First Appellate Court Opinion Post-ACA International

TCPA Connect

As we previously reported, the ACA International opinion earlier this year changed the face of Telephone Consumer Protection Act (TCPA) jurisprudence, insofar as the D.C. Circuit struck down the Federal Trade Commission’s (FCC) previously restrictive interpretation of what constitutes an “automatic telephone dialing system” (ATDS). Since then we have updated our readers on various cases, all of which have shown how the federal district courts are struggling to define an ATDS going forward and that they are doing so with almost no consistency (i.e., facing similar facts, district courts have issued diametrically opposed decisions). In a recent case on appeal from the Eastern District of Pennsylvania, the Third Circuit issued the first federal appellate-level opinion relating to ACA International in a putative TCPA class action. That case is Dominguez v. Yahoo, Inc., the opinion in which was filed on June 26, 2018.

In Dominguez, the plaintiff purchased a cellphone with a reassigned phone number. The prior owner of the phone had subscribed to Yahoo’s text messaging service to get notifications each time an email was sent to his account. Over the course of 17 months, and after having tried to stop the notifications using various messages, the plaintiff received a mind-boggling 27,800 text messages. Sometime prior to 2014, the plaintiff filed a class action alleging that Yahoo used an ATDS as defined by the TCPA to send those messages; but the district court granted summary judgment in Yahoo’s favor in 2014, holding instead that the undisputed evidence showed that Yahoo’s service did not have the “capacity” to store or produce telephone numbers using a random or sequential number generator as the TCPA requires.

While the case was on appeal to the Third Circuit, the FCC separately issued its 2015 declaratory ruling (the ruling that ACA International struck down earlier this year), which concluded that the “capacity” of an ATDS is not limited to its current configuration but also includes its potential functionalities—i.e., if it has the latent or potential capacity to store or produce phone numbers using a random or sequential number generator and to dial those numbers, then it is an ATDS. Consequently, the Third Circuit vacated the district court’s opinion and remanded the case for further consideration.

Yahoo moved for summary judgment again, and once again prevailed at the district level. However, this time while the case was on appeal, the D.C. Circuit decided ACA International. Consequently, the Third Circuit said that the plaintiff could “no longer rely on his argument that [Yahoo’s SMS service] has the latent or potential capacity to function as an autodialer” and instead the “only remaining question, then, [was] whether Dominguez provided evidence to show that [Yahoo’s SMS service] had the present capacity to function as an autodialer.” The plaintiff submitted several expert reports in that regard, all of which suggested that Yahoo’s service could become an autodialer after a few modifications. The Third Circuit rejected those opinions as being “founded upon the exact type of hypothesizing that is foreclosed by ACA International.” The plaintiff’s experts also failed to explain how Yahoo’s system “actually did or could generate random telephone numbers to dial.” Thus, because the only evidence in the record was that Yahoo’s service sent messages only to numbers that had been individually and manually inputted into the system by the user, the Third Circuit affirmed.

Read the Third Circuit’s opinion in Dominguez v. Yahoo, Inc. here.

Why it matters: While Dominguez is notable because it represents the first attempt to apply ACA International by one of the federal appeals courts, the holding is not particularly earth-shattering. At most, it suggests that a system must have the actual capacity to generate random telephone numbers to dial now, rather than in the future with some modifications. Notably, though, while the district court opinions have focused on whether, and to what extent, human intervention is required when defining an ATDS, the Third Circuit did not. And arguably this opinion could be read as a lesson that plaintiffs’ experts give sufficient, not speculative, evidence of “capacity” going forward.

For more reading on Manatt’s continuing coverage on post-ACA International decisions by our TCPA compliance and class action defense team, click here.

To read our continuing coverage on all post-ACA International developments please click here.



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