ACA International Files Legal Brief in Pivotal Ninth Circuit Case to Challenge the Sweeping Reach of its TCPA Decision

ACA has filed an amicus brief in the ongoing lawsuit between a consumer and health club over whether the term ATDS includes equipment that merely has the capacity to automatically dial stored numbers.

10/12/2018 5:00 AM

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ACA International Files Legal Brief in Pivotal Ninth Circuit Case to Challenge the Sweeping Reach of its TCPA Decision

ACA International recently filed a “friend of the court” (amicus) brief  with the U.S. Court of Appeals for the Ninth Circuit in one of the most significant and closely-watched Telephone Consumer Protection Act cases since the D.C. Circuit Court of Appeals issued its decision last March in ACA Int’l v. FCC.  The Marks v. Crunch San Diego, LLC case calls into question the interpretation of the term “automatic telephone dialing system” in the TCPA and the scope of the TCPA’s restrictions.  ACA has joined Crunch in asking the Ninth Circuit to take a fresh look at the appellate court’s prior decision that extended the statutory definition of ATDS to equipment capable of dialing stored numbers automatically, regardless of whether those numbers have been randomly or sequentially generated.

“ACA is disheartened by the Ninth Circuit panel’s decision that significantly expands the scope of the TCPA and makes it more challenging for companies to comply with the TCPA’s provision,” said ACA International’s Vice President and Senior Counsel, Karen Scheibe Eliason.  “This decision misreads an outdated statute that was built for a world that no longer exists, and results in creating a chilling effect on businesses from communicating information to consumers that they want, need or expect to receive. Given that legitimate businesses, like ACA’s members, continue to be shackled by unclear, unnecessary, unwarranted and unduly burdensome regulatory handcuffs, we have today – as the voice of the accounts receivable management industry – submitted an amicus brief to share with the court our unique and direct perspective why we believe the only defensible interpretation of the TCPA requires that equipment must have the capacity to generate random or sequential numbers to qualify as an ATDS.”  

Although the D.C. Circuit Court in ACA Int’l ultimately eviscerated the Federal Communications Commission's expansive definition of ATDS, it did not answer the “basic question raised by the statutory definition [about] whether a device must itself have the ability to generate random or sequential telephone numbers to be dialed,” or whether it would be “enough if the device can call from a database of telephone numbers generated elsewhere.”  As a result, courts around the country, including the Ninth Circuit Court of Appeals, have been left to interpret the TCPA to define an ATDS.  Until the FCC provides much-needed clarity on these critical issues, the scope and proper application of the TCPA will remain unsettled. 

In its amicus brief, ACA argues that “[t]he statute’s text and context confirm that ‘using a random or sequential number generator’ is an integral, not an optional or alternative, part of the definition” of an ATDS.  In addition, ACA maintains that the Ninth Circuit panel not only misread the statute but it also manufactured ambiguity, which collides with the court’s own precedent and contradicts the Third Circuit Court of Appeals.  As a result, the “Panel misreads the Telephone Consumer Protection Act in a way that materially changes it is meaning, and manufactures liability where Congress did not.”  

As ACA reported previously, the appeal in Marks stems from a consumer class action lawsuit alleging that Crunch violated the TCPA by sending promotional text messages using an ATDS without the recipients’ prior express consent.  Finding in favor of Crunch, the lower court ruled that based on the TCPA’s “clear and unambiguous” definition of an ATDS, Crunch’s equipment is not an ATDS because it “lacks a random or sequential number generator.” The lower court was clear that calling a list of stored phone numbers is not “random or sequential number generation.” 

The consumer appealed to the Ninth Circuit.  On September 20, 2018, a three-judge panel of the appellate court vacated the lower court’s decision rendering it null and void.  In doing so, the Ninth Circuit held that “the 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.” 

Crunch is fighting that ruling, and asking the entire Ninth Circuit to hear the case rather than just the three judges who previously ruled. 

If the Ninth Circuit denies Crunch’s request for a rehearing or affirms the Ninth Circuit panel’s decision, the direct conflict between the Ninth Circuit’s decision in Marks and the Third Circuit’s decision in Dominguez v. Yahoo, Inc. (a case in which ACA also provided amicus “friend of the court” support) will put the issue of what constitutes an ATDS on the path for possible consideration by the U.S. Supreme Court. 

In light of the ongoing confusion over the meaning of automatic telephone dialing systems, which has for years created uncertainty and compliance burdens on ACA International’s members, in 2015 ACA submitted another amicus brief in the Marks case to provide assistance and insight to the Ninth Circuit with respect to the public policy and due process implications of how the TCPA is interpreted and applied by the accounts receivable management industry.  In 2018, ACA seized the opportunity to file a supplemental amicus brief in Marks to help explain to the Ninth Circuit the effect of the ACA Int’l decision on the issue of defining an ATDS under the TCPA.

The FCC's Consumer and Governmental Affairs Bureau is seeking comment on how to interpret and apply the statutory definition of ATDS, including the phrase “using a random or sequential number generator,” in light of the recent decision in Marks, as well as how the Marks decision might bear on the analysis set forth in the ACA’ Int’l case.  Comments are due October 17, 2018.   

ACA International is reviewing the additional request for comment and intends to file comments in response. This is also an opportunity for participants in the accounts receivable management industry to speak out against the misguided panel decision in Marks.  Therefore, ACA encourages its members to act immediately by providing their own comments directly to the FCC to let the FCC officials know where legitimate businesses stand on TCPA issues impacting their companies. 

ACA International’s efforts to proactively support the accounts receivable management industry are part of the association’s Industry Advancement Program, and are made possible by funding through ACA’s Industry Advancement Fund. 

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