United States: Federal Court Takes Narrow View Of What Constitutes An ATDS

Last Updated: October 18 2013
Article by Tara S. Sarosiek

The TCPA prohibits the use of an automatic telephone dialing system ("ATDS") to place calls to wireless phones without the called party's prior express consent.  Because calls placed without the use of an ATDS are not subject to the TCPA's prior express consent requirements, what constitutes an ATDS has been a hotly contested issue.  This issue can be expected to take on even greater importance under the new FCC rules that take effect on October 16, because the "prior express consent" requirement will now require written consent.  Telemarketers, it can be expected, may explore ways to abandon the use of equipment that would fall within the definition of ATDS and to modify or replace that equipment with something that would not be an ATDS.

The TCPA defines ATDS as "equipment that 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."  47 U.S.C. § 227(a)(1).  In its prior interpretations of the statute, the FCC has focused on whether a particular device has the capacity to store, produce or dial random or sequential numbers without human intervention.  See In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Report and Order, 18 FCC Rcd. 14014, 14091-92 ¶¶ 132-33 (July 3, 2003).  For instance, the FCC has previously concluded that a predictive dialer using calls lists is an ATDS because it has this capacity "when paired with certain software."  See In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling, 23 FCC Rcd. 559, 563 n.23 (Jan. 4, 2009).  Courts addressing this issue have likewise concluded that equipment need only have the capacity to randomly or sequentially generate numbers and to dial them to constitute an ATDS, regardless of how the equipment is actually used at the time of the call.  See, e.g., Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir. 2009) ("[T]he focus must be on whether the equipment has the capacity to store or produce telephone numbers to be called, using random or sequential number generator . . . [A] system need not actually store, produce, or call randomly or sequentially generated numbers, it need only have the capacity to do it."); Lozano v. Twentieth Century Fox Film Corp., 702 F. Supp. 2d 999, 1010-11 (N.D. Ill. 2010).  Since these rulings, there has been concern in the telemarketing industry that courts might interpret "capacity" so broadly as to sweep within the definition of ATDS equipment that could be modified or altered to allow it to autodial numbers, even if it did not have the functionality to do so at the time of the call.  See, e.g., Nelson v. Santander Consumer USA, Inc., No. 11-cv-307-bbc, 2013 U.S. Dist. LEXIS 40799 (W.D. Wis. Mar. 8, 2013) (applying broad definition of an ATDS in entering judgment against the defendants in a TCPA case).

Recently, the Northern District of Alabama weighed in on the issue.  In Hunt v. 21st Mortgage Corp., 2013 WL 5230061 (N.D. Ala. Sept. 17, 2013), the plaintiff moved to compel inspection of the defendant's telephone system to determine whether it qualified as an ATDS.  In response, the defendant argued that the plaintiff's motion should be denied because its telephone system was a Nortel manual dialing-type system that did not have the "present" capacity to autodial at the time the calls were made.  The plaintiff countered that, based on the "capacity" language under the TCPA, the defendant's telephone system could still be viewed as an ATDS if, for example, software could have been installed onto the system which would have made autodialing possible at some later date.  The plaintiff insisted that he was entitled to inspect the subject phone system, despite the defendant's representations on the "capacity" question, to "verify" the defendant's assurances.

The Hunt court was surprisingly willing to grant the plaintiff access to 21st Mortgage Corporation's premises and equipment to satisfy their curiosity despite (1) defendant's assurances to the court that the equipment at issue lacked the necessary "capacity" to store or produce telephone numbers to be randomly or sequentially dialed, and (2) the apparent lack of any evidence to the contrary.  Indeed, the court made the rather disturbing observation that the defendant's sale or other disposition of the Nortel equipment pre-litigation (but after an identical case had been filed by plaintiff's wife in state court) might have exposed defendant to "severe sanctions available for spoliation."

Whatever might be said of the Hunt decision as a discovery matter, the court squarely rejected the plaintiff's argument that ATDS "capacity" could be found in the mere possibility that equipment could be altered into an ATDS state.  It distinguished the previous rulings by the Ninth Circuit (Satterfield v. Simon & Shuster) and other district courts (e.g., Lozano v. Twentieth Century Fox Film Corp.) by noting that, in those cases, the telephone systems at issue were already fully equipped and ready to autodial at the time of the calls.  Thus, they had the required "capacity," regardless of how they were actually used.  The court noted that the "problem" with the plaintiff's argument was that "in today's world, the possibilities of modification and alteration are virtually limitless."  The court incisively and correctly posited that, by plaintiff's reasoning, an iPhone could be modified by the simple download of a hypothetical app that could be easily developed to become an "autodialer," and then questioned whether the "roughly 20 million American iPhone users" would thus be "subject to the mandates of . . . the TCPA."

In language we hope will be much quoted, the court held that "to meet the TCPA definition of an 'automatic 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."  The court went on to observe that, "[w]hile a defendant can be liable under section 227(b)(1)(A) 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 court granted the plaintiff's motion to inspect the defendant's equipment, but only after adopting this narrow definition of ATDS and capacity under the TCPA.

This is an important decision for those looking to "work around" the FCC's new written consent rules by dialing wireless phones using non-ATDS equipment.  Such companies should stay apprised of the latest developments in this area, as other courts (and ultimately the FCC) weigh in on what constitutes an ATDS.  We hope those courts will follow the Hunt court's lead on the important "capacity" question.

A copy of the Hunt decision is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.