Notwithstanding so-called “guidance” from the Federal Communications Commission (FCC) in its July 2015 Order, the definition of “automatic telephone dialing system” (ATDS or autodialer) continues to be a disputed issue. This issue perpetuates the uncertainty over the scope of the Telephone Consumer Protection Act (TCPA) and creates confusion for businesses that are working in good faith to operate within the parameters of the statute. The FCC’s Omnibus Order issued on July 10, 2015—resolving more than half a dozen petitions on the autodialer question—failed to provide clarity and is being challenged in an appeal pending before a federal appellate court in Washington, DC. Even before the FCC issued its Order, the courts were split on the meaning of the term, and more recent decisions show that courts are continuing to struggle to apply a workable definition. The uncertainty over the definition of ATDS affects the scope of the TCPA and makes it difficult for businesses using automated communications to ensure compliance and manage litigation risk.

Recent FCC Guidance

The TCPA restricts the use of autodialers, which are defined by the statute 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.”1 In 2012, the FCC stated that the definition “covers any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists.” In re Soundbite Communications, Inc. Declaratory Ruling, CG Docket No. 02-278 (Nov. 29, 2012). This definition includes “hardware, when paired with certain software, [that] has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers.” Id. Also included within the FCC’s definition of autodialers are predictive dialers, defined as “equipment that dials numbers and, when certain computer software is attached, also assists telemarketers in predicting when a sales agent will be available to take calls.”

In its July 10, 2015 Order, the FCC stated that the mere capacity or capability alone to store or produce, and dial random or sequential numbers, without any showing that such functionality had been utilized or even could have been utilized at the time the calls were made, would define whether equipment constitutes an autodialer, thus giving rise to potential TCPA liability for the use of such equipment, regardless of whether the autodialer functionality was actually used and even if the equipment was used only to dial numbers from customer telephone lists. This FCC guidance is counter to several court decisions that had applied a more common sense standard by recognizing that an equipment’s capacity alone, without some showing that the functionality in question had been utilized, should not be sufficient to establish liability under the TCPA. Gragg v. Orange Cab Co., Inc., 995 F. Supp. 2d 1189, 1196 (W.D. Wash. 2014). See also Marks v. Crunch San Diego, LLC, 55 F. Supp. 3d 1288, 1291-1292 (S.D. Cal. Oct. 23, 2014);Glauser v. GroupMe, Inc., 2015 WL 475111 *3-4 (N.D. Cal. Feb. 4, 2015).

Not only did the FCC’s July 10, 2015 Order suggest a broad definition of autodialer, but the Order also failed to provide meaningful guidance on the type of equipment that would not qualify as an autodialer under the FCC’s definition. Instead, the FCC’s Order offers only an unhelpful truism—that a rotary dial phone is not an autodialer. The FCC stated that while “it might be theoretically possible to modify a rotary-dial phone to such an extreme that it would satisfy the definition of ‘autodialer,’ . . . such a possibility is too attenuated for us to find that a rotary-dial phone has the requisite ‘capacity’ and therefore is an autodialer.” By resorting to comparisons with rotary phones as an example of what is not an autodialer, the FCC’s Order is effectively devoid of any meaningful or practical guidance. Even a federal appellate court has noted that the ruling is “hardly a model of clarity.”Dominguez v. Yahoo, Inc., No. 14-1751 (3d. Cir. Oct. 23, 2015).

An appeal of the FCC’s Order on this issue is currently pending before the U.S. Court of Appeals for the D.C. Circuit, with further proceedings expected in 2016.

Recent Court Decisions

Notwithstanding the uncertainty created by the FCC’s July 2015 Order, a number of courts have issued decisions on the definition of autodialer since the FCC’s Order. Several courts have applied a practical standard and continued to use the element of human intervention as the touchstone, so that a calling system requiring human intervention has not been held to be an autodialer. These courts have not expansively interpreted the FCC’s suggestion that equipment that presently requires human intervention can constitute an autodialer if its capacity could hypothetically be upgraded or modified to place automated calls. Other courts, however, may be taking a broader view of the FCC’s Order, though the cases are necessarily fact-specific and varying outcomes can often be explained by differences in the specific facts.

Several lower courts have focused on the element of human intervention and dismissed cases where the communications to the plaintiff were initiated through some type of human intervention, regardless of the equipment’s theoretical capacity. In Luna v. Shac, LLC, No. 14-cv-00607, 2015 WL 4941781 (N.D. Cal. Aug. 19, 2015), the court held that a web-based text messaging platform was not an autodialer. The court adopted a test based on human intervention and did not decide the issue based on theoretical capacity. Similarly, in Derby v. AOL, Inc., 2015 WL 5316403, at *4-6 (N.D .Cal., 2015), another text message case, the court dismissed TCPA claims and found that a system that never operates without human intervention is not an autodialer under the TCPA. In Freyja v. Dun & Bradstreet, Inc., No. CV14-7831 (C.D. Cal Oct 14, 2015), the court granted summary judgment for the defendant where a call was manually dialed and therefore involved human intervention was used; the fact that the phone was connected to a desktop computer did not transform it into an autodialer. And inGaza v. LTD Fin. Servs., L.P., No. 8:14-CV-1012, 2015 WL 5009741, at *1 (M.D. Fla. Aug. 24, 2015), the court held that a point-and-click calling system constituted manual dialing and was not an autodialer. Specifically, the agent pulled up the subject account from a database and then used a mouse to manually click on the phone number associated with the account to launch the call. The court held that calls made by this equipment required human intervention, and the equipment was therefore not an autodialer.

Other courts have gone in a different direction, at least in part. The U.S. Court of Appeals for the Third Circuit reversed a favorable defense decision on the autodialer issue and remanded the case for further proceedings in light of the FCC’s July 2015 Order. Dominguez v. Yahoo, Inc., No. 14-1751 (3d. Cir. Oct. 23, 2015). The case involved text message notifications sent each time an email was sent to the user’s Yahoo email account. The district court held that the texts were not sent by an autodialer because the equipment used to send the texts did not use a “random or sequential number generator” but rather dialed from a compiled list. The appellate court reversed and remanded to the lower court to consider whether the calling system had the “latent capacity” to constitute an autodialer under the standard set by the FCC’s July 2015 Order.

In another case involving welcome messages sent as part of a mobile message service, a federal court in California held that the autodialer issue should be submitted to the jury at trial. Sherman v. Yahoo!, Inc., 3:13-cv-041 (S.D. Cal. Dec 14, 2015). The plaintiff received a welcome text message on his cell phone at the time he received an individualized message from another user of the platform. The defendant argued on summary judgment that human intervention by the other user triggered the welcome text, and therefore the text platform could not be considered an autodialer. The court disagreed. In the court’s view, the FCC’s 2015 Order “backed away from the ‘human intervention’ element.” On that basis, the court distinguished cases decided before the FCC’s July 2015 Order.

Conclusion

The lingering uncertainty over the meaning of ATDS, and with it the broader issue of the scope of the TCPA, creates uncertainty and compliance burdens on companies that wish to communicate with their customers. The pending appellate challenge to the FCC’s Order opens a new chapter in this fundamental question affecting the scope of the TCPA.