On Friday, June 19, 2009, the U.S. Court of Appeals for the Ninth Circuit released its decision in Satterfield v. Simon & Schuster, which clarified the construction of the Telephone Consumer Protection Act (TCPA) in ways that are adverse to the interests of companies that conduct marketing via text messaging.

The case came to the Ninth Circuit on appeal from a summary judgment decision at the district court level finding that a text messaging campaign did not violate the TCPA because: (1) a text message is not a "call" under the TCPA; (2) the equipment used to send the message was not an "autodialer" because it was not used to generate random or sequential numbers to call for purposes of sending the text messages; and (3) the sender of the text messages had express prior consent because it had consent to send messages from its "affiliates" and "brands."

The Ninth Circuit reversed and remanded finding that: (1) the Federal Communications Commission's construction of the TCPA to include a text message as a "call" was a reasonable construction of the statute under Chevron; (2) under the TCPA, an autodialer includes equipment with the "capacity" to generate random or sequential numbers, whether or not that capacity is in use, meaning the district court was required to conduct fact finding on whether the equipment in question had such capacity; and (3) there was no express prior consent where customers agreed to receive messages from an "affiliate" or "brand" and the messages sent were from a company with no corporate relation to the sender and were not part of any brand associated with sender. On this last point, the court held that following a message with the phrase "powered by [Sender]" was insufficient to "brand" the message as coming from the sender.

The impact of this decision is as follows:

  • Most companies already treat text messages as "calls" for TCPA purposes, and the Mobile Marketing Association (MMA) Consumer Best Practices Guidelines also assume texts are "calls" under the TCPA. For most companies, this aspect of the decision will not require a change in conduct.
  • The Ninth Circuit's confirmation that "autodialer" is defined broadly to include any equipment with the "capacity" to generate random or sequential numbers for sending messages is also not new for most companies, but may be new to some taking a more aggressive posture. To the extent a company was relying solely on the fact that the equipment it was using is not an "autodialer" as defense against a TCPA claim, the Ninth Circuit's decision would require a change in practice.
  • To the extent companies have obtained customer opt-in consent to receive messages from "affiliates" or "brands," companies should review their practices to ensure the source of the messages is an "affiliate" or "brand" under the Ninth's Circuit's new, narrower definition of those terms. In particular, companies that send third party messages and rely on an identification of the source of the message, such as "powered by XXX," to insulate themselves from TCPA liability should review their practices to make sure the scope of customer consent is sufficiently broad to include these messages.