April 9, 2020 - TCPA

More Autodialer Confusion: Second Circuit Decision Deepens Circuit Split

On April 7, 2020, the Second Circuit Court of Appeals vacated a district court’s decision granting summary judgment to a defendant in a TCPA class action and deepened a split among federal courts by holding that the systems the defendant used to send text messages were Automatic Telephone Dialing Systems (“ATDSs”) under the Telephone Consumer Protection Act (“TCPA”). In Duran v. La Boom Disco, Inc., No. 19-600-cv (2d Cir. Apr. 7, 2020), the Second Circuit interpreted the two concurrent “capacities” that are necessary for a dialing system to qualify as an ATDS under the TCPA[1] and concluded that:

  • A dialing system that stores a list or database of telephone numbers that was generated and uploaded to the system by humans may be considered an ATDS.
  • An ATDS requires the capacity to “dial” telephone numbers automatically—e. without human intervention. However, a person clicking “send” to distribute the calls or text messages is not sufficient human intervention and such a system may be considered an ATDS.

In reaching these conclusions, the Second Circuit followed the Ninth Circuit’s decision in Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018), in contrast to Seventh, Eleventh, and Third Circuits, which held that an ATDS cannot make calls from stored lists. Accordingly, defendants in TCPA actions can no longer argue that the Ninth Circuit is the black sheep among federal courts of appeals on the critical autodialer issue. And the Second Circuit likely will become the new favorite jurisdiction among TCPA plaintiffs’ lawyers.

Background of the Case: A Party-Pooping Plaintiff

In 2016, plaintiff Radames Duran (“Duran”) voluntarily texted a code to a phone number maintained by defendant La Boom Disco (“LBD”), a nightclub, to gain free admission to a party. From that point on, LBD maintained Duran’s telephone number on a list and would send him numerous text messages each month.[2] In 2017, Duran filed a class-action complaint alleging that he received “unsolicited and unconsented-to” text messages from LBD in violation of the TCPA.

On summary judgment, LBD conceded that it sent the text messages to Duran, but argued that it did not violate the TCPA because the systems it used to send the messages, ExpressText and EZ Texting Programs, were not covered by the statute. The district court held that the systems’ reliance on a database of numbers, rather than a random or sequential number generator, did not disqualify them from TCPA coverage. See Duran v. La Boom Disco, Inc., 369 F. Supp. 3d 476, 490 (E.D.N.Y. 2019). But the district court held that the systems were not an ATDS because they required too much human intervention when dialing. Specifically, the district court concluded that “because a user determines the time at which [the systems] send messages to recipients, they operate with too much human involvement to meet the definition of an [ATDS].” Id. at 492. Duran appealed the district court’s decision.

The Second Circuit Crashes the Party

An ATDS Can Make Calls from a Stored List

The first issue before the Second Circuit was whether the systems had the “capacity . . . to store or produce telephone numbers to be called, using a random or sequential number generator.” Both parties agreed that humans generated the telephone numbers and uploaded them to LBD’s systems. The Second Circuit acknowledged a circuit split as to whether a system that pulls numbers from a stored list when it automatically dials is an ATDS, or whether the system must randomly or sequentially generate those numbers to qualify as an ATDS. The Seventh, Eleventh, and Third Circuits have all held that systems lacking the capacity to randomly or sequentially generate numbers do not constitute an ATDS because they only dial telephone numbers from lists that had been generated and uploaded by humans.[3] By contrast—in what was once an outlier decision—the Ninth Circuit held that systems that call numbers from a list or database uploaded by humans fall under the statutory definition of an ATDS because the clause requiring the use of “a random or sequential number generator” modifies only the verb “produce” in the statute, but not the word “store.” Thus, under the Ninth Circuit’s holding, only the numbers that are “produced” are required to be randomly or sequentially generated. The Second Circuit followed the Ninth Circuit and held because the systems that LBD used “stored” the lists of numbers was enough for them to qualify as an ATDS.

