Well folks, as we prepare for the Supreme Court review of the Telephone Consumer Protection Act (TCPA’s) critical automated telephone dialing system (“ATDS”) definition it is important to take note of the status of the case law on the issue so we can understand just how important this latest SCOTUS review really is.
On Friday I published this handy-dandy heat map breaking down the fractured legal landscape surrounding the definition of ATDS at the Circuit Level. Green jurisdictions are more defense friendly. Red jurisdictions are, well, not. The broader the ATDS definition applied by courts, the broader the application of the TCPA and the greater the speech the statute restricts.
Unsurprisingly a number of you had questions as to why certain circuits were labeled as they were. I intended to do a second post last week breaking it down but I do still practice law occasionally it turns out. Ha.
Nonetheless, as a supplement to the big can’t-miss webinar yesterday, I provide the definitive Circuit-by-Circuit analysis of the TCPA’s ATDS definition–at least as of today’s date. (This stuff moves fast so stay tuned to TCPAWorld.com for updates–and, of course, check out our rolling ATDS review for an up-to-the-minute catalog of district court level ATDS decisions.)
- The Statutory Definition
The TCPA has an unusually precise and spelled out definition of ATDS that was, seemingly, included to avoid the sort of disputes the Courts have concocted for themselves. It reads:
“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.”
- D.C. Circuit Court of Appeals
Background: The D.C. Circuit has the power to review FCC rulings under something called the Hobbs Act and it was the setting for a big challenge to the FCC’s 2015 TCPA Omnibus ruling and previous ATDS rulings. The Omnibus determined that all software-enabled dialing devices were subject to the TCPA because such dialers had the inherent “flexibility” to perform the statutory requirements of random or sequential number generation (i.e. a couple of lines of code could always be dropped into any dialer program to allow it to call randomly/sequentially.) It arrived there by focusing on the word “capacity” in the statutory definition and also by assuming that random or sequential number generation were the required functionalities of an ATDS as specified in the TCPA’s definition. Notably, however, earlier ATDS formulations from the Commission in 2003 and 2008 had not required random or sequential number generation, just the ability to call thousands of numbers at a time without human intervention.
In ACA Int’l the D.C. Circuit Court of Appeals set aside the broad definition of ATDS established in the Omnibus determining that it impermissibly converted smartphones into ATDSs and all Americans into TCPA violators in waiting. It also (probably) set aside all of the FCC’s ATDS rulings determining that they are inconsistent with each other and flawed in that they do not identify the functionalities an ATDS must perform to trigger statutory coverage.
Status: The D.C. Circuit Court of Appeals assiduously avoided articulating precisely what functionalities an ATDS must perform to qualify under the TCPA but did specify: i) the definition must not be so broad as to convert every smartphone in the nation into coverage; and ii) the FCC has fairly wide latitude to determine, for instance, that predictive dialers are subject to the TCPA if that is the policy choice it elects to make in the future. All previous ATDS work by the FCC was, however, set aside as inconsistent with reasoned rule making. ACA Int’l set the stage, then, for courts to determine for themselves anew what technology is covered by the statute.
- First Circuit Court of Appeals (District of Maine, District of Massachusetts, District of New Hampshire, District of Puerto Rico, District of Rhode Island)
Background: District Courts within the First Circuit were fairly late to the ATDS party with the first case of note coming down in April, 2019 and adopting Marks. See Gonzales v. Hosopo Corporation, 2019 WL 1533295 (D. Mass. Apr. 9, 2019) Gonzales was the only word on the subject out of the Circuit until March of this year when the D. Rhode Island strolled in with a big Defense-side win in Decapua v. Metro. Prop. & Cas. Ins. Co., C.A. No. 18-590 WES, 2020 U.S. Dist. LEXIS 47695 (D. R.I. March 18, 2020)( potential excel spreadsheet randomization converts system into ATDS). Still Decapua is largely a human intervention case, which leaves Gonzales the standard bearer for functionality assessment within the circuit.
