Member Blog: Is a Predictive Dialer an ATDS?

Troutman Sanders attorneys analyze a ruling from the Northern District of Iowa based on the landmark decision and precedent in ACA Int’l v. FCC.

1/23/2019 8:00 AM

FCCNewsTCPA
Member Blog: Is a Predictive Dialer an ATDS?

By Keaton Stoneking and Ethan G. Ostroff 

Keatonstoneking Web

In Thompson-Harbach v. USAA Fed. Sav. BankNo. 15-cv-2098-CJW-KEM, 2019 U.S. Dist. LEXIS 3687 (N.D. Iowa Jan. 9, 2019), the Northern District of Iowa provided a deep dive into recent Telephone Consumer Protection Act case law and a retrospective look into Federal Communications Commission TCPA pronouncements.  After its informative analysis, the court held that ACA Int’l v. FCC, 885 F.3d 687 (D.C. Cir. 2018), invalidated not only the FCC’s 2015 Declaratory Ruling but also the applicable provisions of the agency’s 2003 Order and 2008 Declarative Ruling, insofar as they “define a predictive dialer as an ATDS, even when the predictive dialer lacks the capacity to generate phone numbers randomly or sequentially and then to dial them.” Accordingly, the court granted the defendant’s motion for summary judgment after finding there was no genuine issue of material fact regarding the dialing equipment’s lack of ability to generate numbers randomly or sequentially, but instead the equipment could only dial specific numbers it was provided.

Ostroff Ethan Web

Joan Thompson-Harbach brought a single-count complaint against USAA Federal Savings Bank, alleging it violated the TCPA by continuing to call her cell phone after she asked USAA to stop placing collection calls to her cell phone. After obtaining a credit card from USAA, Thompson-Harbach entered into an Online Agreement regarding the credit card account. In relevant part, the agreement provides: “You authorize USAA to contact you at the telephone numbers in your profile.  …  To revoke this authorization, you may edit your profile by removing telephone number on which you do not want to receive such calls.” She provided the number at issue as her contact number in her online profile and did not subsequently reject or withdraw from the Online Agreement or remove or change her contact number.

The court found that the evidence showed USAA called Thompson-Harbach’s cell phone. However, after extensive analysis, it held USAA did not use an ATDS or artificial or prerecorded voice to call her.

The court explained that the holding in ACA Int’l “rejected the ‘expansive interpretation’ of the term ‘capacity,’” which effectively deemed all smartphones ATDSs. The D.C. Circuit invalidated the FCC’s 2015 Declarative Ruling because of its contradictory ATDS definition – “one providing that ‘a device qualifies as an ATDS only if it can generate random or sequential numbers to be dialed,’ and the other that ‘it can so qualify even if it lacks that capacity.’” The D.C. Circuit explained that either definition might be permissible, but competing definitions in the same order “rendered unreasonable the FCC’s ruling that predictive dialers categorically qualify as ATDSs.”

By extension, the court reasoned the FCC’s prior rulings, stating that predictive dialers automatically qualify as an ATDS – even when lacking the ability to generate numbers randomly or sequentially and then dial the generated numbers – were invalidated. The court joined courts in the District of Minnesota, Northern District of Illinois, Northern District of Georgia, and District of Arizona in so holding.

After determining the FCC’s rulings were no longer controlling and that ACA Int’l did not provide a conclusive opinion on what meets the requirements of an ATDS, the court set out to determine what qualifies as an ATDS, at least in the Northern District of Iowa.  It wrote: “[T]he question for this Court to determine is whether a predictive dialing device that calls telephone numbers from a stored list of numbers—rather than having generated those numbers either randomly or sequentially—satisfies the statutory definition of ATDS.”

The court engaged in fundamental statutory analysis of the relevant TCPA text.  “[T]he TCPA 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.’”  The court found the language “using a random or sequential number generator” necessarily modifies both “store” and “produce.”  Therefore, it determined “that a device meets the definition of an ATDS only when it is capable of randomly or sequentially producing, or randomly or sequentially storing telephone numbers.”

The court explained that its interpretation is supported by the FCC’s pre-2003 definition of an ATDS.  The agency’s 1992 Order noted the prohibition against ATDS use “clearly do[es] not apply to functions like ‘speed dialing,’ ‘call forwarding,’ or public telephone delayed message services …. because the numbers called are not generated in a random or sequential fashion” while the agency’s 1995 Ruling “described ‘calls dialed to numbers generated randomly or in sequence’ as ‘autodialed.’”  Finally, the court rejected Thompson-Harbach’s reliance on the Ninth Circuit’s holding in Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018), which held equipment lacking the capacity to generate random or sequential numbers could still meet the statutory definition of an ATDS, stating, “With respect, this court finds the Marks court’s decision erroneous as a matter of statutory construction, for the reasons previously stated.”

Since there was not a genuine dispute of material fact as to the capabilities of the dialing equipment at issue, and finding it lacked the ability to randomly or sequentially generate numbers and then dial those numbers and instead stored and called the number provided by the plaintiff, the court granted summary judgment in favor of USAA.

In dicta, the court also analyzed whether the calls at issue were placed without consent.  While Thompson-Harbach alleged she orally revoked consent multiple times, only one occurrence was noted in USAA’s records.  Therefore, for the purposes of summary judgment, the court analyzed only the undisputed oral revocation to determine if it was legally sufficient to revoke consent and trigger TCPA liability for subsequent calls.

In its opinion, the court pointed out that the TCPA is silent regarding whether consumers may revoke permission to be contacted after initially providing consent.  However, the court also noted the FCC’s 2015 Declaratory Ruling “concluded that ‘consumers may revoke consent [to be called] through any reasonable means.”  The court found, as a matter of law, the means for revoking consent may be limited by mutual agreement, provided the means are reasonable, but held the contract could not bar a consumer from withdrawing consent completely.

After this analysis, the court held that the provision at issue, stating a consumer “may” edit their profile to remove the numbers on which they no longer wished to receive calls, was permissive and did not establish the only means by which consent could be effectuated. Therefore, Thompson-Harbach’s oral revocation was a valid – and reasonable – means of revoking consent to be contacted.  However, having already decided that the equipment at issue did not meet the statutory definition of an ATDS, and therefore that Thompson-Harbach could not prevail on her TCPA claim, the court granted USAA’s motion for summary judgment.

Editor’s note: This content is published with permission from Troutman Sanders.  Stoneking is an associate in Troutman Sanders’ Financial Services Litigation practice. Ostroff is a partner with Troutman Sanders and specializes in the defense of consumer actions, including class and mass actions, general business litigation, as well as regulatory compliance.

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