Expansive Definition of ATDS that Includes Devices that Merely Dial Numbers from a Stored List Remains the Law of Land in the Ninth Circuit

Parties Settle Crunch San Diego, LLC v. Marks

Expansive Definition of ATDS that Includes Devices that Merely Dial Numbers from a Stored List Remains the Law of Land in the Ninth Circuit

ACA International learned late today that the parties in Crunch San Diego, LLC v. Marks have reached an agreement to settle the case. Now, the U.S. Supreme Court will not consider Crunch San Diego, LLC’s request that it review the Ninth Circuit Court of Appeal’s decision that the web-based platform the gym operator used to send promotional text messages to its members’ and prospective customers’ cellular telephones may be subject to the TCPA’s autodialer restrictions because it “stores numbers and dials them automatically to send text messages to a stored list of phone numbers.”

Consequently, the three-judge Ninth Circuit panel’s unanimous ruling that “the statutory definition of ATDS includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator” is precedential, authoritative law in the Ninth Circuit upon which lower federal courts subject to the Ninth Circuit’s jurisdiction (Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington) must follow.

The ongoing confusion over the meaning of automatic telephone dialing systems, and with it the broader issue of the scope of the TCPA, has for years created uncertainty and compliance burdens on ACA International’s members. Therefore, as part of ACA’s long-term integrated three-pronged advocacy initiative to reform the TCPA to help its members succeed, in 2015 ACA submitted an amicus curiae (“friend of the court”) brief in the Marks case to provide assistance and insight to the Ninth Circuit with respect to the public policy and due process implications of how the TCPA is interpreted and applied by the accounts receivable management industry. A year later, the Ninth Circuit paused the Marks case pending the U.S. Court of Appeals for the D.C. Circuit’s decision in the landmark case, ACA International v. Federal Communications Commission.

Although the D.C. Circuit Court in ACA Int’l ultimately eviscerated the FCC’s expansive definition of ATDS, it did not answer the “basic question raised by the statutory definition [about] whether a device must itself have the ability to generate random or sequential telephone numbers to be dialed,” or whether it would be “enough if the device can call from a database of telephone numbers generated elsewhere.” Instead, the D.C. Circuit Court explained that the FCC could “adopt either interpretation,” but not both. As a result, courts around the country, including the Ninth Circuit Court of Appeals, have been left to interpret the TCPA to define an ATDS until the FCC acts and uses its rulemaking authority.

Therefore, ACA seized the opportunity to file a supplemental amicus brief in Marks to help explain to the Ninth Circuit the effect of the ACA Int’l decision on the issue of defining an ATDS under the TCPA.

In adopting an overly broad interpretation of ATDS, the Ninth Circuit also ruled that the TCPA includes all equipment that “engages in automatic dialing,” not just “equipment that operate[s] without any human oversight or control.” The Ninth Circuit reasoned that “[c]ommon sense indicates that human intervention of some sort is required before an autodialer can begin making calls, whether turning on the machine or initiating its functions.” Therefore, the appellate court held that the gym operator’s equipment, which dials numbers automatically, “qualifies as an ATDS, even though humans, rather than machines, are needed to add phone numbers.”

The Ninth Circuit’s decision in Marks has created a circuit split with decisions by two other sister circuit courts of appeals – the Second and Third Circuits, which also considered the issue of interpreting the legal definition of an autodialer and reached the opposite conclusion. In June, both the Second Circuit in King v. Time Warner Cable, Inc. and the Third Circuit in Dominguez v. Yahoo, Inc. (a case in which ACA also provided amicus support) held that a device is not considered an ATDS under the TCPA unless it currently has the capability to dial randomly generated or sequential phone numbers.

“Although ACA is disappointed that the U.S. Supreme Court will not be able to review the Ninth Circuit’s erroneous decision in Marks,” said Karen Scheibe Eliason, ACA’s Vice President and Senior Counsel, “reform of the antiquated TCPA remains among the highest priorities for ACA members.”

While enacted to address concerns regarding telephone marketing calls, the TCPA has created significant negative consequences for the public and private sectors seeking to reach consumers for informational, non-telemarketing calls.

Without reform, consumers will be unable to receive updates about time-sensitive information about adverse financial actions involving foreclosures, negative credit reporting, or litigation. Additionally, the TCPA continues to fuel a wildfire of lawsuits by opportunistic consumer attorneys that are overburdening the courts, and the accounts receivables management industry, while providing nominal relief to consumers. Limiting the definition of ATDS under the TCPA will help ensure that legitimate, non-telemarketing debt collection calls (and their resulting positive economic impact on the public and private sectors) are not unfairly impeded.

Scheibe Eliason said that “ACA will continue to be the voice for the industry and a leader in educating the FCC and federal courts around the country on the challenges surrounding the perilous TCPA landscape, as well as in actively advocating for common-sense TCPA reforms that allow legitimate businesses to communicate with consumers about important matters.”

ACA International’s efforts to proactively support the accounts receivable management industry are part of the association’s Industry Advancement Program, and are made possible by funding through ACA’s Industry Advancement Fund.

Posted in Debt Collection.