Jun 13

Federal Court Saves Millions of Smart Phone Users from TCPA Liability

For the first time, a federal court has clarified that the Telephone Consumer Protection Act (“TCPA”) bars the improper use of an automatic telephone dialing system or ATDS. Sterk v. Path, Inc., 2014 WL 2443785 (N.D. Ill. May 30, 2014). It is not enough just to use an ATDS to make a call or text someone without the recipient’s consent. The call or text must be sent from an ATDS being used in its capacity as an ATDS.

The TCPA prohibits businesses from using an ATDS to call or text people without their prior express consent. The statute 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.”

A few years ago, the Ninth Circuit held that when evaluating whether “equipment” is an ATDS, the “focus must be on whether the equipment has the capacity ‘to store or produce telephone numbers to be called, using a random or sequential number generator.’ … [A] system need not actually store, produce, or call randomly or sequentially generated telephone numbers, it need only have the capacity to do it.” Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir. 2009) (emphasis in original). Most—if not all—federal courts interpreting the TCPA have agreed.

The question thus arises whether every call or text from an ATDS potentially violates the TCPA regardless of whether the ATDS is actually being used in its capacity as an ATDS. Suppose, for example, an individual downloads an auto-dialing application to his smart phone. Or suppose the phone, in its native capacity, has the “capacity” to function as an ATDS. Now suppose that individual wants to text his friend. He picks up his phone, types a message, and hits send. But it turns out he typed the wrong number. Instead of texting his friend, he texts a stranger. Has he violated the TCPA? Does he owe $500 in damages plus attorney’s fees?

Under Satterfield, the answer would appear to be yes: the individual’s phone had the “capacity” to store or produce telephone numbers to be called, using a random or sequential number generator. And he didn’t have the stranger’s consent. But this strict interpretation of the TCPA doesn’t make sense. The purpose of the TCPA is to prevent individuals from using an ATDS, in its capacity as an ATDS, for unwanted calls and texts.

Fortunately for my hypothetical defendant, the Northern District of Illinois recently clarified that the “TCPA bars the improper use of an ATDS to harass unsuspecting consumers. … If a person used a cell phone to send countless unsolicited text messages that harmed the public welfare in such a fashion, it would not be an absurd result to find that the cell phone user had violated the TCPA” Sterk, 2014 WL 2443785, at *4 (emphasis added).

The court’s reasoning should provide some relief to defendants facing TCPA lawsuits. Businesses in some industries encourage employees to contact prospective customers through texting. If the employees are using smart phones, they should be fine—even assuming their phones have the “capacity” to function as an ATDS—so long as they are not using their phones in that capacity.

Leave a Reply