Editor’s Note: This piece originally ran as an “Expert Analysis” piece in Law360 entitled “The State Of TCPA Litigation 1 Year After Marks V. Crunch.” It is re-published here with permission of that publication.
It was arguably the single most important decision in the already-incredible history of TCPA litigation.
One year ago the U.S. Court of Appeals for the Ninth Circuit handed down a tightly worded 10-page opinion in Marks v. Crunch San Diego LLC that expanded the Telephone Consumer Protection Act to cover any dialer that calls from a stored list of numbers “automatically.”[1] On the one year anniversary of this momentous occasion it seems fitting to pause and take stock of the decision, how it came to be, as well as to ruminate on the impact Marks has had over the last 365 days.
The Makings of A Highly Unlikely Decision
The entire lead up to the Marks decision was rather remarkable. In the first place, the case arose out of a mere two purportedly unwanted text messages. Two. The total value of this claim, standing alone, was somewhere between $1,000 and $3,000. Hardly the sort of case that seemed destined to become a TCPA legend.
Moreover, there seemed little dispute about the applicable law. Although the Federal Communications Commission had previously determined that text messages were subject to the TCPA, it had never issued a ruling regarding the sort of automatic technology that qualified as an automatic telephone dialing system in that context. And the FCC’s previous orders addressing predictive dialers did not seem to cover devices that transmitted mass text messages — although the FCC had regulated “predictive dialers” there is no predictive algorithm involved in selecting the timing of the text messages sent to the plaintiff. Seemingly, therefore, only the statutory definition could possibly apply.
But the district court’s analysis on summary judgment was unusual. Rather than simply distinguish the FCC’s earlier rulings as inapposite in the context of text messages — as other cases in the Ninth Circuit had done previously — the district court elected to make clear that it would not be deferring to the FCC at all.[2] The district court’s fateful rationale would prove highly ironic. In the district court’s view “the Ninth Circuit [has] found the definition of an ‘ATDS’ ‘clear and unambiguous.’”[3] This was so because since the Satterfield court had found the ATDS definition was “clear and unambiguous,” the FCC’s early interpretations of the ATDS definition were “not binding on the Court.”[4] Determining that the Ninth Circuit had already concluded that an ATDS required the use of a random or sequential number generator, the district court held readily enough that the evidence supported a judgment in the defendant’s favor.
Since only two calls were at issue in the case — and judgment was granted precertification without regard to one-way intervention rules — there seemed to be little incentive for the plaintiff to pursue an appeal. But appeal he did.
In a later podcast interview with Abbas Kazerounian, lead counsel for the class, he would tell me that he was under tremendous pressure not to pursue the appeal, from other plaintiffs lawyers. It was believed that Marks presented a poor test case. Only two texts were at issue and the device used to send the messages appeared to operate with substantial human intervention. Moreover, the assigned panel was populated with Bush-appointed judges. Asking this panel to depart completely from the Ninth Circuit’s earlier ruling in Satterfield seemed like a desperate million-to-one shot.
And things would seemingly only get worse for the appellant as time wore on. ACA Int’l was decided in the midst of the Marks appeal, with the U.S. Court of Appeals for the District of Columbia Circuit condemning the FCC’s earlier expansive interpretations of the TCPA. Weeks later the U.S. Court of Appeals for the Third Circuit handed down Dominguez v. Yahoo Inc., applying a strict statutory definition of the TCPA’s ATDS terminology. With two circuit courts of appeal adopting more narrow formulations of the TCPA’s ATDS definition, the odds that the Ninth Circuit would run in completely the opposite direction were… not good.
Despite the atmospherics, Kazerounian believed in his case. As he would later explain matters to me, Kazerounian felt tremendous rapport with Judge Sandra Ikuta at oral argument and believed that she would pull the panel in the plaintiff’s direction. In his view, there was no chance the Ninth Circuit would allow telemarketers to send text messages using automated technology without consent. And although he admitted to me he did not know how the Ninth Circuit was going to rule in his client’s favor, he was confident the panel would “find a way.”
Find a way it did.
The Ninth Circuit Makes its Mark in Marks
Like many TCPAWorld residents I remember where I was when I learned about the Marks decision. I had just completed an opening statement in a single-plaintiff TCPA arbitration against Morgan & Morgan. When I concluded giving my remarks, opposing counsel immediately asked me whether I’d like to have another 5 minutes added to my allotted time. In response to my perplexed look he responded simply, “check your email.”
