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

TCPA Connect

The circuit split fueling uncertainty over the proper definition of an automatic telephone dialing system (ATDS) deepened this week as the U.S. Court of Appeals, Seventh Circuit, weighed in on the issue. The Seventh Circuit’s decision comes on the heels of last month’s Eleventh Circuit ruling, which similarly adopted a narrow reading of what constitutes an ATDS.

Nearly two years after the D.C. Circuit’s  landmark decision in ACA International (ACA) striking down the Federal Communication Commission’s (FCC) overly expansive 2015 definition, courts continue to debate whether ACA left prior FCC guidance intact, resulting in varying interpretations of what constitutes an ATDS across the country. Last month, the U.S. Chamber of Commerce and groups representing the banking, retail and other industries urged the FCC to weigh in and provide clarity on the issue.

The Seventh and Eleventh Circuits join the Second, Third and Ninth Circuits as the only significant appellate-level decision-makers on the highly debated topic. At the district court level, the courts in the Ninth Circuit continue to follow the Ninth Circuit’s plaintiff-friendly decisions in Marks v. Crunch San Diego and more recently Duguid v. Facebook, which reaffirmed 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. The Seventh Circuit’s ruling is consistent with the Eleventh Circuit’s opinion in Glasser v. Hilton Grand Vacations, both of which notably reject the Marks approach and appear more in line with the Third Circuit’s opinion in Dominguez v. Yahoo.

Since our last update, we have observed no significant shift in how the district courts are interpreting ACA or defining an ATDS—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; 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 by the district courts of the Ninth, Eleventh and Seventh Circuits.

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

Stone v. AT&T Servs., Inc., No. 318CV02028GPCMSB, 2020 WL 209139 (S.D. Cal. Jan. 14, 2020)

Applying Marks and Duguid, U.S. District Judge Gonzalo Curiel denied summary judgment for defendant Vehicle Agency, LLC, holding that an 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.” Vehicle argued that its text messaging system, called Fiddleback, “creates individual personalized messages for each customer based on individualized requests” and therefore “does not dial individuals automatically.” The court, however, noted that Vehicle’s text messaging platform was substantially similar to the platform analyzed in Marks and created a triable issue of fact as to whether the platform constitutes an ATDS.

To read the full opinion in Stone v. AT&T Servs., Inc., click here.

Glasser v. Hilton Grand Vacations Co., LLC, No. 18-14499, 2020 WL 415811 (11th Cir. Jan. 27, 2020)

In a highly anticipated decision, the Eleventh Circuit held that a system must have the capacity to randomly or sequentially generate phone numbers in order to constitute an ATDS. The court’s reasoning focused on the conventional rules of grammar as well as the legislative history of the TCPA, calling its reading “the least superfluous approach” while criticizing the Marks interpretation as “more like surgery.” Specifically, the court found that the phrase “using a random or sequential number generator” modifies both verbs in the statute (to “store” and to “produce”). Therefore, systems that automatically dial numbers from a stored list fall outside this definition. The Eleventh Circuit also explained that devices that require human intervention are not “automatic dialing system[s].” The defendant’s dialing system, Intelligent Mobile Connect, required an employee to push a button labeled “make call,” which then dialed the number and connected the called party with a sales agent. Despite adopting a more narrow definition of an ATDS, the Eleventh Circuit stated that the statute does not require the capacity to randomly or sequentially generate phone numbers to be used in every covered call for the device to be considered an ATDS.

To read the full opinion in Glasser v. Hilton Grand Vacations Co., LLC, click here.

Gadelhak v. AT&T Servs., Inc., No. 19-1738, 2020 WL 808270, at *5 (7th Cir. Feb. 19, 2020)

Consistent with the Eleventh Circuit’s recent decision, the Seventh Circuit held that a dialing system must have the capacity to generate random or sequential numbers in order to qualify as an ATDS. In its ruling, the court held that the phrase “using a random or sequential number generator” modifies both “store” and “produce” in the statute. Admitting the “difficulties posed by” its interpretation, the court discussed four possible interpretations of the statute, including those previously adopted by the Third, Eleventh and Ninth Circuits, before adopting a more narrow interpretation. AT&T’s “Customer Rules Feedback Tool” exclusively dialed numbers from a stored customer database and “neither store[d] nor produce[d] numbers using a random or sequential number generator.” Thus, the court held it did not constitute an ATDS. The court’s ruling rejected the Marks interpretation, calling it a “significant judicial rewrite” and expressly holding that ACA “did not leave prior FCC Orders intact.”

To read the full opinion in Gadelhak v. AT&T Servs., Inc., 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

  • 18 cases say all FCC orders invalidated
  • 34 cases say only some/part of FCC orders invalidated

Case Law by Circuit

  • 2 cases from the First Circuit district courts
  • 19 cases from the Second Circuit district courts and 1 from the Second Circuit
  • 9 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 and 1 from the Seventh Circuit
  • 3 cases from the Eighth Circuit district courts
  • 15 cases from the Ninth Circuit district courts and 2 from the Ninth Circuit
  • 3 cases from the Tenth Circuit district courts
  • 13 cases from the Eleventh Circuit district courts and 1 from the Eleventh Circuit

Case Law by Appellate Level

  • 6 appellate-level cases (Second, Third, Seventh, Ninth and Eleventh Circuits)

Case Law by Autodialer Decision

  • 40 cases where autodialer was found
  • 33 cases where autodialer was not found
  • 14 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.

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