Status (LIGHT RED): We categorize the First Circuit as leaning toward Marks factoring in Gonzales, the physical proximity–and persuasive power–of the Second Circuit Court of Appeals, and the overall pro-consumer lean of district courts in this Circuit.
- Second Circuit Court of Appeals (District of Connecticut, Eastern District of New York, Northern District of New York, Southern District of New York, Western District of New York, District of Vermont)
Background: It looked like district courts in the Second Circuit footprint were going to adopt the statutory definition– see e.g. Zanard v. Bank of Am. & Specialized Loan Servicing, No. 3:15-cv-1208 (MPS), 2019 U.S. Dist. LEXIS 72425 (D. Conn. April 30, 2019)(random and sequential number generation required)— but along came LaBoom and changed all of that.
Status (DARK RED) : After La Boom Disco the Second Circuit Court of Appeals footprint is firmly committed to a broad approach applying the TCPA’s ATDS definition to all automated dialing.
- Third Circuit Court of Appeals (District of Delaware, District of New Jersey, Eastern District of Pennsylvania, Middle District of Pennsylvania, Western District of Pennsylvania.)
Background: What a mixed up circuit. The Third Circuit Court of Appeals was the very first Circuit Court to jump into the fray with Dominguez II (issued just two months after ACA Int’l), in which the Court seemingly held that random or sequential number generation was required. Yet the analysis was so thin— and so much loose language was used– that district courts within the Third Circuit’s footprint continue to swing back and forth on the ATDS definition. Compare Smith v. Navient Solutions, LLC, 2019 U.S. Dist. LEXIS 131231 (W.D. Pa. Aug. 4, 2019)(rejecting Marks and requiring random and sequential number generation) with Johnson v. Comodo Group, Case No. 16-4469, DKT # 221 (D. N.J. Jan. 31, 2020)(finding VICIdialer is an ATDS as all predictive dialers are ATDS under Marks, which court follows.)
Status (LIGHT GREEN):While the courts are still a bit mixed up, the power of Dominguez II cannot be understated and–when properly leveraged–should assure victory to Defendants on the ATDS issue in most cases within the Third Circuit footprint.
- Fourth Circuit Court of Appeals (District of Maryland, Eastern District of North Carolina, Middle District of North Carolina, Western District of North Carolina, District of South Carolina, Eastern District of Virginia, Western District of Virginia, Northern District of West Virginia.)
Background: It was big news this year when a district court in North Carolina became the first within the Fourth Circuit Court of Appeals footprint to apply the statutory definition Snow v. General Electric, No. 5:18-CV-511-FL, 2019 U.S. Dist. LEXIS 99760 (E.D.N.C. June 14, 2019)(text message case dismissed with prejudice for lack of random and sequential number generation allegations). And it became even bigger news when the case was appealed to the Fourth Circuit. But the Snow suit eventually settled and there have been only a handful of glancing decisions since. Plus the Circuit produced one of the scariest manual call cases out there in Morgan v OnDeck so it is tough to say this Circuit leans pro-Defendant on ATDS issues.
Status (TOO CLOSE TO CALL): While the case law is favorable in the Fourth Circuit on the functionality issue, there just is not enough case law to really predict an outcome in any given ATDS case. Plus the shadow of Morgan looms large over the district courts in ACC country so we categorize the Fourth Circuit as yellow on our heatmap.
- Fifth Circuit Court of Appeals (Eastern District of Louisiana, Middle District of Louisiana, Western District of Louisiana, Northern District of Mississippi, Southern, District of Mississippi, Eastern District of Texas, Northern District of Texas, Southern District of Texas, Western District of Texas)
Background: As fate would have it, the first ATDS decision entered in the Fifth Circuit came from the Chief Judge of the most powerful district court in the Circuit–the N.D. Tx. See Adams v. Safe Home Sec., Civil Action No. 3:18-cv-03098-M, 2019 U.S. Dist. LEXIS 126522 (N.D. Tx. July 30, 2019)(Chief Judge of ND Tx holds that predictive dialers are not ATDS and dialers must use random or sequential number generator to qualify under the TCPA) With that ruling in hand, Defendants have seen predictable wins on ATDS challenges in every subsequent case within the footprint.
