ACA International Monday said that it recently filed an amicus curiae brief with the Third Circuit Court of Appeals in the case of Dominguez v. Yahoo!, Inc., No. 14-1751 (3rd Cir. Filed March 31, 2014).  At issue is the district court’s decision that Yahoo’s platform does not constitute an Automatic Telephone Dialing System (“ATDS”) within the meaning of the Telephone Consumer Protection Act (“TCPA”) because it does not have the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers and, therefore, cannot as a matter of law be held liable under the TCPA.

In Dominguez, the consumer began receiving text messages from Yahoo! after purchasing a used smartphone.  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.  Although the consumer asked Yahoo! to stop sending the texts, Yahoo told him that the service could only be stopped if the former owner of the phone disabled it himself.  The consumer then filed a class action TCPA lawsuit.

Yahoo! moved for summary judgment and argued that the text messages were not sent using an ATDS because it did not use a “random or sequential number generator” to “store or produce telephone numbers to be called.”  Instead, Yahoo! explained that its system “only sent messages to a user that had authorized them and only when that user received an email.”  The consumer countered, with the support of an expert opinion, that the Yahoo! system had the “capacity” to meet the ATDS definition and the manner in which the system was actually used was irrelevant.

In granting Yahoo! summary judgment, the federal court in Pennsylvania applied the plain meaning of the statutory definition of ATDS and rejected a Federal Communications Commission (“FCC”) opinion that had purported to broaden it.  The district court held that Yahoo!’s text message system did not constitute an ATDS because the consumer’s expert opinion was unreliable and the consumer failed to present evidence to dispute Yahoo!’s assertion that its system lacked the requisite current capabilities.  The district court wrote that “Plaintiff has not offered any evidence to show that Yahoo!’s system had the capacity to randomly or sequentially generate telephone numbers (as opposed to simply storing telephone numbers), as required by the statutory definition of ATDS.”  It was not sufficient that the system in question could store numbers and send text messages to a list.  Therefore, the district court held that Yahoo!’s equipment was not an auto-dialer.  The district court acknowledged the FCC’s contrary interpretation, but concluded that due to the clarity of the statutory auto-dialer definition, the FCC’s interpretation is not entitled to deference.

The lingering uncertainty over the meaning of ATDS, and with it the broader issue of the scope of the TCPA, creates uncertainty and compliance burdens on ACA’s members.  The Dominguez decision is important to the credit and collections industry because it limits the definition of ATDS to those systems that can generate (as opposed to merely dial) a list of numbers on a “random or sequential” basis.  Therefore, ACA submitted the “friend of the court” brief to assist Yahoo! in defending its judgment on appeal and to provide assistance and insight to the Third Circuit with respect to the public policy and due process implications of how the TCPA is interpreted and applied by the credit and collections industry.

Disputes over the meaning of ATDS are likely to continue until the FCC provides some clarity on this issue.  Therefore, ACA also filed its own industry-leading petition with the FCC seeking TCPA clarity on January 31, 2014.  ACA’s broad-based TCPA petition seeks to accomplish the following objectives on behalf of the credit and collections industry

  • Confirm that not all predictive dialers are categorically automatic telephone dialing systems;
  • Confirm that “capacity” under the TCPA means present ability;
  • Clarify that prior express consent attaches to the person incurring a debt, and not the specific phone number provided by the consumer at the time the debt was incurred; and
  • Establish a safe-harbor for auto-dialed “wrong number” non-telemarketing calls to wireless numbers.

ACA’s efforts to proactively support the credit and collection industry are part of ACA’s Industry Advancement Program and are made possible by funding through ACA’s Industry Advancement Fund.  ACA will continue to provide more information to its members as this case progresses and when any decisions concerning the case are made by the Third Circuit Court of Appeals.

Next Article: FTC Gets Court to Shut Down Debt ...