Third Circuit Revives TCPA Case Against Yahoo
A Yahoo user alleged that he purchased a phone that came with a preassigned telephone number. The previous subscriber of this number apparently set his account so emails sent to his Yahoo account triggered a text message to this phone number (which was now reassigned to plaintiff). Plaintiff allegedly received a staggering 27,000 text messages, and he tried to resolve the issue with Yahoo to no avail. Even having an FCC representative get on a call with a Yahoo customer service representative did not solve the problem.
He filed a lawsuit asserting TCPA claims. (At the statutory damage amount of $500 per message, he would be entitled to a whopping $13 million in damages.) The district court granted summary judgment to Yahoo. Blog post on the district court ruling here: “Yahoo! Scores Significant Win in Email-to-SMS Lawsuit”. The TCPA restricts calls made using equipment that has “the capacity . . . to store or produce . . . numbers to be called, using a random or sequential number generator.” (See Satterfield v. Simon & Schuster.) The Third Circuit addresses two issues on appeal.
First, plaintiff argued that regardless of how the numbers were generated, if the equipment had the ability to dial sequential numbers from a list (no matter how generated), this fit the definition. The Third Circuit did not find this argument convincing, saying that the focus of the statute is on the capacity to generate random or sequential numbers.
Second, the court focused on the system’s “ latent capacity” to make phone calls, and concluded unhelpfully “so long as the equipment is part of a ‘system’ that has the latent ‘capacity’ to place autodialed calls, the statutory definition is satisfied.” Against this definition, the court says Yahoo’s declaration was too conclusory because it failed to explain how exactly Yahoo’s equipment lacked the requisite capacity. The court remands for further consideration of this issue.
The definition of “autodialer,” which is already unhelpfully broad (and as the court notes, out of touch with current technology and practices), becomes even broader. Equipment that is part of a system that has the “latent capacity” to generate random or sequential numbers could be pretty much any modern device. The court struggles with the definition and, in the end, seems to punt on it. Although unpublished, the decision is worth noting because it means Yahoo has to spend another round litigating the autodialer issue in the trial court. (Yahoo did not seek re-hearing.) I’m curious about the court’s rationale for sending this back, and whether this was more procedurally or substantively motivated.
As the court notes, the FCC’s recently issued ruling [pdf], dealing with a range of TCPA issues, arrived at a mixed result on the auto-dialer issue. It concluded that number generation is the focus, rather than being able to dial from a list of numbers (no matter how generated). This interpretation was somewhat narrow and marketer-friendly. But the fact that it looked to whether the system overall (rather than one piece of equipment) had the theoretical capacity cuts the other way, and makes it that much easier for a plaintiff to allege use of an auto-dialer.
Phone number reassignment is a perennial TCPA problem, and the FCC ruling expressly addressed it, giving callers a one free pass if they don’t have knowledge of reassignment and have reasonable basis to believe they had valid consent. The FCC required consent to be from the “current” subscriber, and placed the burden on the sender to deal with making sure it had consent from the right party. Commissioner Pai sharply dissented on this (and other points), noting it sets up a litigation landmine. Yahoo could not take advantage of this exception likely due to the number of text messages at issue and its failure to stop after the recipient expressly requested, but I thought the FCC’s treatment of the number reassignment issue was also worth noting.
Case citation: Dominguez v. Yahoo, Inc., No. 14-1751 (3d Cir. Oct. 23, 2015)