SHORT CUT: First District Court Applying Panzarella Approach Grants Judgment to TCPA Defendant–But Does It Take ATDS Analysis Down the Wrong Road?

This is simply unbelievable (potentially in a really good way.)

A district court in NY–which is seemingly bound to follow the 2nd. Circuit ruling in King v. Time Warner–just bucked the trend of focusing on “capacity” in TCPA ATDS cases and, instead, has followed the Third Circuit’s recent PANDORA’S BOX ruling in Panzarella.

This is about as wild an outcome as you could expect in TCPAWorld.

So let’s set the stage real quick.

The TCPA governs calls made using an ATDS.

An ATDS is a system with the “capacity” to store or produce telephone numbers using a random or sequential number generator.

So, as phrased, the TCPA prevents–subject to certain exceptions–calls to cell phones using any system with the “capacity” to dial in a certain way, even if the dialer didn’t work that way when a specific call was placed.

This issue–among many others–is one of the unique twists that makes the TCPA so wretchedly dangerous. Even if a call is made manually, the mere fact that the system used to make the call might otherwise be capable of making automated calls triggers the TCPA’s restrictions.

That is the rule in most places–including in the Second Circuit following a case called King v. Time Warner Cable, Inc., 894 F. 3d 473 (2nd. Cir. 2018).

Nonetheless, the Third Circuit recently issued a nonsensical–yet perfectly logical–ruling in Panzarella v. Navient Solutions, Inc., 37 F. 4th 867 (3rd. Cir. 2022) holding that despite the TCPA’s focus on “capacity” in the ATDS definition, a call is not made “using” an ATDS unless the actual functionalities of random or sequential number generation are deployed in connection with the calls at issue.

The TCPAWorld Team breaks down Panzarella and Other Developments. Be sure to follow our INCREDIBLE YouTube channel for more great content!

That brings us to the case today. Jiminez v. Credit One Bank, N.A., Nco Fin. Sys., No. 17 CV 2844-LTS-JLC, 2022 U.S. Dist. LEXIS 179434 (S.D.N.Y. Sept. 30, 2022).

In Jiminez the Plaintiff sued claiming the Defendant made a bunch of calls using an ATDS without consent. The Defense moved for summary judgment arguing its dialer–Live Vox(!)–was not an ATDS. The Plaintiff countered with a declaration from “expert” Randall Snyder who testified:  LiveVox “has the capacity” to store and dial randomly or sequentially generated numbers because the agent, if they “so choose, can easily upload random or sequentially generated telephone numbers” into the LiveVox dialing system.

Notably the idea that the ability to upload a randomly produced list of numbers means the system has the capacity to itself store or produce numbers using an ROSNG is… wrong. The system must have the capability to ITSELF generate numbers randomly (although the numbers generated dont have to be phone numbers in the context of storage.) The fact that numbers can be generated outside of the system cannot, in and of itself, convert the system into an ATDS.

But I digress.

Rather than argue that Plaintiff’s evidence was insufficient to raise a triable issue on the capacity issue, the Defendant decided to argue that capacity doesn’t matter and that only the “use” of ATDS functionalities triggers the statute. That argument should not have carried the day. But…

It did!

The Jiminez court holds:

The Third Circuit’s well-reasoned analysis is instructive in this case. Here, as in Panzarella, even if Defendant’s LiveVox system theoretically had the capacity to store or produce lists of random or sequential phone numbers to be called, there is no evidence showing that Defendants made the subject calls to Plaintiff’s cell phone number using such a technique. Instead, the undisputed evidence shows that Defendants only placed phone calls sourced from a curated, pre-approved list of customers. (See docket entry no. 91 ¶ 18 (“EGS calls the phone numbers of Credit One customers from a list that Credit One provides.”).) Thus, because LiveVox dialed Plaintiff’s phone number from a curated list and employed no random- or sequential-number-generating capacity to do so, it did not employ the kind of harmful dialing system that Congress sought to proscribe through the TCPA. See Panzarella, 37 F. 4th at 881- 82. Any factual dispute as to the capacity of the LiveVox system to employ random or sequential number generation is not material to the resolution of Plaintiff’s claim. Plaintiff accordingly cannot satisfy the first element of a TCPA claim, and Defendants are entitled to summary judgment as to each of Plaintiff’s TCPA claims.

So, yay for Defendant. This is obviously a big win for them. And, truthfully, it is the right overall outcome. Snyders goofy (my opinion) analysis should have been insufficient to raise a triable issue here and the Defendant should have won outright on the “capacity” argument anyway.

But the shortcut deployed by the Court here is a bit troubling. Perhaps I’m just a TCPA purist, but the statute say what it says. I didn’t like courts re-writing it to expand the ATDS definition, and I don’t like courts re-writing it to narrow it.

And this is less an issue of intellectual honesty and fidelity to the rules of statutory interpretation–although those things should matter too–it is primarily an issue of PREDICTABILITY.

If district courts might go off course and adopt Panzarella’s approach despite seemingly binding case law to the contrary it becomes that much harder to predict outcomes in TCPAWorld. (On the other hand, defendants are being handed a potentially powerful new defense, so there’s that.) Really I am concerned that–just like after Facebook–callers will become exceedingly bullish with regards to their chances of prevailing in TCPA suits yet district courts will continue splitting on future cases.

Still Panzarella is officially a force to be reckoned with –even outside the Third Circuit footprint. We’ll keep an eye on this new school of TCPA thought!



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