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

TCPA Connect

As we have previously reported, the ACA International 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’s) 2015 automatic telephone dialing system (ATDS) guidance. The more recent Marks v. Crunch San Diego, LLC case from the Ninth Circuit has spurred additional confusion about what constitutes an ATDS. As part of our continuing coverage in this area, the Manatt TCPA team has been reporting 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 Int’l in ways that may impact our readers.

At least one district court in the Ninth Circuit has refused to dismiss or strike the class allegations at the pleadings stage, on the basis of the expansive Marks Meanwhile, district courts in the Second Circuit and Sixth Circuit threw out two TCPA cases following ACA Int’l, but for very different reasons.

Michael Keifer, et al. v. HOSOPO Corporation d/b/a Horizon Solar Power, et al., Case No.: 3:18-cv-1353-CAB-(KSC), 2018 WL 5295011 (S.D. Cal. Oct. 25, 2018). In the first case to apply the Ninth Circuit’s new interpretation of an ATDS as set forth in Marks, the Southern District of California denied the defendant’s motion to dismiss or in the alternative to strike the class allegations. The plaintiff alleged that the defendant’s calls to his cellphone were made using an ATDS because he heard an artificial or prerecorded voice on the calls. The plaintiff seeks to represent two classes: (1) those who were called with an ATDS with no prior express consent and (2) those who were called in violation of National Do Not Call Registry rules. In refusing to dismiss at the pleadings stage, the court applied the Marks definition of an ATDS: “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 … [which] need not create or develop the numbers dialed on its own.” The court concluded that it was reasonable to infer that the defendant’s system was an ATDS based on this definition and that the class claims could also not be stricken.

To read the entire decision in Michael Keifer, et al. v. HOSOPO Corporation d/b/a Horizon Solar Power, et al., please click here.

Tzvee Rotberg et al. v. Jos. A. Bank Clothiers, Inc., et al., 16-cv-2962 (JPO), 2018 WL 5787480 (S.D.N.Y. Nov. 5, 2018). In Tzvee Rotberg, Judge Oetken in the Southern District of New York found that ACA Int’l invalidated much of the FCC’s prior treatment of the term ATDS. Although the court ultimately granted the defendants’ motion to dismiss on the basis of consent, it nonetheless held that the plaintiff had sufficiently pleaded use of an ATDS. The court stated, “An ATDS is ‘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.’” On the issue of “capacity,” the court explained, “‘[A] device’s current functions, absent any modifications to the device’s hardware or software[,]’ must satisfy the function requirements set out in 47 U.S.C. § 227(a)(1).” The court found that the indication in the terms and conditions that the defendants intended to use an ATDS, coupled with the use of a short code telephone number to send generic text messages, as well as the fact that the company distributed marketing materials suggesting it had delivered more than 4 billion mobile messages, established the plausibility of the plaintiff’s allegations that the defendants utilized an ATDS.

To read the entire decision in Tzvee Rotberg et al. v. Jos. A. Bank Clothiers, Inc., et al., please click here.

Gary v. TrueBlue, Inc., No. 17-cv-10544, 2018 WL 4931980 (E.D. Mich. Oct. 11, 2018). In this action, U.S. District Judge Drain in the Eastern District of Michigan interpreted ACA Int’l as persuasive authority when he granted summary judgment for the defendant on the issue of whether the WorkAlert and mBlox systems constituted ATDSs within the TCPA’s definition. In so holding, the court noted that ACA Int’l invalidated only part of the FCC’s 2015 Order but left intact the provision that “[t]he equipment used to originate Internet-to-phone text messages to wireless numbers via email or via a wireless carrier’s web portal is an ‘automatic telephone dialing system’ as defined in the TCPA.” The court stated, “To qualify as an automated telephone dialing system under the TCPA, a piece of equipment must have the capacity to (1) store or produce telephone numbers to be called, using a random or sequential number generator, and (2) dial such numbers. The question whether equipment has the ‘capacity’ to perform functions of an ATDS ultimately turns less on labels such as ‘present’ and ‘potential’ and more on considerations such as how much is required to enable the device to function as an autodialer.” In granting summary judgment for the defendant, the court held that the systems used by the defendant were not clearly “the type of internet-to-phone text messaging platforms contemplated by the FCC’s 2015 Ruling” because there was no evidence that the platforms operated in such a manner.

To read the entire decision in Gary v. TrueBlue, Inc., please click here.

Why these cases matter: The aftermath of the Marks decision is beginning to take shape, as evidenced by the recent district court opinion in the Ninth Circuit that applied the Marks definition. This expansive definition could encompass many more systems and devices that otherwise would not qualify as ATDSs under ACA Int’l alone. Furthermore, the district court opinions in the Second and Sixth circuits evidence the ongoing different approaches to interpreting ACA Int’l and highlight differing views on just what constitutes “capacity” to be an ATDS. Manatt’s TCPA compliance and class action defense group continues to monitor developments in this area and will continue to report on post-ACA decisions if and until the FCC finally weighs in and gives some much-needed clarity.