Caveat Vendor

Clear and “Present” (Capacity): In the Absence of FCC Guidance, Federal Judge Interprets Scope of Autodialer Definition under TCPA

By Sherrese Smith and Matt Gibson

Late last week, GroupMe, Inc. won an important victory in Glauser v. GroupMe, Inc., a federal class action stemming from allegations that the company violated the Telephone Consumer Protection Act of 1991 (TCPA) by sending unauthorized text messages to the plaintiff.  Perhaps more significantly, in 

to GroupMe, the trial court took a step that the Federal Communications Commission (FCC) thus far has not taken and addressed a lingering question of how the TCPA and the FCC’s implementing regulations define an automatic telephone dialing system (ATDS). 

Background

The scope of the ATDS definition is important because under the TCPA a company must obtain the called party’s prior express consent before using an ATDS to call or text a mobile telephone number.  As a result, the TCPA litigation often turns on the factual question of whether a defendant called the plaintiff using an ATDS (defined 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”). 

Over the years, the FCC has issued orders that interpret different aspects of the ATDS definition.  Importantly for the court’s analysis in GroupMe, however, the FCC has yet to act on numerous

for the agency to clarify whether the term “capacity” is limited to a system’s capabilities at the time that a call is made or whether the term can be interpreted as including a prospective or theoretical capacity based on equipment design. 

The GroupMe Decision

Last week, the GroupMe court stepped into the vacuum created by the FCC’s silence and determined that the ATDS analysis should focus on a system’s present capacity to dial lists of numbers without human intervention and rejected the plaintiff’s preferred “potential capacity” test because it could subject everyday devices, such as smartphones, to the TCPA. 

In ruling for the defendant, the GroupMe court rejected the plaintiff’s argument that the Ninth Circuit’s 2009 decision in Satterfield v. Simon & Schuster bars the more limited “present capacity” reading of the ATDS definition.  To justify its rationale, the GroupMe court noted that in Satterfield the Ninth Circuit decided that the ATDS definition required an examination of the capacity of the dialing system and that the features actually used to call the plaintiff were irrelevant.  According to the court, because Satterfield did not address the question of present versus potential capacity, it was free to draw such a distinction in the context of the GroupMe litigation. 

Interestingly the court’s reading of the TCPA and Satterfield conflicts with a recent “capacity” decision out of the neighboring Southern District of California.  In last year’s decision in Sherman v. Yahoo! Inc., the trial court rejected the defendant’s similar attempt to distinguish between present and potential capacity of its dialing system, finding that Satterfield and its progeny foreclose a “present capacity” interpretation of the ATDS definition.

While GroupMe is clearly a favorable decision for companies using automated systems to communicate with parties via text messages, this decision does not clear the air by creating binding precedent for future litigation.  As such, readers should continue to monitor this issue to see whether the FCC or an appellate court weighs in on whether an ATDS is defined by its present capacity or by its potential capacity to place automated calls.

Caveat Vendor is Paul Hastings’ Consumer Issues blog. We welcome your feedback. Please contact our blog editor with any thoughts or suggestions. 

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