This week, Erin Kubota prognosticated how the United States Circuit Courts of Appeals will decide automatic telephone dialer cases (“ATDS”) post the monumental Marks ruling from the Ninth Circuit on September 20, 2018. Here is a recap of Marks:
Marks v. Crunch San Diego, LLC, 2018 WL 4495553 (9th Cir. Sept. 20, 2018): The Ninth Circuit Court found that ACA Int’l v. FCC, 885 F.3d 687 (D.C. Cir. 2018) (“ACA Int’l”) overturned the FCC’s prior predictive dialer rulings. It also found that the statutory text was “ambiguous on its face,” and that it needed to look at the “context and the structure of the statutory scheme.” Id. at *8. It concluded 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.” The Court then defined “ATDS” to mean:
“[E]quipment which has the capacity – (1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator – and to dial such numbers automatically (even if the system must be turned on or triggered by a person).”
Because our motive here at TCPAland is to inform and entertain, we’ve since scoured the Circuit Court dockets to find all pending ATDS-related appeals for you to keep an eye on in the coming months. We found, surprisingly, very few. Still, grab your popcorn, because here are the three most ATDS-centric appeals we think you should pay attention to post-Marks:
Duguid v. Facebook, Inc., No. 15-cv-00985-JST, 2017 U.S. Dist. LEXIS 22562 (N.D. Cal. Feb. 16, 2017)(“Duguid”):
Not that we play favorites, but this is a good one. Let me set the stage. Duguid is pending in the Ninth Circuit – the same Court that decided Marks. It’s a proposed class action. The Defendant-Respondent is Facebook. Duguid is represented by TCPAland Ramble Podcast alum Sergei Lemberg. And … it involves text messages allegedly sent by an ATDS, without human intervention, from Facebook to someone who alleges he had no Facebook account.
According to the operative complaint, Facebook offers an “extra security feature” for its consumers in which Facebook sends computer-generated text messages when a Facebook account is accessed from a new device. Likewise, when an account is disabled due to suspected fraud, Facebook allegedly sends a code to a consumer’s cell phone via text message and requests the user enter that security code to log into the disabled Facebook account. Duguid alleges that he does not have a Facebook account but that he began receiving automated, template text messages from Facebook on his cellular telephone to this effect. He alleges that he emailed Facebook to request that the text messages cease and in response, Facebook sent an automated message instructing him to log on to Facebook’s website to report the issue. He also alleges that those efforts were unsuccessful. Finally, Duguid alleges that the text messages were sent with an ATDS that either has the capacity to generate random or sequential numbers or can add the capacity through the use of code.
Facebook moved to dismiss the suit for lack of Article III standing and for failure to state a claim. The Court found that Duguid had standing but failed to adequately allege that the Facebook texts were sent using an ATDS. A text message is already considered a “call” for purposes of the TCPA – so that was not at issue. Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 954 (9th Cir. 2009).
Facebook alleged failure to state a claim on several grounds including that Duguid did not adequately allege that the login notifications were sent by an ATDS as defined by the TCPA and that the messages fall within the TCPA’s exception for calls “made for emergency purposes.”
Duguid argued that because Facebook’s system was computer based, it had the capacity to generate random and sequential numbers. Duguid also argued that if the system did not have that ability, it could be “trivially” added, and that Facebook uses a “predictive dialer-like system.” Duguid relied on the FCC and other California District Court cases (he’s looking at you Nunes v. Twitter, Inc., No. 14-cv-02843-VC, 2014 WL 6708465, at *1 (N.D. Cal. Nov. 26, 2014)) to argue that the definition of an ATDS “appears to encompass any equipment that stores telephone numbers in a database and dials them without human intervention.”
The Court disagreed with Duguid’s definition of an ATDS and his reliance on Nunes because the Nunes Court held that to be an ATDS the equipment had to have the “capacity to ‘generate’ numbers at random or sequentially” in addition to its ability to store and dial numbers without human intervention. Nunes, at *1–2. The Duguid Court held that the Facebook system did not qualify as an ATDS because there was “no plausible inference that Facebook’s equipment had the capacity to generate random or sequential numbers.”
Here is the plot twist and the reason we will be tuning in to this appeal. The Marks Court held that the equipment just has to have the capacity to start numbers to be called (texted) OR produce numbers to be called, using a random or sequential number generator and to dial such numbers automatically even if it must be turned on/triggered by human intervention. Duguid alleged that Facebook stores the phone numbers in the computer and the messages are automatically sent when the account is accessed from an unknown device. It will be interesting to watch and see whether the Ninth Circuit applies Marks here and overturns the dismissal which was based on ATDS grounds. If Marks is applied faithfully and broadly it seems like Facebook is doomed. But we might see the Duguid panel limit or distinguish Marks in some manner or—perhaps more likely—wrestle with the FCC’s latest declaratory ruling. Should make for good reading either way.
