After the U.S. Court of Appeals for the District of Columbia released its highly anticipated decision in ACA International v. Federal Communications Commission, courts have been addressing issues raised in that case. We previously summarized the opinion — which raises four issues, one of which is what constitutes an Automatic Telephone Dialing System (“ATDS”) — here.
The statute defines an ATDS as “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.” This can be a critical threshold question in TCPA class actions — did the company being sued use an ATDS? Importantly, the U.S. Court of Appeals for the Second Circuit recently narrowed the definition of what type of equipment constitutes an ATDS.
In King v. Time Warner Cable Inc., the Court of Appeals for the Second Circuit vacated and remanded the district court’s decision to grant partial summary judgment in favor of plaintiff Araceli King for her claim that Time Warner Cable violated the TCPA by using an ATDS to call her phone without her consent. The Second Circuit remanded the case for further proceedings since the district court’s analysis was based on an incorrect interpretation of the statutory text. The district court previously held that the equipment used by Time Warner Cable (an “interactive voice response” calling system) qualified as an ATDS. The system works in the following way:
[It] automatically references Time Warner’s billing records to determine which customers are more than 30 days late on their payments, and then dials the number associated with those accounts. If a person answers the call, the system is programmed not to call that number again until the following day (and it will stop altogether if the customer’s account becomes current). If the call is not answered, the system is programmed to leave a voicemail and attempt to call back two more times that day.
Significantly, while the equipment can store numbers, Time Warner asserted that it does not have the capacity to make random or sequentially generated calls. After the district court granted partial summary judgment in favor of the plaintiff, ACA International was decided, which paved the way for the Second Circuit to consider the district court’s reliance on the FCC’s 2015 Order, which “broadly construed the term ‘capacity’ and thus extended the TCPA to reach any device that could be modified by software changes to perform the functions of an autodialer.”
The Second Circuit analyzed the plain meaning of “capacity” and stated that “[c]ommon sense suggests that legislation, which typically targets present social problems, would be aimed at devices that have the “capacity,” in that narrower sense, to cause the problem that is the subject of legislative concern, rather than addressing itself to the hazily defined universe of things that have only a theoretical potential to do so.” The Second Circuit added that it was inclined to adopt a narrower definition of capacity than that which the FCC endorsed in its 2015 Order.
Following the D.C. Circuit’s reasoning, the Second Circuit concluded:
We view the D.C. Circuit’s discussion as correctly drawing a distinction between a device that currently has features that enable it to perform the functions of an autodialer — whether or not those features are actually in use during the offending call — and a device that can perform those functions only if additional features are added. We find that distinction persuasive; accordingly, we would conclude that the former category of devices falls within the definition of an ATDS, and the latter does not.
At least in the Second Circuit, the type of equipment that falls within the ambit of the TCPA’s definition of an ATDS has narrowed, and plaintiffs will have a more difficult time overcoming that first hurdle in TCPA litigation — showing that the company they are suing used an ATDS.