Current Ninth Circuit Opinions Handle Standing and the That means of “Automated Phone Dialing System” | Faegre Drinker Biddle & Reath LLP

The Ninth Circuit recently issued two noteworthy TCPA decisions. Most recently, in Borden v. eFinancial, LLC, No. 21-35746, 2022 WL 16955661 (9th Cir. Nov. 16, 2022), the Court addressed one of the most hot-button issues in this space: the definition of “automatic telephone dialing system” (“ATDS”). Shortly before that, in Chennette v. Porch.com, Inc.50 F.4th 1217 (9th Cir. 2022), the Ninth Circuit discussed both Article III and statutory standing.

Borden and the ATDS Definition

In a unanimous opinion, the Ninth Circuit recently affirmed the dismissal of a text message TCPA suit based on its holding that to qualify as an ATDS, dialing equipment “must generate and dial random or sequential telephone numbers,” not just any numbers. See Borden2022 WL 16955661, at *1.

Plaintiff David Borden provided some of his personal information, including his phone number, on a website to obtain a life insurance quote. He then allegedly began receiving marketing texts from eFinancial. He filed a putative class action, alleging that eFinancial sent text messages to telephone numbers it kept on a stored list and used a “sequential number generator” to pick the order in which to call the phone numbers. The motion to dismiss filed by eFinancial challenged the plausibility of the complainant’s ATDS allegations. The Western District of Washington agreed with eFinancial and dismissed the complaint.

On appeal, Mr. Borden argued that an ATDS includes equipment that generates random or sequential numbers (though not necessarily telephone numbers). The Ninth Circuit rejected this argument based on both the statutory ATDS definition and the Supreme Court’s decision in Facebook, Inc. v. Duguid, 141 S.Ct. 1163 (2021).

The TCPA 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.” 47 USC § 227(a)(1) (emphasis added). The Court explained that this statutory text, from its grammatical structure to its repeated use of “number” in the context of a statute about phone calls, “makes clear that the number in ‘number generator’ within subpart (A) means a telephone number.” Borden, 2022 WL 16955661, at *3. Further, the Court noted that other sections of the TCPA, notably the do-not-call provisions, use “telephone number” and “number” interchangeably. ID.

Moreover, the Supreme Court in Facebook had deemed the “random or sequential number generator” part of the definition a “necessary feature.” As the Ninth Circuit observed, Mr. Borden’s proposed reading “would go against the Supreme Court’s holding and return this circuit back to the . . . state in which ‘virtually all’ cell phones were at risk of violating the TCPA.” Borden, 2022 WL 16955661, at *4. The Ninth Circuit thus sided with eFinancial and upheld a narrow view of what constitutes an ATDS.

Chennette and Standing

Previously, the Ninth Court issued an opinion concerning both Article III and statutory standing. It held that the receipt of “even one unsolicited, automated text message” is “a concrete and particularized injury” that Article III provides standing. Chennette50 F.4th at 1222. It also held that the plaintiffs, a group of home improvement contractors, had statutory standing to sue for text messages to their cell phone numbers, both for the alleged use of an ATDS and alleged do-not- call violations, even though these phone numbers were used in part for business purposes.

The home improvement contractors had sued multiple companies that sent them client leads via text messages, allegedly with an ATDS and without consent. The companies allegedly obtained the contractors’ cell phone numbers through their listings on websites like yelp.com and yellowpages.com, then sent the contractor a business opportunity via text message (eg, “[Name] is searching for [service] in. in [city]. You have first priority. Reply 1 if interested, 3 if not.”). Some of the contractors additionally claimed do-not-call violations because their cell phone numbers were on the national registry.

The defendants moved to dismissal, arguing plaintiffs lacked Article III and statutory standing. The District of Idaho assumed Article III standing but found no statutory standing.

The Ninth Circuit reversed. For Article III standing, the Court rejected the argument that the contractors had no injury because they solicited business inquiries online from potential customers. The Court reasoned, “Receiving even one unsolicited, automated text message. . . is the precise harm identified by Congress”—and “a concrete and particularized injury sufficient for Article III standing.” Chennette50 F.4th at 1222 (emphasis added).

For statutory standing, the Court likewise determined that the home improvement contractors fell within the “zone of interests” protected by the TCPA. For the claim based on calls made with an ATDS, the Court cited the statutory text that grants a private right of action to a person “or entity” and thus concluded that the subsection of the TCPA at issue (47 USC § 227(b) ) covers calls to cell phones for both individuals and businesses alike. See Chennette50 F.4th at 1222.

The Court also found that the contractors who claimed do-not-call violations had statutory standing under the applicable provision of the TCPA (47 USC § 227(c)). It relied on two FCC Orders and the prevailing view among district courts that, although do-not-call claims can only be pursued by “residential” subscribers, a cell phone number is presumed “residential” and also “can be residential even when used for both personal and business purposes.” Chennette50 F.4th at 1224. The Court noted the lack of FCC guidance on how to determine when such a “mixed-use phone” crosses the line to become solely a “business phone.” ID. at 1225. Absent guidance, the Court held, at the motion to dismiss stage, that the contractors’ cell phones were presumptively residential as alleged, although defendants could later attempt to show otherwise.

Looking ahead

Although these two decisions involved similar text message claims under the TCPA, were issued by the same circuit just weeks apart, and arose out of the same procedural posture (review of a motion to dismiss), they share little else in common. Borden was a unanimous opinion that reached a defense-friendly result, upholding a narrow, plain-text interpretation of the ATDS definition grounded in the Supreme Court’s Facebook decision. Chennette, by contrast, sets a low bar for standing and thus is favorable for plaintiffs; it also generated both a concurrence and dissent—with dissenting Judge Ikuta expressing serious concern that the majority’s do-not-call analysis would “broadly allow anyone who owns a cell phone to sue.” One thing is for certain: both cases involve common TCPA issues that are routinely litigated and will surely arise again. Thus, the long-term implications, both within and outside the Ninth Circuit, remain to be seen.

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