The District of Massachusetts recently entered summary judgment in favor of a plaintiff after deferring to FCC statements that purport to expand the definition of an automated telephone dialing system (“ATDS”) to include predictive dialers that can dial stored numbers without human intervention. See Davis v. Diversified Consultants, Inc., No. 13-10875 (D. Mass. June 27, 2014).

Jamie Davis sued Diversified Consultants Inc. (“DCI”), a debt collection agency, over calls to his cell phone. DCI had acquired a debt owed by Rosalee Pagan and then paid a third-party vendor for her telephone numbers and other information about her. But a number it obtained was assigned to Davis, who ended up receiving a total of 60 calls that were meant for Pagan. Davis filed suit and alleged that DCI had violated Section 227(b)(1)(A) of the TCPA, which makes it unlawful to “make any call (other than a call made for emergency purposes or made with the express prior consent of the called party) using any automated telephone dialing system . . . to any telephone number assigned to a . . . cellular telephone service[.]”

The court explained how DCI made debt-collecting calls. Every morning a DCI employee uploaded a file containing phone numbers into a cloud-based server called LiveVox, and LiveVox then called those numbers throughout the day. If someone answered the call, LiveVox would re-route the call to a DCI debt collector. Although LiveVox erased the numbers at 1 a.m. each day, it had the capacity to store them for up to 30 days. DCI admitted that LiveVox could dial numbers sequentially but stated that it had not used that feature.

Both parties moved for summary judgment. Their motions focused on whether the calls had been made: (1) by DCI or LiveVox; and (2) using an ATDS. Opinion at 8.

As for who had made the calls, the court found that DCI could not deny liability by claiming it used a “technological intermediary.” It reasoned that DCI was involved throughout the dialing process and thus had “made” the calls for purposes of the TCPA. Id. at 9.

As for how the calls had been made, the court noted that an ATDS is defined as “equipment which has the capacity—(A) to store or produce telephone numbers to be called, using random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 227(a). It stated that, “to satisfy that definition, the equipment does not have to actually store or produce phone numbers or to use a random or sequential number generator; it merely must have the capacity to do so.” Id.

The court also noted that the FCC has stated that predictive dialers qualify as ATDSs. Id. at 9-10. In 2003, the FCC stated that predictive dialer hardware, “when paired with certain software, has the capacity to store or produce numbers and dial those numbers at random, in sequential order, or from a database of numbers.” In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act Of 1991, 18 FCC Rcd. 14104, 14091-93 (July 3, 2003). The FCC reaffirmed this position in 2008. In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling, 23 FCC Rcd. 559, 566 ¶ 12 (Jan. 4, 2008) (“[W]e affirm that a predictive dialer constitutes an automatic telephone dialing system and is subject to the TCPA’s restrictions on the use of autodialers.”); id. (rejecting position that “a predictive dialer meets the definition of [an ATDS] only when it randomly or sequentially generates telephone numbers, not when it dials numbers from customer telephone lists”).

DCI’s Vice President of Compliance admitted that LiveVox could store numbers for up to 30 days, and a LiveVox memorandum affirmed that it could “store . . . telephone numbers to be called.” Id. Based on that evidence, the court found that LiveVox had the capacity to store phone numbers. Id. at 10. It reasoned that it was irrelevant that DCI deleted the numbers on a daily basis because the statute requires that equipment be able to store numbers, not that it actually be used to store numbers. Id.

The court then turned to whether LiveVox had the capacity for random or sequential number generation. Although DCI’s Vice President of Compliance testified that LiveVox had the capacity to dial sequentially, DCI produced an affidavit that retracted this testimony and a memorandum LiveVox sent to its clients that stated that its system did not use a random or sequential number generator. The court concluded that there was no genuine issue of material fact because, “even if [LiveVox] cannot dial randomly or sequentially, it is undisputed that LiveVox is a ‘predictive dialer’ that dials from lists of number.” Id.

Courts disagree about whether to defer to the FCC’s statements on what constitutes an ATDS. For example, on March 21, 2014, Judge Baylson of the Eastern District of Pennsylvania found that the definition of an ATDS is “clear and unambiguous” and that the FCC’s statements on the statutory definition are therefore not entitled to Chevrondeference. See Dominguez v. Yahoo!, No. 13-1887, 2014 LEXIS 36542 (E.D. Pa. Mar. 21, 2014).

Attempting to seek clarity on this issue, several parties have petitioned the FCC regarding the meaning of an ATDS under the TCPA. See, e.g., Professional Association for Customer Engagement Petition for Declaratory Ruling, CG Docket No. 02-278 (filed October 18, 2013) (seeking clarification that “(1) a system is not an [ATDS] unless it has the capacity to,inter alia, dial numbers without human intervention; and (2) a system’s ‘capacity’ is limited to what it is capable of doing, without further modification, at the time the call is placed.”) (emphasis in original); Glide Talk, Ltd. Petition for Expedited Declaratory Ruling, CG Docket 02-278 (filed October 28, 2013) (Glide Talk Petition) (seeking clarification that a dialing system is an ATDS “only if it is capable of storing or generating randomized numbers at the time of the call.”). DCI had moved to stay the summary judgment and trial deadlines until the FCC resolves these petitions, but the court denied that motion.

This post was written with contributions from Daniel B. Rotko.