Coming on the heels of the Third Circuit’s opinion in Dominguez, the Second Circuit issued what amounts to only the second federal appellate-level opinion thus far applying the D.C. Circuit’s important decision in ACA International to the Telephone Consumer Protection Act (TCPA) definition of an automatic telephone dialing system (ATDS). That case, King v. Time Warner Cable, Inc., was decided on June 29, 2018, as this edition of TCPA Connect was going to press.

There, the plaintiff had obtained partial summary judgment at the trial level on her claim that Time Warner had knowingly or willfully violated the TCPA by using an ATDS to call her cellphone 153 times without her consent. However, the district court relied on the Federal Communications Commission’s (FCC) 2015 order, which was invalidated by ACA International.

At the time of the alleged calls, plaintiff was a Time Warner subscriber and had agreed to the cable company’s terms of service, which allowed Time Warner to call “any number” provided “for any purpose” using an ATDS or artificial or prerecorded voices to call. According to the Second Circuit’s recitation of the facts, “[t]he [Time Warner] system automatically references Time Warner’s billing records to determine which customers are more than 30 days late on their payments, and then dials the number associated with those accounts. If a person answers the call, the system is programmed not to call that number again until the following day (and it will stop altogether if the customer’s account becomes current). If the call is not answered, the system is programmed to leave a voicemail and attempt to call back two more times that day.”

In summer 2013, Time Warner’s system started making calls to the cellphone belonging to the plaintiff in order to collect on an overdue account belonging to a different Time Warner customer. The plaintiff informed Time Warner that she was being called in error after receiving ten calls, but the calls continued and thus she filed suit. Time Warner admitted that its system has “the capacity to store numbers” and dial them, but also asserted that its system did “not have the capacity to make random or sequentially generated calls.”

In 2014, Time Warner moved for summary judgment, arguing that the term “capacity” as used in the TCPA definition of an ATDS means the device must be “capable at the time of use” of performing the functions of an autodialer. The district court disagreed, citing to a press release announcing the FCC’s 2015 order and concluding that the TCPA’s definition of an autodialer included “any technology with the capacity to dial random or sequential numbers,” such as “robo-callers,” and concluded that Time Warner’s system met that “low bar.” Time Warner appealed.

Writing on behalf of the panel, Circuit Judge Gerald E. Lynch wrote, “Although we are not bound by the D.C. Circuit’s interpretation of the [TCPA from ACA International], we are persuaded by its demonstration that interpreting ‘capacity’ to include a device’s ‘potential functionalities’ after some modifications extends the statute too far. Instead, we agree with the D.C. Circuit that the term ‘capacity’ is best understood to refer to the functions a device is currently able to perform, whether or not those functions were actually in use for the offending call, rather than to devices that would have that ability only after modifications.” Thus, the panel concluded that the trial court had “relied on an incorrect interpretation of the statute that was in turn premised on deference to an FCC Order [i.e., the 2015 Order] that is no longer valid.” However, because there was insufficient evidence in the record to determine whether Time Warner’s system had “capacity” to meet the definition of an ATDS after ACA International, the panel reversed and remanded.

To read the Second Circuit’s opinion in King v. Time Warner Cable, Inc., click here.

Why it matters: The opinions from the Second Circuit in King and the preceding decision from Third Circuit in Dominguez discussed above show how the courts are struggling to define an ATDS in the wake of the ACA International decision. They are consistent in key respects, in that they both employ a “present capacity” approach to defining an ATDS and reject an “actual or present use” theory (i.e., whether ATDS technology is actually used to make the specific call at issue). King explicitly holds that it does not matter whether the autodialer functions were actually used in making calls, whereas Dominguez is more subtle, stating that the plaintiff’s expert reports lacked “any explanation of how the Email SMS System actually did or could generate random telephone numbers to call.”

From there, the two Circuit decisions diverge in significant ways. Dominguez makes clear that, to be an ATDS, the system must have the present capacity to generate random or sequential telephone numbers and to dial those numbers, and human intervention is a key factor, noting that the text messages at issue “had been individually and manually inputted into [the] system by a user.” King, on the other hand, declines to address the role of random or sequential number generation or human intervention and instead focuses on “how much is needed” to activate autodialing features. The Second Circuit in King notes that an ATDS would include devices where one can merely “flip a switch” but goes further in stating that “courts may need to investigate, on a case-by-case basis, how much is needed to activate a device’s autodialing potential in order to determine whether it violates the TCPA.” Perhaps the Second Circuit will take up the important issues of random or sequential number generation and human intervention in a subsequent decision, but in the meantime, it appears the Third Circuit is providing TCPA defendants with better clarity.