Northern District of California Issues Two Important ATDS Opinions

Given the overwhelming migration away from landline telephones, a business’ ability to call its customers’ cell phones, for both marketing and non-marketing purposes, has never been more critical.  Doing so in compliance with the Telephone Consumer Protection Act (TCPA) can, however, be tricky.  Unless a business knows for certain that a customer has provided the appropriate level of consent to be called— no easy feat given the onerous written consent requirements for marketing calls and issues such as number reassignment— the legality of such calls often hinges on the type of equipment used to make the call.  The TCPA’s restrictions on live calls to cell phones only apply if the caller uses an “automatic telephone dialing system” (ATDS) to make the call.  To that end, the definition of ATDS has become perhaps the most important issue with respect to TCPA compliance and litigation.

With the increasing prevalence of class action TCPA lawsuits and statutory penalties of up to $1,500 per call, it is no surprise that industry continues to push for clarifications from the FCC on what constitutes an ATDS.  Absent such clarification, businesses must take into account varying court opinions related to the definition of ATDS, including rulings on the following issues:

  1. Whether the FCC expanded the statutory definition of ATDS to include all equipment that has the capacity to dial numbers without human intervention;
  2. Whether the relevant standard is the equipment’s present capacity (what it is capable of doing at the time the call is made) or future/potential capacity (what it would be capable of doing if modified); and
  3. What constitutes human intervention?

Through two recent opinions, the Northern District of California weighed in on each of these issues.

McKenna v. WhisperText

The first case, McKenna v. WhisperText, involves text messages— which are considered calls under the TCPA— sent by the defendant at the direction of third parties.  When a person downloads the defendant’s app to their phone, it allows the person to click a button to send text messages to his/her friends and invite them to download the same app.  The plaintiff was the recipient of such an invitation and alleged that the defendant used an ATDS to send the text.  The parties disputed the definition of ATDS; however, the court held that the alleged facts were insufficient to support a claim even if the broad “human intervention” standard applies.  Specifically, the plaintiff did not allege that texts could be sent without a user of the app directing the defendant to send such texts by clicking a button.  Put another way, texts sent to third parties in response to a request by an app user were deemed to have been made with human intervention.

Glauser v. GroupMe, Inc.

The second case, Glauser v. GroupMe, Inc., involves similar facts, but is even more instructive on the ATDS issue.  The plaintiff was added to a text message group by a third party and, upon being added to the group, received two “Welcome Texts” from GroupMe.  In analyzing whether the equipment used to send the texts was an ATDS, the Court addressed each of the three issues listed above.

First, the Court cited present tense verbiage in both the state and regulations to adopt a “present capacity” standard.  The court held that in order to be an ATDS, the equipment must have the present capacity to perform the requisite functions.  In rejecting a future or potential capacity standard, the Court disagreed with the Sherman opinion issued by the Southern District of California, finding that the Ninth Circuit did not even address the present capacity v. potential capacity issue in Satterfield or Meyer, much less adopt a “potential capacity” standard.  This interpretation comports with the opinion issued by the Western District of Washington in Gragg and echoes MPS’ criticisms of Sherman.  The Court did, however, cite the statute and Satterfield to reiterate that the focus must be on the equipment’s present capacity, not how the equipment was actually used.

Second, the Court held that the requisite capacity that makes equipment an ATDS is the capacity to dial numbers without human intervention.  To reach this conclusion, the Court cited prior FCC rulings on this issue and noted that it was bound by such rulings pursuant to the Hobbs Act.  In so doing, the Court joins numerous others that held the FCC expanded the statutory definition of ATDS, which requires the equipment to be capable of storing or producing telephone numbers to be called, using a random or sequential number generator.  Whether the FCC has the authority to expand the statutory definition is a subject of much debate and something that may be addressed by one or more Circuit courts in the near future.

Finally, the Court held that there was no evidence that the system had the capacity to send texts without human intervention because each text was “a direct response to the intervention of [the group creator].”  Specifically, the evidence showed that the Welcome Texts could not be sent to a phone number unless the group leader added the number to the group text.  According to the Court, such actions constitute human intervention despite the fact that the group creators do not draft the Welcome Texts or specifically ask GroupMe to send them.

Another notable aspect of the opinion involves the plaintiff’s alternative argument that the pre-written text messages constituted “an artificial or prerecorded voice” and, therefore, violated the TCPA even if an ATDS was not used to send them.  In addition to rejecting the claim on procedural grounds, the Court implicitly rejected the substantive argument that a text is a prerecorded message by noting that the plaintiff cited no authority for the proposition that a text message can have a “voice.”