Ninth Circuit Adopts Expansive Definition of Autodialer Under the TCPA, Creating Circuit Split With Third Circuit

In Marks v. Crunch San Diego, the Ninth Circuit Court of Appeals, considering anew the statutory definition of automatic telephone dialing system (ATDS) under the Telephone Consumer Protection Act (TCPA), held 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.” The Ninth Circuit expressly declined to follow the Third Circuit’s interpretation of ATDS in Dominguez v. Yahoo, Inc., thus setting up a clear Circuit split. Both Marks and Dominguez were issued after the D.C. Circuit invalidated the FCC’s interpretation of ATDS in ACA International v. Federal Communications Commission.

In Marks, plaintiff brought a TCPA class action after receiving three text messages from Crunch Fitness where he had a gym membership, asserting that the texts were sent using an ATDS. The messaging system was a “web-based marketing platform designed to send promotional text messages to a list of stored telephone numbers.” Phone numbers were either manually entered into the system or provided directly by customers. To send text campaigns, a Crunch employee would log in, select the intended recipients, generate the content of a message, and select the time and date for the transmittal of the text messages. The district court granted summary judgment on the ground that the messaging system did not qualify as an ATDS because it “lacked a random or sequential number generator, and did not have the potential capacity to add such a feature.”

While the appeal of the summary judgment order was pending, the D.C. Circuit, in ACA International, invalidated the FCC’s interpretation of the two key questions raised by the statutory definition of an ATDS, namely: “(i) when does a device have the ‘capacity’ to perform the two enumerated functions; and (ii) what precisely are those functions?” Because the D.C. Circuit vacated the FCC’s interpretation of which type of device qualified as an ATDS, the Ninth Circuit reconsidered the statutory definition of ATDS.

The TCPA defines ATDS as “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.” 47 U.S.C. § 227(a)(1). The Ninth Circuit explained that the critical question is “whether, in order to be an ATDS, a device must dial numbers generated by a random or sequential number generator or if a device can be an ATDS if it merely dials numbers from a stored list.” The Ninth Circuit held that the TCPA’s definition was ambiguous, and thus, the Court looked to “the context and the structure of the statutory scheme” where it found ample support for the conclusion that “language in the statute indicates that equipment that made automatic calls from lists of recipients was also covered by the TCPA.”

Therefore, even though the TCPA defines ATDS as “equipment which has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator,” the Marks Court held that “a random or sequential number generator” was not needed to qualify as an ATDS. Specifically, the Court explained that an “ATDS is not limited to devices with the capacity to call numbers produced by a ‘random or sequential number generator’ but also includes devices with the capacity to dial stored numbers automatically.”

The Ninth Circuit’s decision in Marks and the Third Circuit’s decision in Dominguez reach diametrically opposed conclusions on the meaning of ATDS, and, at least outside of these Circuits, the debate will rage until the U.S. Supreme Court weighs in.

Michael R. McDonald is a Director in the Gibbons Commercial & Criminal Litigation Department.