Telephone and Texting Compliance News: Litigation Update — ATDS Definition Potentially in Flux: New Petition to the Ninth Circuit Urges En Banc Review of Borden ATDS Decision

As we reported in November, the Ninth Circuit Court of Appeals, in Borden v. E-Financial, LLC, 2022 WL 16955661 (9th Cir. Nov. 17, 2022), held that dialing numbers from a pre-existing list, even if the pre-existing list is sorted randomly or sequentially, would not qualify as dialing with an automatic telephone dialing system (ATDS). While Borden cleared up any potential ambiguity concerning the definition of an ATDS in the Ninth Circuit, a new filing now threatens to muddy the TCPA waters.

On January 24, 2023, a group of plaintiff’s lawyers filed a petition urging the Ninth Circuit to reconsider the Borden ruling en banc. The petition argues that the confluence of multiple inapposite orders within the Ninth Circuit and between circuits demonstrates that Borden conflicts with United States Supreme Court authority. The petition further argues that the interpretation of ATDS following Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021) involves a developing and important question of law that is currently seeing a great deal of appellate activity.

Since Facebook, there have been three circuit-level opinions further defining an ATDS. First, in Borden, the Ninth Circuit held that an “automatic telephone dialing system” must generate telephone numbers randomly or sequentially under the TCPA's plain text. A few weeks later, in Brickman v. United States, 56 F.4th 688, 691-93 (9th Cir. 2022), a different Ninth Circuit panel relied on Borden’s analysis to hold that an ATDS must generate and dial random or sequential telephone numbers under the TCPA, and so the defendant (Facebook) did not violate the TCPA because it did not use an ATDS that randomly or sequentially generated the telephone numbers in question. However, Judge Van Dyke issued a concurring opinion stating that he fundamentally disagrees with the Borden decision because it "wrongly concludes that the word 'number' means the same thing in all instances where it appears in TCPA's definition of an autodialer." According to Judge Van Dyke, “a random (or sequential) number generator is a term of art referring to a particular type of computation tool that can be used to generate all types of different numbers, from telephone numbers to zip codes to a sequence of consecutively ordered numbers (e.g., 1, 2, 3, … or 2, 4, 6,…).”

Meanwhile, in Panzarella v. Navient Solutions, Inc., 37 F.4th 867 (3rd Cir. 2022), the Third Circuit stated that “for a dialing system to qualify as an ATDS, it need only have the “present capacity to function as an autodialer by generating random or sequential telephone numbers and dialing those numbers.” Unlike the Ninth Circuit, the Third Circuit found “an ATDS may include several devices that when combined have the capacity to store or produce telephone numbers using a random or sequential number generator and to dial those numbers.”[1]

The inconsistent and sometimes conflicting logic of recent opinions concerning the ATDS illustrates the widespread lack of certainty regarding what actually constitutes an ATDS. There is no nationwide standard defining what constitutes an ATDS. Moreover, if the Ninth Circuit grants the petition, then the ATDS definition within that circuit could be rewritten again. For defendants, this means that relying on an ATDS defense to a TCPA claim is risky business.

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