A California federal court recently ruled in Marks v. Crunch San Diego, LLC, that a third-party Web-based platform used by a health club to send text messages to its members was not an “automated telephone dialing system” (autodialer) for purposes of the Telephone Consumer Protection Act (TCPA). It is hoped the decision will portend a more enlightened approach to technological solutions to TCPA issues.

The TCPA generally prohibits autodialed or precorded, non-emergency calls to wireless numbers without the called party’s “prior express consent.” The TCPA defines an autodialer as equipment that “has the capacity” to “store or produce numbers to be called, using a random or sequential number generator” and “dial such numbers.” In his complaint, the plaintiff alleged that the defendant violated the TCPA by sending him unwanted text messages using the platform, which he claimed was an autodialer.

The facts showed that phone numbers could only be inputted into the platform in one of three scenarios: when the defendant or another authorized person manually uploaded a number, an individual responded via text message to the defendant’s marketing campaign, or an individual manually inputted the number on a consent form through the defendant’s website that interfaced with the platform. To have the platform send a text message, the defendant needed to select the desired number, generate the message to be sent, and select a date for the message to be sent.

In granting the defendant’s summary judgment motion, the court found that the platform did not constitute an autodialer as defined by the TCPA because it lacked a random or sequential number generator. The court specifically rejected the Federal Communication Commission’s (FCC) broad reading of the autodialer definition, under which any equipment with the capacity to store or produce numbers and dial them without human intervention could be an autodialer, regardless of how the numbers called were generated. The court labeled the FCC’s interpretation an “impermissible” attempt to modify the TCPA’s statutory language, observing that the FCC had “no authority to modify or definitively interpret” the TCPA provision containing the autodialer definition.

The court also read the definition to refer to a system’s current capacity to store, produce, or call randomly or sequentially generated phone numbers and not its potential capacity to do so. The court noted concerns that focusing on potential capacity could lead to the “absurd result” of making potentially all smartphone and computer users subject to the TCPA. It found that because numbers only could enter the platform used by the defendant through methods requiring “human curation and intervention,” the platform did not have the current capacity to call or store numbers that were randomly or sequentially generated. The court observed that even if potential capacity were relevant, there was no potential for the platform to be modified to include a random or sequential number generator.

Ballard Spahr has created a TCPA Task Force to assist clients in navigating the complex and challenging issues that arise under the TCPA. The task force, which comprises regulatory attorneys and litigators, assists clients by providing counsel on avoiding TCPA liability, including reviewing policies and practices and helping to design mobile text message and prerecorded and autodialed call campaigns. It also assists clients in handling scrutiny from regulators, including preparing for examinations, responding to investigations, and defending against enforcement actions. Task force members also defend clients against TCPA class or individual actions.

Ballard Spahr's Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).

For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, John L. Culhane, Jr., at 215.864.8535 or culhane@ballardspahr.com, or Mark J. Furletti at 215.864.8138 or furlettim@ballardspahr.com.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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