In Marks, the Ninth Circuit panel had done the seemingly unthinkable. Although the same court had previously found that the TCPA’s ATDS definition was “unambiguous” — that was the district court’s entire rationale for refusing to apply the FCC’s earlier orders after all — the Marks panel disagreed, and opted to interpret the statute differently than any of the dozens of courts that had previously passed upon the meaning of the phrase ATDS.
The definition in question reads as follows: The term “`automatic telephone dialing system’ means 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.” As written, then, the use of a random or sequential number generator is a lynchpin requirement for a dialer to qualify as an ATDS.
Nonetheless, all parties agreed that the FCC had expanded the scope of the TCPA by including predictive dialers within the statutory definition on a handful of occasions, beginning in 2003. Although a number of courts had applied the FCC’s interpretation — concluding, perhaps erroneously, that they were required to do so by the Hobbs Act — no court had ever independently concluded that the statutory language applied to dialers that could not dial randomly or sequentially. (And this, ironically, was the point I had just finished making in my opening remarks to the arbitrator as the Marks opinion was being handed down.)
Well, Marks would change all of that. After first concluding that the FCC’s previous orders were set aside by the D.C. Circuit Court of Appeal in ACA Int’l — a
determination which was itself a major ruling at the time — the Marks panel goes on to conclude that the TCPA’s ATDS definition is ambiguous and must be interpreted in light of legislative history and intent. In passing on the statute with fresh eyes, the Marks panel was moved by two specific facts in concluding that the phrase “random or sequential number generator” modified only the word “produce” and not the word “store” in the statutory definition. First, the Marks panel observed that the express consent defense would have little utility if only random-fire dialers were covered by the statute. Second, the Marks panel observed that the TCPA was amended by Congress after the FCC’s earlier rulings broadening the statute without readdressing the ATDS definition, a tacit approval of the agency’s action.
On that basis, the Marks court held that “the term ‘automatic telephone dialing system’ means equipment which has the capacity — (1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator — and to dial such numbers automatically (even if the system must be turned on or triggered by a person).” This was, seemingly, something of a rewrite of the statute.
Taking Stock of Marks A Year On
Marks made quite the splash when it was first decided. A little over a month after Marks was handed down, the first district court applying its reasoning issued its decision in Keifer v. Hosopo Corp.[5] Just days later the reach of Marks would be expanded outside of the Ninth Circuit when a district court in Florida applied the case for the first time in Adams v. Ocwen.[6] Marks would later be applied by district courts in the First, Sixth and Seventh Circuits by the middle of this year, expanding the reach of the Ninth Circuit’s seminal ATDS decision as far as New England.
Nonetheless, Marks has not worn well and its impact appears to be faltering. Indeed, the decision has now been criticized by more district courts than have opted to follow the reasoning outside of the Ninth Circuit. The chart below notes that 18 cases applying a rationale contrary to Marks whereas only 4 cases outside of the Ninth Circuit have applied the Marks formulation:
Despite the potential waning influence of Marks outside of the Ninth Circuit, the decision still looms large on the minds of TCPA litigants who must always account for the decision in briefing and analysis, and on compliance officers hoping to keep their institutions safe from potential TCPA exposure. And with the U.S. Court of Appeals for the Seventh Circuit set to decide a critical ATDS showdown in Gadelhak v. AT&T Services Inc. — oral argument is set for next week in that one — the battle for the TCPA’s soul (its ATDS definition) has still not yet been finally decided.
Whatever the ultimate outcome may be — assuming there is ever a final verdict on the true meaning of the statute’s ATDS definition — Marks will forever be the case heard round the (TCPA)world, and a remarkable example of judicial expansion of a carefully (and seemingly narrowly) drafted statutory definition.
[1] See Marks v. Crunch San Diego, LLC , 904 F. 3d 1041 (9th Cir. 2018.)(Marks).
[2] See Marks v. Crunch San Diego, LLC, 55 F. Supp. 3d 1288 (S.D. Cal. 2014)(Marks Prime)
[3] Marks Prime at 1290.Citing Satterfield, 569 F.3d 946, 951 (9th Cir.2009).
[4] See Marks Prime at 1291 (refusing to apply Chevron deference to FCC TCPA rulings.).
[5] Keifer v. Hosopo Corp., Case No. 3:18-cv-1353, 2018 U.S. Dist. Lexis 183468 (S.D. Cal. Oct. 25, 2018).
[6] Adams v. Ocwen, Case No. 18-81028, Dkt # 23 (M.D. Fl. Oct. 29, 2018)
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