Hold the Phone: Ninth Circuit Ruling Means Your Smartphone Is an Auto-Dialer

Can your phone store telephone numbers and dial them? If so, it’s an “automatic telephone dialing system” under the Telephone Consumer Protection Act (TCPA), said the Ninth Circuit Court of Appeals last week. The opinion in Marks v. Crunch San Diego creates a circuit split on the issue and highlights the difficulty courts have in applying statutory language from a pre-smartphone world to the technological capacity of the devices that half of you are using right now to read these words.

The facts of Marks are simple enough: Marks received three promotional text messages from Crunch Fitness gym over an 11-month period. The messages were sent from a system called Textmunication, which can store telephone numbers and send text messages to stored numbers. Seeking to represent a class, Marks sued under the TCPA, which generally prohibits the use of an auto-dialer to send such promotional text messages without the recipient’s consent. Crunch moved for summary judgment, saying that the Textmunication system was not an auto-dialer because it did not have a random or sequential number generator, and was not configured in a way that would permit this capacity to be added. The district court granted Crunch’s motion.

The Ninth Circuit reversed after analyzing language in the TCPA that the panel found to be “ambiguous on its face.” That finding was important because, the Marks court explained, a court can use “canons of statutory construction, legislative history, and the statute’s overall purpose to illuminate Congress’s intent” if language is ambiguous. The TCPA provision at issue says that a device is an auto-dialer if it 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.” Guided by its analysis of the TCPA’s overall statutory scheme, the Markscourt explained “that the statutory definition of [an auto-dialer] 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, the panel concluded, the TCPA says it’s an auto-dialer if a device can (A) store telephone numbers to be called, or (B) produce telephone numbers to be called, using a random or sequential number generator. In other words, if your phone can store telephone numbers and dial them automatically, it’s an auto-dialer.

Arriving at this conclusion required some grammatical gymnastics. In the Ninth Circuit’s formulation, the statutory phrase “to be called” modifies both telephone numbers that are stored and telephone numbers that are produced. So far, so good. But the statute has an additional limiting phrase after “to be called,” set off by a comma: “using a random or sequential number generator.” Unlike “to be called,” the Ninth Circuit applied this second limiting phrase to only one of the things that comes before it. In effect, the comma before “using” causes the phrase to jump over “telephone numbers to be called” and modify “produce,” but not “store” – even though “telephone numbers to be called” is the object of both “store” and “produce.” That is a lot of work for a comma to do!

For those doing business with customers in the states covered by the Ninth Circuit, the immediate significance of the Marks decision is to highlight how careful everyone must be before sending an unconsented-to text, including those of us who have phones that can store and dial telephone numbers. But for companies defending TCPA class actions in the Ninth Circuit, all is not necessarily lost. For example, if some of the calls or texts at issue were made without the auto-dialer functionality, consider raising a typicality defense. A text sent by a person typing numbers into a phone – even if the device fits the statutory definition of an auto-dialer – causes a different kind of harm than a text sent by a machine that sent thousands of texts at once, even if both communications technically violate the TCPA. Also, if the class is a putative (b)(3) class and the class definition includes calls or texts to reassigned numbers, consider challenging commonality or predominance: the reasonableness of the caller’s belief that it had consent to call or text likely must be determined on an individual basis.

The Marks decision also sets up a circuit split on the auto-dialer issue. Earlier this year, the D.C. Circuit in ACA, Int’l v. FCC struck down the 2015 FCC rule interpreting the TCPA, in part because of the rule’s expansive definition of auto-dialer. The D.C. Circuit warned that such a broad definition – which was pretty close to “can store telephone numbers and dial them” – would make “nearly every American … a TCPA-violator-in-waiting, if not a violator-in-fact” because “every uninvited communication from a smartphone infringes federal law.”

If the FCC engages in additional rulemaking on the auto-dialer issue, FCC Chairman Ajit Pai, who dissented from the 2015 rule on the same grounds articulated by the D.C. Circuit, will preside over the process.