Seventh Circuit Provided Opportunity to Consider Just What “Capacity” Equipment Must have to Fall Within TCPA Restrictions

The U.S. Court of Appeals for the Seventh Circuit could entertain arguments on what “capacity” equipment must have to be considered an autodialer under the Telephone Consumer Protection Act (TCPA). An Illinois federal district court recently allowed Path, Inc. to pursue an interlocutory appeal of a summary judgment order finding the social networking service used an automated telephone dialing system (ATDS), as defined by the TCPA, to send unsolicited text messages to numbers gathered from users’ contact lists. If the Seventh Circuit agrees to hear Path’s appeal, it could beat the Federal Communications Commission (FCC) to the punch on an issue often at the center of the significant upswing of TCPA class action litigation.

The TCPA prohibits autodialed calls to cellular and other wireless phones, or other services for which recipients pay for calls, unless there is prior express consent or the call is for emergency purposes. The statute defines an ATDS as equipment having the capacity to store or produce phone numbers to be called, using a random or sequential number generator, and to dial such numbers. That definition was adopted in 1991 and the FCC was charged with implementing it, which it has done broadly, and generally has not refined its approach as technology advanced. How to define “autodialers” has thus become a central issue in petitions for clarification and/or declaratory ruling currently pending before the agency.

The Illinois and potentially soon-to-be Seventh Circuit case of Sterk v. Path, Inc. is a putative class action alleging Path collected Sterk’s contact information from a Path user, then violated the TCPA by using an ATDS to send him unsolicited SMS text messages about Path’s service. Path asserts that the system it used to contact the plaintiff was not an ATDS, because Path did not have or use any equipment with the capacity to store or produce telephone numbers to be called using a random or sequential number generator.

This spring, a federal district court in Illinois held in granting Sterk’s motion for summary that the undisputed facts demonstrated Path used autodialers. The court’s order emphasized that the FCC previously found that an ATDS may include equipment capable of automatically dialing numbers from a stored list without human intervention, “even when the equipment lacks the capacity to store or produce telephone numbers to be called.” The court consequently held “Path acquires a stored list of phone numbers from users” and that its equipment thus “calls from a stored list without human intervention” and as such “is comparable to the predictive dialers that have been found by the FCC to constitute an ATDS.”

But recently, a new judge assigned to the case issued an order permitting Path’s interlocutory appeal to contest the summary judgment ruling. The decision allowing the appeal found Path raised controlling and contestable questions of law regarding whether equipment that does not have the capacity to store or produce numbers using a random or sequential number generator, but does have capacity to dial numbers from a stored list automatically without human intervention, is an ATDS. The court found a contestable issue in just what kind of number-generation capacity is required under the TCPA. It also noted that federal district courts across the country are divided on the “capacity” issue, and that “[t]here is room to debate the meaning of the FCC decisions and what number-generation capacity is required under the [TCPA].”

The district court’s decision permitting Path’s interlocutory appeal is likely welcomed not only by Path itself, but by other services that use similar means to reach consumers but are fearful that their service may be seen by courts as using an ATDS. A possible ruling by the Court of Appeals on what number-generation capacity a device needs to meet the TCPA’s definition of an ATDS may put added pressure on the FCC to clarify its decisions on the issue.