Marks v. Crunch
Vacated and remanded (published opinion)
Crunch allegedly sent unsolicited (ATDS) marketing texts to plaintiff’s mobile. Plaintiff alleged he received three messages (between Nov 2012 and June 2013), and was charged by his provider for each incoming message. Although plaintiff had a membership with Crunch, he claimed he never consented to receive marketing text messages.
Phone numbers were allegedly entered into Crunch’s system either manually, when a user texted a request, or when a user completed an online form. Texts were allegedly sent through a process by which a Crunch employee created messages, assigned them to users, and then stored them in the system until they were (automatically) sent.
In granting defendant’s motion for summary judgement (Doc#55), the district court ruled that since Crunch’s system did not have the capacity (present or potential) to generate any random or sequential numbers (numbers were entered by one of the three methods above), its system was not an ATDS. The district court opined:
- “The Federal Communications Commission (“FCC”) does not have the statutory authority to change the TCPA’s definition of an ATDS“
- “If the statute meant to only require that an ATDS include any list or database of numbers, it would simply define an ATDS as a system with “the capacity to store or produce numbers to be called”; “random or sequential number generator” would be rendered superfluous. This phrase’s inclusion requires it to have some limiting effect.”
As a refresher, the TCPA defines an ATDS as:
[E]quipment 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.
In a published opinion, a three judge panel ruled the statutory text was ambiguous on its face. This point was acknowledged, the court ruled, in the recent ACA ruling (D. D.C.; 15-1211), where the court stated that “[i]t might be permissible” for the FCC to adopt an interpretation that (1) a device had to generate random or sequential numbers in order to be an ATDS, or (2) that a device could be an ATDS if it was limited to dialing numbers from a stored list, but it could not adopt both. The inherent contradiction in the FCC’s handling of numbers “randomly or sequentially generated” or that “come from a calling list” lead the DC court to overturn the FCC’s 2015 rulemaking on the definition of an ATDS.
Finding the ACA decision invalidated (but did not replace) all prior FCC rulemaking on the definition of an ATDS, the court conducted its own statutory interpretation.
The court determined that in enacting the TCPA, Congress intended to regulate devices that make automatic calls. Moreover, the statute permitted automatic calls where a caller had obtained consent. Inherent in this was the fact that an ATDS could either dial a list of permitted numbers (e.g., with consent) or block prohibited numbers (emergency telephone lines, patient rooms, etc.). This indicated Congress understood that “an ATDS was not limited to dialing wholly random or sequential blocks of numbers, but could be configured to dial a curated list.”
Moreover, since congress declined to modify the definition of an ATDS when amending the TCPA in 2015 (Bipartisan Budget Act of 2015), it left the existing definition of an ATDS intact, tacitly approving any existing FCC rulemaking on the subject.
Thus, the court read the TCPA to state:
the term automatic telephone dialing system means equipment which has the capacity–
(1) to store numbers to be called or
(2) to produce numbers to be called, using a random or sequential number generator
–and to dial such numbers.
Since the Crunch system stored numbers and dialed them automatically to send text messages to a stored list of phone numbers, plaintiff’s allegations were sufficient to survive defendant’s motion for summary judgement.
[9th Circ.; 14-56834 (Orig: S.D. CA; 3:14-cv-00348)]
jbho: So next step will be a petition for an en banc review? Or will the FCC step in?
The capacity question – not addressed by the panel – may come up as well.
Since the texts were sent before the 2012 Robocall Rules were in effect, Crunch would have only needed prior express consent. Looks like plaintiff knowingly provided his number when signing up for the gym membership. Will the texts fall under the scope of consent addressed within that contract? For the record, according to the complaint, the texts read:
Give the Gift of Health:Crunch El Cajon-Black Friday Specials have started! Special Family Rate-$0 enroll +prorate & monthly rate-6197496939 exp:11/25 reply S
Crunch Fitness:Att:Fathers,Dads & Grads-$0 enrollment on all monthly memberships this wknd or $99 for the year (Base)! 6/13-6/16 6197496939 exp:6/16 reply STOP
Happy 2 Year Anniversary- Crunch:Special Personal Training Rates(5-30min $99)(5-60min $189) 1st time client-3days free for family 6197496939 exp: 10/20 reply ST
Although if Crunch felt it had consent, the case may never have gotten this far.
Also worth noting, the court did make brief mention of the “human intervention” question. However, it found that any human intervention in the present case was trivial (tantamount to flipping an ‘on’ switch). “Congress made clear that it was targeting equipment that could engage in automatic dialing, rather than equipment that operated without any human oversight or control.” The fact that humans added numbers to the system did not change the fact that the system in question had the automatic dialing function necessary to qualify as an ATDS.
This ruling will likely lead to a string of appeals of decisions that cited Marks, such as Herrick v. GoDaddy (D. AZ; 2:16-cv-00254) where the court ruled equipment was not an ATDS since it did not have a random or sequential number generator.
And finally, the 9th also delivered a bit of a smackdown to the 3rd circuit. Citing the 3rd circuit opinion in Dominguez v. Yahoo [3rd. Circ. 14-1751 (Orig: E.D. PA; 2:13-cv-01887)], the 9th criticized the “unreasoned assumption” reached, and stated the 3rd avoided the interpretive questions it itself raised in the statutory ATDS definition. So perhaps SCOTUS will be called on to resolve?
UPDATE: 30Oct2018 – Petition for en banc rehearing denied (9th. Circ. – Doc#119). “The full court has been advised of the Petition for Rehearing En Banc and no Judge has requested a vote on whether to rehear the matter en banc.”
UPDATE: 28Jan2019 – The Supreme Court granted certiorari to Crunch’s appeal (SCOTUS; 18-995)
UPDATE: 26Feb2019 – joint motion to dismiss with prejudice granted (S.D. CA – Doc#81). The parties reached an undisclosed settlement, and the case will no longer be heard by the high court. The district court subsequently published a mandate (S.D. CA – Doc#82) establishing that, consistent with the appellate court’s ruling, an ATDS includes equipment which has the capacity to to store numbers to be called and to dial such numbers automatically (even if the system must be turned on or triggered by a person).
That is, predictive dialers are ATDSs in the 9th Circuit.