Is TCPA doomed?

It has been well over a year since the U.S. Court of Appeals for the D.C. Circuit issued its landmark opinion in ACA International v. FCC, 885 F.3d 687 (D.C. Cir. 2018), which struck down the overly expansive definition of an "automatic telephone dialing system," or ATDS, proffered by the Federal Communications Commission in 2015 -- a decision that undoubtedly changed the face of Telephone Consumer Protection Act litigation for the immediate future (or at least until that court or the U.S. Supreme Court issues another landmark decision or the FCC issues an interpretive ruling). Yet, while many practitioners -- particularly those in the defense bar -- and companies involved in telemarketing applauded the D.C. Circuit's decision, some feared it heralded a coming storm in its sister circuits and the courts below on the proper definition of an ATDS.

Those fears were realized in Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018), when the 9th Circuit created a circuit split that continues to perplex courts, telemarketers, plaintiffs and their attorneys alike. Then, adding more fuel to a raging fire, the 9th Circuit recently issued an opinion in Duguid v. Facebook, Inc., 926 F.3d 1146 (9th Cir. 2019), which not only reaffirmed Marks but also struck down a portion of the TCPA -- the government "debt collector" exemption -- as an unconstitutional content-based restriction under the free speech clause of the First Amendment, following in the footsteps of a 4th Circuit opinion issued just a few months prior, Am. Assoc. of Political Consul., Inc. v. FCC, 923 F.3d 159 (4th Cir. 2019). Consequently, there is much uncertainty in the TCPA litigation world at present.

To understand the impact that Marks presently has on TCPA litigation, it is important to note that it and Duguid are only two of four post-ACA appellate decisions defining an ATDS thus far, yet they are markedly different than their counterparts. In Dominguez v. Yahoo, Inc., 894 F.3d 116 (3d Cir. 2018), the 3rd Circuit ruled a device must have the present capacity to "function[] as an autodialer by randomly or sequentially generating telephone numbers, and dialing those numbers" to qualify as an ATDS, and suggested the amount of human intervention involved could play a key factor in whether a device qualified as an ATDS. The 2nd Circuit issued a similar opinion three days later in King v. Time Warner Cable, Inc., 894 F.3d 473 (2d Cir. 2018), which held that the "term 'capacity' [in the TCPA] is best understood to refer to the functions a device is currently able to perform, whether or not those functions were actually in use for the offending call, rather than to devices that would have that ability only after modifications" -- although it declined to directly address the role of random or sequential number generation or human involvement (but did not foreclose the possibility that those issues might factor in later), leaving those issues to the district court.

Many district courts in and outside those circuits have followed these two decisions (especially Dominguez) and have not only held that an ATDS includes only devices with the present (not potential) capacity to automatically call numbers produced by a random or sequential number generator but have also suggested that some human intervention -- though exactly how much remains to be seen -- could disqualify a device as an ATDS. See, e.g., Smith v. Navient Solutions, LLC, 2019 WL 3574248 at *7-8 (W.D. Pa. Aug. 6, 2019) (citing various cases).

In stark contrast, the 9th Circuit concluded in Marks 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." Thus, any device that has the capacity to dial stored numbers automatically qualifies as an ATDS regardless of how those numbers were generated, at least according to the 9th Circuit. The court also rejected the defendants' "argument that a device cannot qualify as an ATDS unless it is fully automatic, meaning that it must operate without any human intervention whatsoever," holding that, in the statutory definition of an ATDS, "Congress made clear that it was targeting equipment that could engage in automatic dialing, rather than equipment that operated without any human oversight or control."

The problem with Marks (and, by extension, Duguid) is essentially threefold: First, the 9th Circuit's definition of an ATDS is obviously quite broad and could apply to any device that can automatically dial phone numbers with little to no human intervention, including presumably every smartphone available on the market today, which is precisely why the D.C. Circuit struck down the FCC's prior definition of an ATDS in ACA. Second, the majority of TCPA litigation is filed in California, where Marks has been well-accepted by 9th Circuit district courts despite several invitations by defendants to rule differently. Third, while the 9th Circuit's ATDS interpretation arguably does not represent the majority view, some district judges -- particularly where there are no binding post-ACA appellate decisions but a substantial amount of TCPA litigation like in the 7th and 11th Circuits -- have found Marks persuasive, thereby contradicting other judges in the same district and/or circuit in some instances. As a result, and since the FCC has still yet to provide any meaningful post-ACA guidance, whether a device qualifies as an ATDS can vary wildly depending on the jurisdiction, and those companies that could potentially face a TCPA suit should remain wary until this split is resolved.

In the months following Marks, there appeared to be hope on the horizon, as the defendant filed a petition for certiorari. But alas, this never came to fruition and the petition was dropped. Thus, the TCPA world would have to wait for another appellate decision contributing to the circuit split to find guidance on what qualifies as an ATDS after ACA.

Enter Duguid. There, as noted above, the 9th Circuit reaffirmed its highly criticized Marks decision, which broadly defined what constitutes an ATDS after ACA initially changed the landscape for "the better" (for defendants anyway) and struck down the FCC's previous overly expansive definition. Beyond that, a petition for certiorari in Duguid arguably has a better chance of being accepted by the Supreme Court, should the defendant decide to further appeal (no petition has been filed as of this article), because the 9th Circuit also struck down one exemption to the TCPA but it stopped short of declaring the entire TCPA unconstitutional in the same opinion, just like the 4th Circuit. This alone is significant, as Duguid represents only the second time an appellate court has struck down any part of the TCPA, with those two decisions coming just months apart and with prior constitutionality challenges at the district level having generally been unsuccessful until recently. But, by reaffirming Marks at the same time as killing the debt collector exemption, Duguid sets up a possible showdown in the Supreme Court that could (in theory) not only resolve the current split on the ATDS definition but also wipe out the entire TCPA as an unconstitutional restriction on free speech. Given the current "pro-business" makeup of the Supreme Court and the FCC under the Trump administration, this is a distinct possibility. 