Status (Light Green): Courts within the Fifth Circuit footprint are very likely to skew toward a narrow ATDS definition. The only reason we have not colored the Circuit in dark green is that the Court of Appeals has not yet officially weighed in on the issue.
- Sixth Circuit Court of Appeals: (Eastern District of Kentucky, Western District of Kentucky, Eastern District of Michigan, Western District of Michigan, Northern District of Ohio, Southern District of Ohio, Eastern District of Tennessee, Middle District of Tennessee.)
Background: It has been quite the seesaw in the Sixth Circuit. The earliest post-ACA rulings focused on applying the FCC’s defunct ATDS rulings from 2003 and 2008. Eventually courts moved past that approach but continue to struggle between the Marks approach and the statutory definition. Compare Allan v. Pennsylvania Higher Education Assistance Agency, No. 2:14-cv-54 (W.D. Mich. Aug. 19, 2019)(following Marks and extending reach of Marks to Michigan and Sixth Circuit for the first time) with Lord v. Kisling, Case No. 1:17-CV-01739, 2018 U.S. Dist. LEXIS 116288 (N.D. Oh. July 12, 2018)(failure to allege random or sequential number generation sufficient to justify dismissal of TCPA text message case). The Sixth Circuit came close to issuing a ruling on the issue in Gary v Trueblue but appeared to confine its holding to procedural issues. And while it looked like things might be trending toward Defendants post-Gary, Quickensuffered a big loss at the pleadings stage that swung the pendulum back to neutral.
Status (TOO CLOSE TO CALL): The Sixth Circuit district courts are simply unpredictable at the moment and an ATDS ruling will turn on the judge reviewing the case. Notably, however, the Sixth Circuit is set to issue a ruling on ATDS functionalities in the next few months.Stay tuned.
- Seventh Circuit Court of Appeals: (Central District of Illinois, Northern District of Illinois, Southern District of Illinois, Northern District of Indiana, Southern District of Indiana, Eastern District of Wisconsin.)
Background: Ever since the ground breaking defense win in Pinkus, the district courts in the N.D. Ill. were the standard bearers for the statutory ATDS approach. A pile of rulings were handed down adopting the narrow approach random/sequential approach- which made the stakes EXTREMELY high for Defendants in the Seventh Circuit review in Gadelhak. Had the Seventh Circuit followed Marks things might really have been bleak in TCPAWorld. Luckily, that didn’t happen.
Status (DARK GREEN): Historically the N.D. Ill. was a VERY favorable TCPA jurisdiction for Plaintiffs– Soppet had a lot to do with that. But on ATDS issues, at least, Gadelhak assures district courts in the Seventh Circuit COA footprint must remain Defense friendly.
- Eighth Circuit Court of Appeals (Eastern District of Arkansas, Western District of Arkansas, Northern District of Iowa, Southern District of Iowa, District of Minnesota, Eastern District of Missouri, Western District of Missouri, District of Nebraska, District of North Dakota, District of South Dakota)
Background: Aww what might have been. The ruling in Stewart L. Roark v. Credit One Bank, N.A., No. CV 16-173 (PAM/ECW), 2018 WL 5921652 (D. Minn. Nov. 13, 2018)(rejecting Marks and requiring random/sequential number generation) was huge–and not just from an ATDS perspective. Not long after the N.D. Iowa ruled similarly. But the recent shenanigans by the Trump Campaign before the Chief Judge of the D. Minn–an Obama-appointee–really flipped the Circuit from a defense-friendly locale to a future hotbed of TCPA litigation in our view.
Status (LIGHT RED): This jurisdiction is still a bit of a tweener, but when the Chief Judge of D. Minn issues a ruling you can expect other district courts within the Eighth Circuit’s footprint to take heed.
