v. General Electric Co., 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

  • 12 cases say all FCC orders invalidated
  • 31 cases say only some/part of FCC orders invalidated

Case Law by Circuit

  • 1 case from the 1st Circuit district courts
  • 17 cases from the 2d Circuit district courts and 1 from the 2d Circuit
  • 7 cases from the 3d Circuit district courts and 1 from the 3d Circuit
  • 1 case from the 4th Circuit district courts
  • 0 cases from the 5th Circuit district courts
  • 5 cases from the 6th Circuit district courts
  • 10 cases from the 7th Circuit district courts
  • 2 cases from the 8th Circuit district courts
  • 11 cases from the 9th Circuit district courts and 2 from the 9th Circuit
  • 2 cases from the 10th Circuit district courts
  • 11 cases from the 11th Circuit district courts

Case Law by Appellate Level

  • 4 appellate-level cases (2d, 3d, 9th Circuits)

Case Law by Autodialer Decision

  • 29 cases where autodialer found
  • 25 cases where autodialer not found
  • 11 cases where human intervention was a deciding factor in determining that system was not ATDS

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