Federal Court Takes Narrow View Of What Constitutes An ATDS

The TCPA prohibits the use of an automatic telephone dialing system ("ATDS") to place calls to wireless phones without the called party's prior express consent. Because calls placed without the use of an ATDS are not subject to the TCPA's prior express consent requirements, what constitutes an ATDS has been a hotly contested issue. This issue can be expected to take on even greater importance under the new FCC rules that take effect on October 16, because the "prior express consent" requirement will now require written consent. Telemarketers, it can be expected, may explore ways to abandon the use of equipment that would fall within the definition of ATDS and to modify or replace that equipment with something that would not be an ATDS.

The TCPA defines ATDS as "equipment that 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." 47 U.S.C. § 227(a)(1). In its prior interpretations of the statute, the FCC has focused on whether a particular device has the capacity to store, produce or dial random or sequential numbers without human intervention. See In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Report and Order, 18 FCC Rcd. 14014, 14091-92 ¶¶ 132-33 (July 3, 2003). For instance, the FCC has previously concluded that a predictive dialer using calls lists is an ATDS because it has this capacity "when paired with certain software." See In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling, 23 FCC Rcd. 559, 563 n.23 (Jan. 4, 2009). Courts addressing this issue have likewise concluded that equipment need only have the capacity to randomly or sequentially generate numbers and to dial them to constitute an ATDS, regardless of how the equipment is actually used at the time of the call. See, e.g., Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir. 2009) ("[T]he focus must be on whether the equipment has the capacity to store or produce telephone numbers to be called, using random or sequential number generator . . . [A] system need not actually store, produce, or call randomly or sequentially generated numbers, it need only have the capacity to do it."); Lozano v. Twentieth Century Fox Film Corp., 702 F. Supp. 2d 999, 1010-11 (N.D. Ill. 2010). Since these rulings, there has been concern in the telemarketing industry that...