New Decision Provides Hope for Common-Sense Application of TCPA, but the High-Stakes Debate Over the Scope of the TCPA Will Continue

New Decision Provides Hope for Common-Sense Application of TCPA, but the High-Stakes Debate Over the Scope of the TCPA Will Continue

By David N. Anthony, Chad R. Fuller, John C. Lynch, Alan D. Wingfield, and Virginia Bell Flynn

On Thursday, March 21, 2014, the Eastern District of Pennsylvania in Dominguez v. Yahoo!, Inc., [enhanced version available to lexis.com subscribers], held that Yahoo did not violate the Telephone Consumer Protection Act (TCPA) [enhanced version available to lexis.com subscribers], because Yahoo’s SMS system could not “randomly or sequentially generate telephone numbers.” The Dominquez court is the most recent to weigh in on one of the most controversial and high-stakes issues under the TCPA – what types of technologies are considered automated telephone dialing systems (ATDS), which are dictated by the TCPA. The Dominquez decision represents a narrow view of the definition of an ATDS but will by no means put to rest the furious debate.

Background

Plaintiff filed a putative class asserting that Yahoo’s practice of sending unsolicited text messages to cellular telephone numbers without prior express consent violated the TCPA. Yahoo filed an answer and shortly thereafter moved for summary judgment, asserting that its system was not an ATDS and, therefore, Yahoo was not in violation of the TCPA.

The Court focused on declarations from both sides to determine whether the SMS system was an ATDS. There was general agreement that the Email SMS Service employed by Yahoo automatically converted email messages into a truncated format, accessed the appropriate user's telephone number from a stored list, and automatically sent the text message to the customer's mobile device.

The Court held that no genuine dispute existed as to Yahoo’s system, based upon the declarations at issue, and that Yahoo did not violate the TCPA because it did not use an ATDS to send SMS messages. Strictly tracking the language provided by the FCC, the Court makes clear that an ATDS must have the present capacity not just to store numbers, but to randomly generate them as well.

Dominguez, however, stands in contrast to other decisions which have taken a much broader view of the definition of ATDS, such as Echevvaria v. Diversified Consultants, Inc.,, [enhanced version available to lexis.com subscribers], and Sherman v. Yahoo! Inc., [enhanced version available to lexis.com subscribers], which held that a company may be liable under the TCPA simply because its systems have the capacity but not the present capacity to randomly or sequentially generate numbers.

Practical Implications

TCPA litigation has exploded nationwide over the last several years, putting any business that uses dialing technology at risk. A fundamental compliance strategy to avoid risk is to not use an ATDS in the first place, at least for some types of calls. Court decisions, however, are in disarray on the fundamental definition of what constitutes an ATDS, making compliance tricky at best and unmanageable at worst.

Businesses have submitted petitions with the Federal Communications Commission (FCC) in the past year seeking clarification of existing FCC regulations and language as to what an ATDS actually is. While welcome, the Dominquez decision in and of itself is not decisive in the debate – presumably, definitive clarification will have to await further action by the FCC and courts.

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Financial Services Litigation Practice Group

Troutman Sanders’ Financial Services Litigation practice group is an accomplished and experienced leader in providing litigation and regulatory advice to a broad spectrum of financial services institutions. The team is comprised of a dedicated group of trial and regulatory lawyers who regularly focus on resolving the array of issues that confront financial institutions. The group’s lawyers have years of hands-on successful experience in all areas of the trial process, including motions, arbitration, mediation, trial and appeal, coupled with in-depth banking industry and regulatory knowledge.

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