Epps v. Earth Fare, Inc., No. CV 16-08221 SJO (SSx), 2017 U.S. Dist. LEXIS 63439 (C.D. Cal. Feb. 27, 2017) (“Epps”):
And we’re still in the Ninth Circuit. Epps is exciting because Epps is someone who could be cast as a “professional plaintiff.” Over the past few years, Epps has filed at least four other TCPA suits against numerous big corporations including Office Depot, The Gap and Dunkin’ Brands.
Epps is also interesting because in the dismissal order that Epps has appealed, the District Court focused on Epps’s failure to reasonably revoke her consent to receive text messages from Earth Fare. While the Court noted that Epps failed to plausibly plead that Earth Fare used an ATDS within the meaning of the TCPA, it was not the focus of the Court’s dismissal. Nonetheless, Epps focused significantly on the ATDS issue in her appeal, arguing “the District Court erred by failing to recognize whether [Earth Fare’s] particular system constitutes an ATDS is a question of fact.”
Epps argued that although the operative complaint did not expressly allege that Earth Fare’s software “could store a database of cell phone numbers and then automatically send text messages en masse to those stored cell phone numbers at a later date, it is reasonable to draw such inference” based on the allegations about the capacity of Earth Fare’s software and the commercial content of the text messages Epps allegedly received. Epps also argued that the District Court’s ATDS analysis was defective because it did not construe the ATDS element broadly – and argues that whether Earth Fare’s system was an ATDS for purposes of the TCPA is a factual question warranting leave for Epps to file a second amended complaint.
Much like the Duguid appeal, we are watching this one to see if the Ninth Circuit applies Marks and overturns the dismissal based on the definition of an ATDS. It appears that Epps might face more obstacles as Duguid expressly alleged that Facebook’s system stored numbers to be called and Epps relies on the inferences that can be drawn from the operative complaint.
Keyes v. Ocwen Loan Servicing, 2018 WL 3914707 (E.D. Mich. Aug. 16, 2018) (“Keyes”):
We may have a long wait on Keyes because the dismissal order was just handed down in August and the appeal has not been briefed yet. However, it’s an important one to watch and we’ve talked about it extensively on TCPAland.com (including here and here). The District Court’s decision in Keyes sent a tidal wave through TCPAland because it concerns common call center technology – the Aspect predictive dialer software that is used across the country. The District Court’s definition of an ATDS in Keyes and the Ninth Circuit’s definition in Marks are, rather obviously, at odds with one another.
In Keyes, the Plaintiff’s expert Jeff Hansen opined that the Defendant’s Aspect dialing system was an ATDS. The Court found Hansen’s opinion unreliable because Hansen never tested or inspected and Aspect system. The Court also found that Hansen was not in a position to provide a legal opinion regarding whether the Aspect system was an ATDS because and expert is not permitted to make legal conclusions.
Regarding the issue of ATDS functionality, the Court examined the impact of ACA Int’l on all the FCC’s prior rulings on the issue and held that the D.C. Circuit had “set aside” the FCC’s “rulings” regarding “the functions an autodialer must be able to perform, namely its interpretation of whether a device needed to be able to generate and call random or sequential numbers to constitute an ATDS.” The Court found that the FCC’s “definition of the functions necessary for a device to constitute an autodialer,” had been “vacated” as a result of ACA Int’l.
Much like the Ninth Circuit did in Marks, in Keyes the Eastern District of Michigan “reach[ed] back to the statutory language of an ATDS,” (i.e. dialing randomly or sequentially generated numbers) to determine whether the defendant’s Aspect system qualified as an ATDS. It reached a different conclusion.
In Keyes, the Court found the Aspect system did not have the “capacity” to generate and call random or sequential numbers because it took more than a “flip of the switch,” to alter the Aspect system to perform those functions. The defendant also presented evidence that it didn’t have the ability to make such an alteration. The Court then found – and this is very different than Marks – that the Aspect system did not possess the functions necessary to be an ATDS because “[t]he Aspect System dials from a set list, but that is not the same as dialing numbers using a random or sequential number generator.” If the Keyes Court had applied the Marks standard, it could have stopped at the first Marks prong – whether the Aspect system had the capacity to store numbers to be called – and could have concluded that Aspect’s system dialing from a “set list” qualified as an ATDS.
Notably, we may have an extra long wait on the Keyes appeal because the appeal is being pursued by Abbas Kazerounian—the same lawyer who brought us Marks—and, as he told the Ramble yesterday, that appeal might suddenly evaporate to avoid the potential for a circuit split.
We are eagerly anticipating the outcomes of these cases. Don’t want to miss it either? Don’t worry – you’ve got us.
 (1) Jalen Epps v. Office Depot, Inc., Case No. 2:16-cv-08223 DMG-JC (C.D. Cal.); (2) Jalen Epps v. Walgreen Co., Case No. 2:16-cv-08652 AB-AS (C.D. Cal.); (3) Jalen Epps v. Dunkin’ Brands Group, Inc., Case No. 2:16-cv-9062 RSWL-AJW (C.D. Cal.)); (4) Jalen Epps v. Gap, Inc. No. CV 17-3424-MWF (PLAx), 2017 U.S. Dist. LEXIS 219772, at *3 (C.D. Cal. June 27, 2017)