On October 23, 2015, a Third Circuit Court of Appeals decision gave Telephone Consumer Protection Act (“TCPA”) plaintiffs additional ammunition supporting an expanded definition of an “ATDS.” In Dominguez v. Yahoo, Inc., No. 14-1751, (3d Cir. Oct. 23, 2015), based on the July 10, 2015 Federal Communications Commission (“FCC”) order that expanded the definition of an automated telephone dialing system “ATDS” under the TCPA, the court vacated a prior summary judgment decision in Yahoo, Inc.’s favor.

insideARM previously wrote about this case in October of last year.  The facts in the case are not complicated. Dominguez received text messages from Yahoo on his cell phone. The cell phone was a reassigned telephone number. The prior owner of the phone had enrolled the number in Yahoo’s text message system to receive a text notification when he received an e-mail to his Yahoo! account.  The consumer alleged that Yahoo used an ATDS to send thousands of unsolicited text messages (nearly 50 to 60 per day for many months) to his cell phone, ultimately totaling 27,809 texts.

The plaintiff filed a putative TCPA class action against Yahoo, alleging a violation of the TCPA.

The TCPA provision at issue is 47 U.S.C. § 227(b)(1)(A)(iii), which prevents…. making “any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any ATDS… to any telephone number assigned to a… cellular telephone service.”

The TCPA defines an ATDS 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.”

Prior to the FCC’s July order, Yahoo had successfully moved for summary judgment. Yahoo’s argument was that the TCPA required an ATDS 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 prior summary judgment decision. The court cited two reasons in its opinion.

First, it found evidence offered by Yahoo, an affidavit from its expert stating that Yahoo’s text-messaging system did not qualify as an ATDS, was “nothing more than a legal conclusion couched as a factual assertion.” The court then stated, “Because this is an issue of heightened importance in light of the 2015 FCC Ruling, and the District Court did not previously have the benefit of the FCC’s ruling in addressing the issue, remand is appropriate to allow that Court to address more fully in the first instance whether Yahoo’s equipment meets the statutory definition.”

Second, the court felt that the term “capacity” needed further review. The court commented, “Because this is an issue of heightened importance in light of the 2015 FCC Ruling, and the District Court did not previously have the benefit of the FCC’s ruling in addressing the issue, remand is appropriate to allow that Court to address more fully in the first instance whether Yahoo’s equipment meets the statutory definition.”

insideARM Perspective

This case is another blow to the ARM industry and any other business that calls cellular phones. Though the written opinion specifically states, “The disposition is not an opinion of the full Court and pursuant to Internal Operating Procedures of the U.S. Court of Appeals for the Third Circuit (I.O.P. 5.7) does not constitute binding precedent,” you can be certain that this case will be cited in every pending TCPA case (and every case that will be filed in the future).

This case also highlights the potential exposure to businesses in TCPA litigation. The court’s opinion highlights the potential exposure, “A successful plaintiff under the TCPA is entitled to $500 in damages per violation. 47 U.S.C. § 227(b)(3)(B). Therefore, Dominguez stands to win $13,904,500.”  The court did not address the potential treble damages if Yahoo was found to have “willfully or knowingly” violated the TCPA, nor the potential exposure if a class was certified.  The numbers are staggering.


Tags: TCPA

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