The question of what constitutes an automatic telephone dialing system pursuant to the Telephone Consumer Protection Act continues to keep courts across the country busy. Recently both the Third Circuit Court of Appeals and a federal court in California considered the issue.
Section 227(a)(1) of the TCPA defines an 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.”
Reversing a federal court judge’s grant of summary judgment, the Third Circuit held that Yahoo’s text alert system might qualify as an ATDS. The case was filed by Bill Dominguez, who claimed he received more than 27,000 text alerts after purchasing a cell phone that came with a reassigned telephone number. The previous owner had subscribed to an e-mail notification service offered by Yahoo, where a text message was sent every time an e-mail was received by the owner’s linked Yahoo e-mail account.
Dominguez was unable to cancel the service and eventually sued Yahoo for violating the TCPA, seeking $13.9 million in damages. Yahoo moved for summary judgment and a federal court judge granted the motion, ruling that the system at issue lacked the current capability to randomly or sequentially generate telephone numbers as opposed to simply storing the numbers.
The federal appellate panel reversed, relying on the Federal Communications Commission order issued this summer to find that a system needed only the capacity to store or produce numbers that are randomly or sequentially generated, not the present ability.
“Although hardly a model of clarity, its orders (as we interpret them) hold that an autodialer must be able to store or produce numbers that themselves are randomly or sequentially generated ‘even if [the autodialer is] not presently used for that purpose,’” the Third Circuit wrote. “But importantly, in the most recent ruling the FCC also clarified that neither ‘present ability’ nor the use of a single piece of equipment is required. Thus, so long as the equipment is part of a ‘system’ that has the latent ‘capacity’ to place autodialed calls, the statutory definition is satisfied.”
Because the district court did not have the benefit of the FCC’s ruling, the federal appellate panel remanded the case to allow it “to address more fully” whether Yahoo’s equipment met the statutory definition of an ATDS.
A California federal court reached a different conclusion in granting WhisperText’s motion to dismiss a TCPA suit. In that case, U.S. District Court Judge Paul S. Grewal found that human intervention “foreclose[s] any plausibility that WhisperText sends messages using an ATDS” because users of the WhisperText app must take affirmative action to have a text sent to a recipient inviting them to join.
Tony McKenna alleged that he received an unsolicited text message from WhisperText in December 2013 reading: “Someone you know has anonymously invited you to join Whisper, a mobile social network for sharing secrets. Check out the app here [with a link].” Instead of joining the network, McKenna filed a putative class action under the TCPA.
The court dismissed McKenna’s first amended complaint for failure to allege plausible facts suggesting the Whisper app used an ATDS. His subsequent complaint was dismissed because WhisperText’s equipment required human intervention and therefore did not meet the statutory definition of an ATDS.
For the third—and final—time, Judge Grewal dismissed McKenna’s complaint.
The plaintiff removed all mention of the WhisperText customer’s role in deciding to send invitations to contacts and in selecting the invitation’s recipients, and focused on the processes by which the defendant harvests the selected contacts’ phone numbers, uploads the numbers to a third-party platform, and sends out its invitations. The “entire process” of harvesting, uploading, and sending is automated and performed without any human intervention, McKenna told the court.
Despite this characterization of the process, the court said the fact that human intervention was required to send invitations remained unchanged. “As the court held in its previous order, McKenna’s statements that the Whisper App sends text invitations only at the user’s affirmative direction foreclose any plausibility that WhisperText sends messages using an ATDS, without human intervention.”
The most recent complaint “strives mightily to direct attention to WhisperText’s automated processes, and discusses them as if they were completely detached from any user direction,” the court said. “Nonetheless, it neither denies nor contradicts McKenna’s earlier allegations regarding the user’s role. Therefore, while this court accepts as plausible the allegations that WhisperText uses automated processes to harvest phone numbers from a Whisper App user’s phone and upload them to a third-party platform, and that the platform uses automated processes to send invitational messages to those numbers, it is undeniable from McKenna’s previous allegations that the human intervention of a Whisper App user is necessary to set those processes in motion. In light of the need for human intervention, McKenna’s allegations that WhisperText and assorted non-party companies use a third-party platform are irrelevant.”
The court cited a similar decision from a California federal court for support as well as the FCC’s July order, which found that an application that required human intervention to send invitational messages was not the “maker or initiator” of the calls for TCPA purposes.
“Accordingly, even though WhisperText uses automated processes to harvest and upload a user’s selected phone numbers and then send invitational messages, that is insufficient to make WhisperText the maker or initiator of a call using an ATDS under the TCPA,” the court said, dismissing McKenna’s complaint with prejudice.
To read the opinion in Dominguez v. Yahoo, Inc., click here.
To read the order in McKenna v. WhisperText, click here.
Why it matters: Along with the recent FCC order, the California federal court’s decision in McKenna adds to a growing line of cases holding that when human intervention is required to send invitational text messages, a sender cannot have used an ATDS. But the Third Circuit’s opinion provides a troubling interpretation of the term to include any system with the capacity to place autodialed calls, a sweeping read of the statute that could make life more difficult for TCPA defendants.