The Second Circuit reasoned that its interpretation of the statute was supported by the rule against surplusage, the structure and purpose of the TCPA, and the prior guidance from the Federal Communications Commission (“FCC”). Agreeing with the Ninth Circuit, the Second Circuit noted that its holding avoids rendering the word “produce” redundant by giving it an independent significance from the word “store,” i.e. differentiating between a system that can store numbers of all kinds and one that can produce numbers in a particular way (randomly or sequentially). Next, the Second Circuit observed that the TCPA allows an ATDS to be used “to collect a debt owed to or guaranteed by the United States.” As Congress did not authorize the use of stored lists only for this exception, it must have intended to allow ATDSs to store lists of human-generated numbers generally. Finally, the Second Circuit looked to the 2003, 2008, and 2012 FCC Orders as persuasive authority.[4] The Second Circuit found that the FCC suggested that the TCPA should be interpreted broadly so that the statute’s prohibitions maintain their deterrent effect.

Human Intervention: Clicking “Send” Is Not the Same as “Dialing”

The second issue before the Second Circuit was whether the systems had the “capacity . . . to dial such numbers.” The Second Circuit analyzed how much human intervention is tolerable under the statute before an ATDS becomes a non-ATDS and found that the district court erred in finding the human intervention analysis turned solely on the timing factor. Instead, the Second Circuit held that the key factor in the analysis is whether the systems had the ability to “dial” automatically, i.e. without human intervention. The Second Circuit held that clicking “send” or some similar button—like flipping an “on” switch—is not the same thing as dialing, “since it is not the actual or constructive inputting of numbers to make an individual telephone call or to send an individual text message.” According to the Second Circuit, to hold otherwise would undermine Congress’s ultimate purpose in passing the TCPA because any dialing system presumably requires some sort of human operation at some point in the process. In anticipation of future arguments concerning calls made using smartphones, the Second Circuit included a lengthy footnote explaining that its holding does not “unintentionally define all smartphones as ATDSs,” because clicking on a name in a smartphone digital phonebook is a “form of speed‑dialing or constructive dialing that is the functional equivalent of dialing by inputting numbers.”

Takeaways  

  • Duran deepens the circuit split on the “random or sequential number generator” requirement for ATDSs under the TCPA. Now that the Second Circuit has followed the Ninth Circuit’s precedent in Marks, it is possible that other circuits may adopt the same approach.
  • Duran expands potential TCPA liability in the Second Circuit in two respects:
    • A dialing system that stores a list or database of telephone numbers but does not produce those numbers from a “random or sequential number generator” may be considered an ATDS; and
    • A dialing system where human interaction is limited to clicking “send” or a similar button may be considered an ATDS.
  • Until the FCC or the Supreme Court weighs in on these issues, there will continue to be confusion and inconsistent holdings on the ATDS issue among district courts that are not in the Second, Ninth, Seventh, Eleventh, or Third Circuits.

[1] To qualify as an ATDS, a dialing system must have both the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator[,]” 47 U.S.C. § 227(a)(1)(A), and the capacity “to dial such numbers[,]” id. § 227 (a)(1)(B).

[2] Duran alleged he received somewhere near 300 text messages, while LBD argued it only sent him around 121 text messages.

[3] See Gadelhak v. AT&T Servs., Inc., 950 F.3d 458 (7th Cir. 2020); Glasser v. Hilton Grand Vacations Co., 948 F.3d 1301 (11th Cir. 2020); Dominguez v. Yahoo, Inc., 894 F.3d 116 (3d Cir. 2018).

[4] The Second Circuit noted that its decision in King v. Time Warner Cable Inc., 894 F.3d 473 (2d Cir. 2018) and the D.C. Circuit’s decision in ACA International v. Federal Communications Commission, 885 F.3d 687 (D.C. Cir. 2018) did not invalidate the 2003, 2008, and 2012 FCC Orders.