The Second Circuit of United States Court of Appeals in Duran v. La boom Disco, Inc. (“Duran”), broke from the majority position from the Third, Seventh, and Eleventh Circuits and found that a dialing system that called from a stored list of numbers qualified as an automatic telephone dialing system (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”). In doing so, the Second Circuit joins the Ninth Circuit in adopting a broad interpretation of what constitutes as an ATDS.
In Duran, the plaintiff brought a putative class action claiming that defendant (a nightclub from Queens, NY), sent numerous unsolicited text messages to plaintiff over the course of more than a year-and-a-half. Defendant did not dispute that it sent plaintiff text messages, but the parties disagreed whether the system that sent the text messages qualified as an ATDS. On summary judgment, the district court granted defendant’s motion, finding that defendant’s system did not qualify as an ATDS because “a human determines the time at which a text message gets sent out . . . [and therefore] because a user determines the time at which the ExpressText and EZ Texting programs send messages to recipients, they operate with too much human involvement to meet the definition of an autodialer.” Plaintiff appealed and the Second Circuit reviewed the matter de novo.
The Second Circuit reversed the District Court’s judgment and made the following key findings: (1) a reading of the verbs ‘stored’ and ‘produced’ to both apply to the ‘random or sequential generation’ requirement would be surplusage; (2) ACA International only invalidated the FCC 2015 order, but the prior orders providing guidance about ATDS remained valid; (3) Congress intended that an ATDS encompassed numbers called from a stored list when it carved out an exception specifically for collection of government debts; and (4) a dialing system that required only a human to click ‘send’ or some similar button in order to initiate a text campaign did not require sufficient human intervention to absolve it from a finding that it has the capacity to operate as an ATDS. Based on these findings, the Second Circuit vacated the District Court’s judgment and remanded for a calculation of penalties.
The Second Circuit’s holding in Duran is a setback for companies defending TCPA claims. The split amongst the circuit courts on what qualifies as an ATDS under the TCPA has the Third, Seventh, and Eleventh Circuits following a more restrictive view – requiring that a dialing system must both ‘store’ and ‘produce’ numbers using a random or sequential number generator in order to qualify as an ATDS. The Ninth Circuit and now the Second Circuit have adopted a broader view – finding that a dialing system that calls from a ‘stored list’ sufficient to qualify as an ATDS. This additional decision on the issue from another Circuit Court only increases the likelihood of an eventual review by the United States Supreme Court on this issue.