As we have been saying for months now, despite the fact that the FCC is actively considering a further order to define the proper scope of the TCPA’s ATDS definition, courts have continued to reach their own conclusions on this extremely important issue of law.  Many, but not all, of the courts that have interpreted the ATDS definition have been federal district courts, which, as many of you already know, cannot issue opinions that are binding on other district courts or any circuit court. But on September 20, 2018, the United States Court of Appeals for the Ninth Circuit jumped into the ATDS interpretation debate via its extremely broad interpretation of the ATDS definition in Marks v. Crunch San Diego, LLC, making it the third federal appellate court to interpret the phrase in the last three months. 

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The Ninth Circuit’s decision highlights the noticeable conflict of opinions between the appellate courts on how this critical term should be applied in TCPA litigation going forward, and it could prove important for your business’s TCPA case.

The Marks Decision:

In Marks, the Ninth Circuit issued a broad interpretation of the ATDS term, reaching the following conclusion:

[T]he statutory definition of ATDS is not limited to devices with the capacity to call numbers produced by a “random or sequential number generator,” but also includes devices with the capacity to dial stored numbers automatically.  Accordingly, we read § 227(a)(1) to provide 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.

Thus, for all litigants facing TCPA actions in the Ninth Circuit (which encompasses the states of Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington), the ATDS definition that now applies includes any device that automatically dials from a curated list of telephone numbers, not just those that generate numbers in a random or sequential fashion.  Of course, this decision stands in stark contrast to the decision reached by the United States Court of Appeals for the Third Circuit in Dominguez v. Yahoo, Inc., wherein the court defined an ATDS as extending only to devices that “randomly or sequentially generat[e] telephone numbers, and dial those numbers.”

But how, exactly, did the Ninth Circuit arrive at such a broad definition, especially after the Third Circuit reached a completely different interpretation not so long ago? The court reached its decision after engaging in a three-point analysis on the TCPA statute:

  1. The Ninth Circuit Removed the FCC’s Prior ATDS Interpretations: 

    The Ninth Circuit began its analysis by determining the scope of the holdings in ACA International; i.e., whether the D.C. Circuit’s decision vacated not only the FCC’s 2015 interpretation of the ATDS term, but also those ATDS interpretations that came out of the FCC’s 2003 and 2008 Orders.  As we have previously mentioned, it appears that more and more courts are coming around to the conclusion that the ACA Internationalruling vacated the overly-expansive ATDS definitions arrived at in the 2003, 2008, and 2015 Orders, and here the Ninth Circuit actually agreed with the majority, recognizing that “the D.C. Circuit exercised its authority to set aside the FCC’s interpretation of the definition of an ATDS in the 2015 order and any prior FCC rules that were reinstated by the 2015 order [thereby making] the FCC’s prior orders on that issue [] no longer binding on us.”

    This part of the analysis is critical to the Ninth Circuit’s conclusions because, if the FCC’s older decisions remained effective and binding, the Ninth Circuit would be required to defer to those prior opinions. 

  2. The Ninth Circuit Concluded There Is No “Plain Meaning” of “ATDS”, Giving Itself Plenty of Power to Interpret the Term: 

    Next, the court looked to the “plain language” of the TCPA itself to determine whether a common-sense interpretation of the ATDS term could be reached.  Here, it quickly concluded that the statute was “not susceptible to a straightforward interpretation based on the plain language alone,” as the statute appeared “ambiguous” on its face and, as the D.C. Circuit recognized in ACA International, could truly be read to either include or exclude devices that dialed from a curated list of numbers.

  3. The Ninth Circuit Concluded the “Context and Structure” of the TCPA’s “Statutory Scheme” Compels a Broad Interpretation of the ATDS Term: 

    Consequently, the Ninth Circuit determined that the ATDS term could not be interpreted without assistance from outside of the TCPA’s text, meaning the court would need to “turn to other aids in statutory interpretation” in order to reach a decision. Accordingly, the court elected to establish its interpretation through the “context and structure of the statutory scheme” upon which Congress regulated, which in the Ninth Circuit’s opinion came down to two “key” features.
  • “Provisions in the TCPA allowing an ATDS to call selected numbers”: As an initial matter, the court believed Congress meant to include devices that dial from a curated list in its ATDS definition because of the exceptions it had written into the TCPA. According to the court, the TCPA “permitted use of autodialers for a call ‘made with the prior express consent of the called party,’” thereby implying that, in order to take advantage of this exception, the caller would “have to dial from a list of phone numbers of persons who had consented to such calls, rather than merely dialing a block of random or sequential numbers.”  Such an implication was also supported by Congress’s 2015 amendment exempting the use of an autodialer for government-debt related calls, the court said.
  • Congressional inaction is itself action:  Furthermore, the court believed that, if Congress truly did not want the TCPA to apply to devices that dial from a curated list of numbers, it would have made this intention clear when it amended the TCPA in 2015.  As the Ninth Circuit explained, by 2015 Congress would have been aware of the FCC’s 2003 and 2008 Orders interpreting the TCPA’s ATDS definition to include devices that dialed from a curated or stored list, and it would have amended the ATDS definition to notinclude these types of devices if it did not agree with the FCC’s prior orders.  Thus, the court determined that “[b]ecause we infer that Congress was aware of the existing definition of ATDS, its decision to not amend the statutory definition of ATDS to overrule the FCC’s interpretation suggests Congress gave the interpretation its tacit approval.” 

Practical Implications

While the Third Circuit’s narrow ATDS interpretation in Dominguezhad the potential to benefit companies that are the target of TCPA litigation in that circuit, the Ninth Circuit’s broad ATDS interpretation in Markscan be expected to have the opposite effect for businesses facing TCPA litigation in the states that fall under its jurisdiction. The impact of the Marksdecision does not, however, stop there. This decision could have an effect on TCPA cases throughout the nation and possibly on the FCC’s TCPA rules themselves:

  • Effect on Other District Courts: Perhaps one of the most immediate impacts of the Marksruling is the effect it could have on courts outsideof the Ninth Circuit. As we have stated before, since the ACA Internationaldecision was released in March, many courts have been confused as to what ATDS definition should now be applied and how the ATDS term should be interpreted, and a large reason for all of this confusion is likely because the courts have nowhere to presently look for clear guidance.  Thus, district courts sitting in areas where the applicable appeals court has not issued its own binding interpretation of the ATDS definition may well look to the Marksdecision for guidance and thereby implement a broad interpretation of the term.  
  • Effect on the FCC’s Ongoing TCPA Proceeding:The Ninth Circuit’s opinion could also have an effect on the FCC as it continues to consider how to define the proper scope of the TCPA’s ATDS definition.  In particular, the Ninth Circuit’s opinion could spur the FCC to accelerate its resolution of this issue in order to provide definitive guidance. In our view, a Republican-led FCC may well be inclined to overrule the Ninth Circuit’s expansive anti-business decision.



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About The Author

Meet John, our ethics champion, marathoner, and optimist. His experience managing the firm’s proprietary TCPA case database makes him a valuable source of information on TCPA history and its legal evolution. John is ready to put his knowledge to the test and give every client goal and legal concern the unique attention it deserves.