TCPA Alert: Alabama Federal Court Rules that ATDS Definition Requires “Present” Capacity to Store and Call Random Telephone Numbers
Particularly since the decision in Nelson v. Santander, No. 11cv307, 2013 U.S. Dist. LEXIS 40799 (W.D. Wis. Mar. 8, 2013) – which applied a broad definition of an automated telephone dialing system (ATDS) in entering a $572,000 judgment against defendants in a consumer-protection case – the issue of what constitutes an ATDS has become a significant issue to businesses using dialing technologies. On September 17, 2013, the U.S. District Court for the Northern District of Alabama issued an opinion in Hunt v. 21st Mortgage Corporation, No. 2:12cv2697 (N.D. Ala. 2013), that weighed in on the subject. The court held that “to meet the TCPA definition of ‘an automated telephone dialing system,’ a system must have a present capacity, at the time the calls were being made, to store or produce and call numbers from a number generator.” (emphasis added). The court continued:
While a defendant can be liable under § 227(b)(1)(A) [of the Telephone Consumer Protection Act] whenever it has such a system, even if it does not make use of the automatic dialing capability, it cannot be held liable if substantial modification or alteration of the system would be required to achieve that capability.
The dispute in Hunt centered on the plaintiff’s motion to compel a Rule 34 inspection of the defendant’s facilities, telephones, computer systems, and software. Citing the broad and liberal treatment of discovery by the Federal Rules of Civil Procedure, the court granted the plaintiff’s motion. However, the court took the opportunity to weigh in on the proper definition of an ATDS under the TCPA. Recognizing the advancement of technology since the TCPA’s enactment in 1991, the court rejected the plaintiff’s argument that certain software could have been installed on the defendant’s system which would have made automatic dialing possible:
The problem with that reasoning is that, in today’s world, the possibilities of modification and alteration are virtually limitless. For example, it is virtually certain that software could be written, without much trouble, that would allow iPhones ‘to store or produce telephone numbers to be called, using a random or sequential number generator, and to call them.’ Are the roughly 20 million American iPhone users subject to the mandates of § 227(b)(1)(A) of the TCPA? More likely, only iPhone users who were to download this hypothetical ‘app’ would be at risk.
Practical Impact
The Hunt decision, on the one hand, accepts that the “capacity” to make automated calls determines when an ATDS is subject to the TCPA; on the other, the court took a comparatively narrow view of what constitutes “capacity.” Currently pending before the FCC is the petition of GroupMe, Inc./Skype Communications (GroupMe), which derived from a putative class action against a text message-app maker. The class action has been stayed pending the FCC’s decision, but GroupMe seeks a ruling in which the FCC “adopt[s] a definition of ATDS that excludes technologies with a theoretical capacity, but not the actual capacity, to autodial random or sequential numbers.” Ultimately, therefore, the FCC – which has interpretive authority over the TCPA – may have the last word.
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