Ninth Circuit Interprets Autodialer Broadly For TCPA Purposes

October 25, 2018 · by Venkat Balasubramani · in E-Commerce, Marketing, Privacy/Security, Spam

Marks signed up for a gym membership with Crunch Fitness. He received three text messages. He sued on behalf of a putative class. The key question is whether the messages were sent using an “automatic telephone dialing system” (ATDS) under the TCPA. The district court granted summary judgment on the ground that the system in question lacked a random or sequential number generator and lacked the potential capacity for such a feature. Marks appealed.

The Ninth Circuit reversed. Given that the DC Circuit recently invalidated the FCC’s interpretation of the term ATDS, the court looks at the statute with fresh eyes. The FCC’s most recent interpretation (which was recently invalidated) said that if equipment has the future capacity to function as an autodialer, taking into account upgrades and enhancements, then it’s an ATDS.

The court says that equipment can be an autodialer if it has the capacity to dial numbers automatically and the capacity to (1) to store numbers, or (2) produce numbers to be called (randomly or otherwise). In other words, the system at issue in this particular case very likely falls under the definition of an autodialer:

The device at issue in this appeal is called the Textmunication system, which is a web-based marketing platform designed to send promotional text messages to a list of stored telephone numbers. Phone numbers are captured and stored in one of three ways: An operator of the Textmunication system may manually enter a phone number into the system; a current or potential customer may respond to a marketing campaign with a text (which automatically provides the customer’s phone number); or a customer may provide a phone number by filling out a consent form on a Textmunication client’s website. A client of Textmunication can then design a marketing campaign that, for example, offers customers free passes and personal training sessions, provides appointment reminders and class updates, or sends birthday greetings, and the Textmunication system will automatically send the desired messages to the stored phone numbers at a time scheduled by the client. [emphasis added]

This sounds like a pretty broad definition that would encompass a lot of systems that companies use for text message campaigns!

The court footnotes that its position is at odds with the Third Circuit. The Third Circuit concluded in a recycled number case against Yahoo that an autodialer had to have the present capacity to generate a list of numbers and then dial such numbers. Granted, a smartphone could be configured to do this, but even this required some configuring and fell into the category of something that didn’t have the present capacity to do so. (Here’s my blog post on an earlier ruling in the Third Circuit case: “Third Circuit Revives TCPA Case Against Yahoo“.)

Crunch has sought rehearing en banc.

It will be interesting to see whether the Ninth Circuit takes the case en banc or if Crunch files a petition for cert.

The TCPA has kept lawyers busy! The statute itself is unclear as to what equipment must be used in order for a message to fall within the statute’s coverage. As the FCC and courts have noted, given the advances in technology, even a smartphone can function as an ATDS. The technological advances between the TCPA’s enactment and today have rendered the statutory definition somewhat less than useful.

Companies who may be the target of TCPA lawsuits hoped that invalidation of a somewhat broad FCC Order construing the definition of an ATDS would grant them relief. As this case reflects, it can be hit-or-miss in the courts.

Case citation: Marks v. Crunch San Diego, LLC, 2018 U.S. App. LEXIS 26883 * | __ F.3d __ | 2018 WL 4495553 (9th Cir. Sept. 20, 2018)

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