Consumer Crossroads: Where Financial Services and Litigation Intersect

Hinshaw continues to monitor the deepening circuit split over what constitutes an automatic telephone dialing system (ATDS) under the Telephone Consumer Protection Act (TCPA), which restricts certain automated calls and text messages. To say there has been substantial debate by the courts and FCC concerning what constitutes an ATDS would be putting it lightly. And, just when it seemed a majority position was emerging, the playing field seems to have leveled with the Second Circuit's decision in Duran v. La Boom Disco, Inc.

We now have a split among federal circuits regarding the definition of an automatic telephone dialing system (ATDS), under the Telephone Consumer Protection Act (TCPA), which limits automated calls and text messages. What constitutes an ATDS has been debated both by the FCC and courts for quite some time. In 2008 and 2015, the FCC found that all predictive dialers were automated telephone dialing systems under the TCPA. In Marks v. Crunch San Diego in 2018, the Ninth Circuit, held that the TCPA applies to devices with the capacity to automatically dial telephone numbers from a stored list or devices that dial telephone numbers produced from a random or sequential number generator. Now, in Glasser v. Hilton Grand Vacations and Gadelhak v. AT&T Services, Inc., the Eleventh and Seventh Circuits have taken the opposite approach and found that an ATDS only includes equipment that dials randomly or sequentially.

In 2018, the D.C. Court of Appeals issued ACA International, et al. v. FCC that set aside key determinations of the FCC's interpretations of what qualifies as an automated telephone dialer service (ATDS). The D.C. Circuit concluded that the focus of the Telephone Consumer Protection Act's (TCPA) definition of an ATDS should be on the device's "present capacity" to store and produce telephone numbers, as opposed to its "potential functionalities" or "future possibility." Since this decision, courts have remained split as to what qualifies as an ATDS, although there is a growing trend of courts concluding that a predictive dialer is not an ATDS unless it has the present capacity to store and produce phone numbers randomly and sequentially. On July 30, 2019, the Northern District of Texas joined that trend with its decision in Adams v. Safe Home Security Inc.

In a case we have been tracking closely, a unanimous panel of the D.C. Court of Appeals set aside two key determinations of the FCC's interpretations of the Telephone Consumer Protection Act. In ACA International, et al. v. FCC, Judge Sri Srinivasan found that the FCC's "explanation of what qualifies" as an automated telephone dialer service (ATDS) and its one-call safe harbor for calling a phone number that has been reassigned to a non-consenting person was arbitrary and capricious. However, the Court sustained the FCC's rulings on revocation of consent "through any reasonable means clearly expressing a desire to receive no further messages" and the scope of the exemption for "time-sensitive healthcare calls."