United States: Third Circuit Allows Putative TCPA Class Action To Proceed, Citing FCC Ruling

On October 23, 2015, the Third Circuit vacated a summary judgment decision in Yahoo, Inc.'s favor based on a recent Federal Communications Commission ("FCC") order that expanded the definition of an "autodialer" under the Telephone Consumer Protection Act ("TCPA").  Dominguez v. Yahoo, Inc., No. 14-1751, slip op. at 9 (3d Cir. Oct. 23, 2015).

The plaintiff in Dominguez received a host of text messages from Yahoo on his cell phone, which came with a reassigned telephone number.  After successive efforts by the plaintiff to stop the texts, which ultimately totaled 27,809, the plaintiff filed a putative TCPA class action against Yahoo.

The TCPA provision at issue in Dominguez is 47 U.S.C. § 227(b)(1)(A)(iii), which prevents  persons in the United States from making "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 ['autodialer'] . . . to any telephone number assigned to a . . . cellular telephone service."  The TCPA defines an "autodialer" 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." 47 U.S.C. § 227(a)(1) (emphasis added).

In a July 10, 2015 declaratory ruling and order, the FCC expanded the definition of "capacity" by stating that "capacity" is not limited to the "present ability" of equipment, but also includes its "potential functionalities."  If equipment has the "potential ability" to be an "autodialer" then it is one under the FCC's order.

Prior to the FCC's order, Yahoo successfully moved for summary judgment.  Yahoo's argument was that the TCPA required an "autodialer" to actually have a "random or sequential number generator," which its text-messaging system did not have.  Instead, it dialed numbers from a compiled list.

The Third Circuit, however, vacated the summary judgment decision for two reasons.  First, it found that Yahoo's evidence – an affidavit from its expert stating that Yahoo's text-messaging system did not qualify as an "autodialer" – was "nothing more than a legal conclusion couched as a factual assertion."

Second, and more importantly, the court stated that Yahoo's evidence begged the "question of what is meant by the word 'capacity.'"  (Id.)  The court noted the "capacity" issue is one of "heightened importance in light of the 2015 FCC Ruling," the benefit of which the District Court previously lacked, and that "remand is appropriate to allow the [District Court] to address more fully . . . whether Yahoo's equipment meets the statutory definition."

The Dominguez court acknowledged the FCC's order is not a "model of clarity" and labeled the FCC's interpretation of "capacity" as a "significant clarification."  Notably, the FCC's order is being challenged in the D.C. Circuit.  (ACA Int'l v. FCC, No. 15-1211 [D.C. Cir.]).

In the short term, it is likely that Dominguez will be cited as evidence that the FCC's order should be accepted by the courts, and businesses should be prepared for a broader reading of the TCPA.

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