- Ninth Circuit Court of Appeals (District of Alaska, District of Arizona, Central District of California, Eastern District of California, Northern District of California, Southern District of California, District of Hawaii)
Background: Some day, many years from now, you will be attending a Thursday Trivia night and be asked: what was the first ATDS ruling in the nation post-ACA Int’l. The answer is Marshall v. CBE Grp., Inc., No. 2:16-cv-02406-GMN-NJK, 2018 U.S. Dist. LEXIS 55223 (D. Nev. Mar. 30, 2018) and it took a decidedly narrow approach to the TCPA’s ATDS definition. So did the second case on the subject, Herrick v. GoDaddy.com LLC, No. CV-16-00254-PHX-DJH (D. Az. May 14, 2018), (decided rather famously the same day as Reyes v. BCA Fin. Servs., No. 16-24077-CIV (S.D. Fla. May 14, 2018)– more on that one below.) While Marhsall and Herrick seemed to open the door for TCPA defendant’s to agitate for a narrow ATDS definition, that door was slammed shut in Marks– the first circuit court level case to directly examine the TCPA’s ATDS definition.
Status (SO VERY DARK RED): Marks adopted the broadest read of the TCPA’s ATDS definition to date–applying it to all dialers that have capacity to call “automatically” from a list and preserving the issue of whether “capacity” might even refer to future capacity. Eesh. Since Marks the Ninth Circuit has repeatedly affirmed that Marks is the law of the land and rejected en banc proposals. We’re stuck with Marks until the Supreme Court’s ruling in Facebook folks.
- Tenth Circuit Court of Appeals (District of Colorado, District of Kansas, District of New Mexico, Eastern District of Oklahoma, Northern District of Oklahoma, Western District of Oklahoma, District of Utah, District of Wyoming.)
Background: The beautiful Tenth Circuit- America’s high country where the deer and the antelope play. Where seldom is heard a disparaging word or a lawsuit, and the TCPA landscape is not cloudy all day. It has been sleepy out in the Tenth Circuit since ACA Int’l with only ONE ATDS case to date, a mixed result in Asher v. Quicken Loans, Inc., Case No. 2:17-cv-1203, 2019 WL 131854 (D. Utah Jan. 8, 2019)(equipment must have capacity to call using a random or sequential number generator but the specific call at issue need not have been placed using that capacity.)
Status (TOO CLOSE TO CALL): Just not enough of a sample size here folks. We’ll have to wait for more cases before we can categorize the Tenth Circuit. If only the rest of the nation were so peaceful.
- Eleventh Circuit Court of Appeals (Alabama Northern District Court, Alabama Middle District Court, Alabama Southern District Court, Georgia Northern District Court, Georgia Middle District Court, Georgia Southern District Court, Florida Northern District Court, Florida Middle District Court.)
Background: You know that old saying–pigs get fat, hogs get slaughtered? The arc of TCPA litigation in the Eleventh Circuit may perfectly exemplify this cliche. For years Florida was the absolutely hotbed of TCPA litigation in the nation. Big wins in Osorio and in Reyes v. BCA Fin. Servs., No. 16-24077-CIV (S.D. Fla. May 14, 2018) set the stage for a fantastic spike in TCPA litigation in the Sunshine state, which was only spurned on by rulings in Gamble and subsequent district court rulings on ATDS and standing issues. But what goes up must come crashing down in TCPAWorld–in flames. In a stunning run of cases, starting with Hanna v. Salcedo and culminating with the recent Medley decision the Eleventh Circuit Court of Appeals hasabsolutely destroyed the Florida plaintiff bar’s chances in TCPA suits. And the chief wrecking ball– the big ATDS decision in Glasser in which the Court of Appeals issued a lengthy and studious opinion explaining precisely why the TCPA’s ATDS definition means what it says, and nothing more.
Status (VERY DARK GREEN): The Eleventh Circuit is definitely the best jurisdiction to be a TCPA Defendant these days–who saw that coming 18 months ago?
Well there you go folks, hope you enjoyed. Feel free to reach out with questions.