September 28, 2018.
On September 20, 2018, the Ninth Circuit issued its published opinion in Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018), expanding the scope of the Telephone Consumer Protection Act, 47 U.S.C. § 227 (“TCPA”) by broadly defining the term “automatic telephone
dialing system” (“ATDS”).
Congress enacted the TCPA in 1991 to prohibit unsolicited spam marketing via telephone. Among other things, the TCPA establishes the following restrictions on spam phone calls, text messages, and faxes:
(b)Restrictions on use of automated telephone equipment
- (1)Prohibitions It shall be unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States—
- (A) to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice—
(iii)to any telephone number assigned to a . . . cellular telephone service . . . or any service for which the called party is charged for the call, unless such call is made solely to collect a debt owed to or guaranteed by the United States;
- (B) to initiate any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party, unless the call is initiated for emergency purposes, is made solely pursuant to the collection of a debt owed to or guaranteed by the United States, or is exempted by rule or order by the Commission under paragraph (2)(B);
- (C) to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement . . .
See 47 U.S.C. § 227 (b)(1)(A)(iii), (B), & (C). The Federal Communications Commission and federal courts have construed the term “call” in the TCPA to include text messages. Section 227(b)(3) establishes penalties between $500 to $1500 per unlawful call, message, or fax. Accordingly, when a business launches a large-scale marketing campaign that includes unsolicited spam texts or phone calls, it exposes itself to huge liability exposure if it fails to first obtain consumers’ express prior consent.
At issue in Marks was the definition of the term “automatic telephone dialing system” used in § 227. In Marks, the district court granted summary judgment to a TCPA Defendant that used a web-based marketing platform, referred to as the Textmunication system, to send promotional texts to cell phone numbers on a stored list. In the Textmunication system, telephone numbers were collected and stored in one of three ways: (1) an operator of the system could manually enter a phone number; (2) a customer could respond to a marketing campaign with a text; or (3) a customer could provide the telephone number through the operator’s website. Id. at 1048. A client could then use those numbers to create a targeted marketing campaign, for example to send birthday text greetings to customers on the list on specific days. The District Court granted summary judgment finding that the Textmunication system did not qualify as a ATDS because it
lacked a random or sequential number generator. Id.
The Ninth Circuit reversed, holding that the definition of ATDS “also includes devices with the capacity to dial stored numbers automatically.” Id. at 1052. In reaching its conclusion, the Ninth Circuit determined that the statutory language regarding ATDS was ambiguous, and looked at Congress’ views on the scope of the TCPA. The Ninth Circuit concluded that Congress’ intent in enacting the TCPA was clearly to prevent companies from making calls to consumers without their prior express consent. Id. at 1051-1052. In broadly defining an ATDS, the Ninth Circuit opinion conflicts with the Third Circuit’s decision in Dominguez v. Yahoo, Inc., 894 F.3d 116 (2018), which ruled that to qualify as an ATDS the equipment used must have the capacity to randomly or sequentially generate telephone numbers.
In the last several years, the TCPA has been among the most litigated consumer protection laws in the nation. By broadly expanding the scope of the definition of ATDS, class action and individual cases filed pursuant to the TCPA are not likely to slow down. As technologies and marketing platforms continue to evolve through e-commerce and cloud based systems, companies need to understand the nuances of the TCPA and their potential exposure. A text marketing campaign thought clever by the company’s tech and marketing staff could suddenly create millions of dollars in liability exposure.
In consumer surveys and interviews, consumers continue to complain about unwanted texts and phone calls, which are on the rise in our ever evolving cellular based lives. Consumers often think there is nothing that can do to stop such spam, but there are remedies. If you are a consumer and have received what you believe to be a spam text or robocall, consider: Can you tell from the message itself what company sent it? If so, did you ever provide your telephone number to that company? Why? If you provided your telephone number in a connection with a purchase, for example, to facilitate shipping, did the business disclose that it would use your number for later spam text marketing? Did it make those disclosures conspicuously, or bury them in fine print. Did you, for example, check a box immediately next to language in which you expressly agreed to receive a spam texts or robocalls? If you did not provide your express prior consent to receive spam texts or robocalls, the spam is illegal under the TCPA and class action treatment may be appropriate.
To find out more on any of these issues, please contact our offices: Wucetich & Korovilas LLP; (310) 335-2001; email@example.com. This article is for educational use only, should not be considered legal advice, and in no way creates an attorney-client relationship between the firm and the reader.