Telephone and Texting Compliance News: Litigation Update — Nail in the Coffin: Ninth Circuit Shuts the Door on Future ATDS Claims

On November 16, 2022, the Ninth Circuit Court of Appeals, in Borden v. E-Financial, LLC, 2022 WL 16955661 (9th Cir. Nov. 17, 2022) shut the door on any potential ambiguity concerning the definition of an automatic telephone dialing system (“ATDS”) following the Supreme Court’s landmark decision in Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021). The Ninth Circuit held that an “automatic telephone dialing system” must generate telephone numbers randomly or sequentially under the TCPA's plain text. In other words, dialing numbers from a pre-existing list, even if the pre-existing list is sorted randomly or sequentially, would not qualify as dialing with an ATDS.

In Borden, the plaintiff claimed that eFinancial “used [a] sequential number generator to determine the order in which to pick the telephone numbers to be dialed from the defendant's stored list (database), such that each eFinancial Insurance Text Message Advertisement is sent in an adjustable but predetermined sequential order, which is based on the number of days since [a] lead form was initially completed (‘eFinancial Mass Text Advertisement Sequential Order’).” The plaintiff also claimed that eFinancial's autodialer “uses a sequential number generator to assemble sequential strings of numbers in a field labeled LeadID, which are then stored and assigned to a telephone number and are used when the sequential number generator picks the order, which is based on the adjustable but predetermined eFinancial Mass Text Advertisement Sequential Order.”

The court found that using a random or sequential number generator to select “from a pool of customer-provided phone numbers would not cause the harms contemplated by Congress.” The court elaborated, “[p]ublic emergency services (such as police or fire departments) would presumably not be in these customer-provided lists. And, if an autodialer called the phone numbers on its customer list sequentially, it would likely not reach the sequential numbers often assigned to a single business (e.g., when a business has many phone lines that share the same area code and the first 3-5 numbers of the telephone number).”

Notably, the Ninth Circuit rejected the plaintiff’s theory that Footnote 7 of Facebook presented a viable angle for TCPA plaintiffs going forward. Borden seized on this sentence of the footnote: “an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list.” He argued that E-financial did exactly that — used a generator to pick the phone numbers from a list. The Ninth Circuit found this to be “an acontextual reading of a snippet divorced from the context of the footnote and the entire opinion” and that “Borden's myopic focus on a single sentence in a footnote — hardly a holding — ignores the broader context discussed by the Court, including how the Court itself characterized the issue as ‘whether an autodialer must have the capacity to generate random or sequential phone numbers.’”

In sum, the Ninth Circuit confirmed that nothing in Facebook suggests that the Supreme Court intended to define an autodialer to include anything other than devices that generate telephone numbers at random or in sequence.

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