FDCPA

Federal Courts Nationwide Are Now Rejecting Valid Claims Against Non Banks for Harassment Using a Very Questionable ‘Technical’ Excuse – But Texas Courts Lead the Field

Notably, this is the second case in Texas, after Adams v. Safe Home Security, Inc. (N.D. Tex. July 30, 2019), to hold that random and sequential number generation is needed for a device to qualify as an ATDS.

Courts Continue to Hold Random/Sequential Number Generation is Required to Meet ATDS Definition Under TCPA

Recently, a string of district courts outside of the Ninth Circuit have held that to qualify as an ATDS, a device must have the capacity to generate telephone numbers randomly or sequentially. In the month since the last such case we examined, there have been four additional rulings from district courts in various jurisdictions reaching the same or similar holdings regarding the definition of an ATDS.

Reed v. Quicken Loans (Northern District of Texas)

In Reed v. Quicken Loans, Inc., No. 3:18-CV-3377-K, 2019 WL 4545010 (N.D. Tex. Sept. 3, 2019), report and recommendation adopted sub nom. Reed v. Quicken Loans, Inc., No. 3:18-CV-3377-K, 2019 WL 4538079 (N.D. Tex. Sept. 18, 2019), the Court dismissed the plaintiff’s complaint at the pleadings stage for failing to allege use of an ATDS.

In its ruling granting defendant’s motion to dismiss, the Court held:

Though Plaintiff avers the text messages were “automated” he does not plead that the text messages or phone calls were “placed with an ATDS that randomly or sequentially generated his number,” nor does he assert that the phone calls included “dead-air time” indicative of use of an ATDS.

Notably, this is the second case in Texas, after Adams v. Safe Home Security, Inc. No. 3:18-CV-03098-M, 2019 WL 3428776 (N.D. Tex. July 30, 2019), to hold that random and sequential number generation is needed for a device to qualify as an ATDS.

Reed is also a good reminder that plausible factual allegations are necessary to survive a pleadings challenge and that bare bones allegations will not pass muster.

Johnson v. Capital One (Southern District of Florida)

In Johnson v. Capital One Services, LLC, No. 18-CV-62058, 2019 WL 4536998, at *4 (S.D. Fla. Sept. 19, 2019), the Court, without getting into any detailed explanation, found that the statutory definition of an ATDS controls:

The TCPA defines an ATDS as equipment that has the capacity to store or produce telephone numbers to be called using a random or sequential number generator and to dial the stored numbers. 47 U.S.C. § 227(a)(1).

The Court did not waiver from its position even after the plaintiff argued that the defendant’s agent had admitted that the defendant used an “auto dialer.”

The plaintiff, in her declaration, stated, “[o]n May 16, 2018 at approximately 3:58 p.m. I received a telephone call from Capital One and was eventually connected to a representative named Bill. I asked Bill directly if he had used an auto dialer to contact me that day and Bill stated that Capital One had used an auto dialer.”

The Court did not find the agent’s statement to have created a genuine issue of material fact because “there is no…evidence to indicate that the ‘auto dialer’ used qualified as an ATDS under the statute.” This is particularly significant because the Court expressly held that the admitting of use of an “auto dialer” does not necessarily mean that the device used meets the statutory definition of an ATDS.

Denova v. Ocwen Loan Servicing (Middle District of Florida)

In Denova v. Ocwen Loan Servicing, No. 8:17-CV-2204-T-23AAS, 2019 WL 4635552, at *3 (M.D. Fla. Sept. 24, 2019), the defendant objected to a Recommended Order by a Magistrate Judge which found that the defendant’s Aspect telephone system constituted an ATDS.

The Court sustained the defendant’s objection to the Recommended Order and held that, “[t]o constitute an ATDS the system must possess the capacity to generate random or sequential numbers.”

To reach this conclusion, the Court first acknowledged that the FCC’s 2003 and 2008 Orders broaden the ATDS definition to included predictive dialers. The Court then went on to address ACA Int’l v. FCC, 885 F.3d 687 (D.C. Cir. 2018) and found that ACA Int’l not only set aside the FCC’s 2015 Order on ATDS, but also set aside the 2003 and 2008 Orders.

Finding that the FCC’s definition of an ATDS had been overturned, the Court then turned to the statutory language.  The Court expressly disagreed with Marks v. Crunch, 904 F.3d 1041 (9th Cir. 2018) and held that:

the natural and grammatical reading of the TCPA’s definition of an ATDS — the focus of which is the capacity to generate random or sequential numbers — compels the conclusion that to constitute an ATDS the system must possess the capacity (1) to store telephone numbers using a random or sequential number generator or (2) to produce telephone numbers using a random or sequential number generator…

Accordingly, the Magistrate Judge’s ruling on the issue of ATDS was overruled.

Rivero v. D’Jais, LLC (District of New Jersey)

In Rivero v. D’Jais, LLC, No. CV1812697FLWZNQ, 2019 WL 4784175, at *3 (D.N.J. Sept. 30, 2019), the Court held “[a] device must only have the capacity to generate random or sequential numbers and to dial those numbers and then must call or text a cellular telephone’s number, though not necessarily one that was randomly or sequentially generated, without the permission of the owner of the recipient number, for a violation of TCPA to occur.”

The Rivero Court discussed Dominguez v. Yahoo, Inc., 894 F.3d 116 (3d Cir. 2018) in depth and honed in on the “capacity” of the device to randomly or sequentially generate numbers and dial those numbers.  The Court then concluded, at the pleadings stage, that it is plausible that the defendant used an ATDS because it is possible a business that uses mass text messages to promote itself would use equipment that has the capacity to generate random or sequential numbers and text those numbers, “even if a particular recipient’s phone number were not generated randomly or sequentially.” (Emphasis added).

Ultimately, the point of the court was that the use of a random or sequential number generator is not required to establish ATDS use.  Instead, the Plaintiff must plausibly plead that the Defendant called with a device that merely has the capacity to do so, regardless of whether or not that capacity was actually used in making the call at issue.

This string of very recent decisions seems to highlight a growing trend we have seen over the course of this year amongst the lower courts across different jurisdictions.  While there are some variations amongst these cases, they each uniformly hold that the capacity to randomly or sequentially generate telephone numbers is essential for a device to qualify as an ATDS.

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