Ninth Circuit Rules on TCPA “Mixed Use” Wireless Numbers and ATDS

December 8, 2022/Richard Newman
According to the Telephone Consumer Protection Act, only “residential telephone subscribers” possess a right of action for violations of the Do-Not-Call registry.
Specifically, 47 U.S.C. § 227(c)(1) directs the FCC to promulgate DNC regulations to “protect residential telephone subscribers’ privacy rights to avoid receiving telephone solicitations to which they object.”  47 C.F.R. § 64.1200(c)(2) prohibits telephone solicitation calls to “[a] residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry.”

But what about numbers that are used for both residential and business purposes?

In Chennette v. Porch.com, Inc. (50 F.4th 1217 (9th Cir. 2022)), the Ninth Circuit recently held that a fact-specific inquiry into each separate telephone number is required in order to determine whether a mixed-use telephone line is “residential.”
Here, the plaintiffs were home improvement contractors that allegedly received unsolicited text messages from Porch.com and its subsidiary, GoSmith that offered leads.  Numerous plaintiffs purportedly registered their telephone numbers on the national DNC registry but allegedly received over 2,000 text messages.  As a result, the plaintiffs filed suit in federal court alleging violations of the TCPA based upon use of an automated telephone dialing system to send automated text messages and violations of the DNC registry prohibitions.

The defendants filed a motion dismiss.  They argued that the plaintiffs lacked standing to sue under the TCPA because their telephone numbers are used for personal and business purposes.

The Ninth Circuit reversed the lower federal court ruling.

In doing so, the Ninth Circuit relied upon a 2003 order in which the Federal Communications Commission concluded that a cell phone registered on the DNC registry is “presumptively a residential phone.”  Importantly, a 2005 FCC order declined to impose a hard-and-fast rule rule that telephone numbers associated with home-based businesses would be excluded from the DNC provision because the FCC prefers to “review such calls as they are brought to our attention to determine whether or not the call was made to a residential subscriber.”

Consequently, the Ninth Circuit opined that numerous district courts have found that a number used for both personal and business purposes can still be regarded as a residential line under the TCPA’s DNC provision.

In Chennette, the Ninth Circuit held that there is a presumption that a cell phone placed on the DNC  registry is residential, but that the foregoing presumption can be rebutted on a case-by-case basis.  The case was sent back to the district court for further factual inquiry into the issue of whether the plaintiffs’ telephone lines were residential or business in nature.

The Ninth Circuit set forth several factors that the lower federal court should consider, including whether plaintiffs have publicly held out their numbers for business purposes, whether plaintiffs’ telephones have been registered as business or residential, whether the telephones are used for business or employment purposes, and whether plaintiffs’ are reimbursed by their employers for associated telephone costs.

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The Ninth Circuit also recently issued another decisions of interest to telemarketers that pertains to the definition of an “automatic telephone dialing system.”

Definition of Automatic Telephone Dialing System

In Borden v. eFinancial, LLC (No. 21-35746, 2022 WL 16955661 (9th Cir. Nov. 16, 2022)), a unanimous panel ruled that an ATDS is dialing equipment that must generate and dial random or sequential  telephone numbers.

In Borden, the plaintiff purportedly provided his personal information, including his phone number, on a website to obtain a life insurance quote.  He then allegedly began receiving commercial text messages
from eFinancial.
Mr. Borden subsequently filed a class action lawsuit, alleging that eFinancial sent text messages to telephone numbers it maintained on a stored list and used a “sequential number generator” to select the order in which to call the telephone numbers.
eFinancial successfully sought to dismiss based upon the plaintiff’s ATDS allegations.
Mr. Borden appealed.  He argued that an ATDS includes equipment that generates random or sequential numbers, but 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.”

The Court explained that this statutory text “makes clear that the number in ‘number generator’ within subpart (A) means a telephone number.”  The Court also found that other sections of the TCPA (e.g., DNC provisions) use “telephone number” and “number” interchangeably.

The Ninth Circuit also observed that Mr. Borden’s argument would contradict the Supreme Court Facebook ruling which held that the “random or sequential number generator” part of the definition of an ATDS is a “necessary feature.”

It would also presumably once again, whether intentional or not, render virtually all cell phone user potentially liable for TCPA violations.

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Takeaway in the Ninth Circuit:  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 in the Ninth Circuit.  The Ninth Circuit has set a low bar for TCPA standing.  Cell phones are presumed residential and can also be residential even when used for both business and personal.  The issue of whether a telephone line is residential or business is a fact-intensive inquiry.  However, ATDS claims cover calls to cell phones for both businesses and individuals in the Ninth Circuit.  The decision bears significantly on TCPA class action litigation.

Richard B. Newman is a FTC lawyer at Hinch Newman LLP.

Informational purposes only. Not legal advice. May be considered attorney advertising.

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Richard Newman

Richard B. Newman is a nationally recognized FTC advertising compliance, CID investigation and regulatory enforcemetn attorney. He regularly provides advertising counsel and represents clients in high-profile investigations and enforcement proceedings initiated by the Federal Trade Commission, state attorneys general, departments of consumer affairs, and other federal and state agencies with jurisdiction over advertising and marketing practices. Richard is also an ecommerce lawyer and spam defense attorney. His practice additionally focuses upon false advertising defense, data privacy, cybersquatting, intellectual property law and transactional matters relating to the dissemination of national advertising campaigns, including the gamut of affiliate marketing, telemarketing, lead generation, list management and licensing agreements. Richard advises clients on how to minimize the legal risks associated with digital marketing, email marketing, telemarketing, social media influencer campaigns, endorsements and testimonials, negative option marketing models, native advertising, online promotions and comparative advertising,
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Hinch Newman LLP’s advertising and marketing practice includes two decades successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. As FTC attorneys, the firm possesses superior compliance knowledge and deep legal advocacy experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. It has also been selected to author the Consumer Protection Section of the prestigious American Lawyer Media International Federal Trade Commission: Law, Practice and Procedure Treatise, a comprehensive resource for developments of concern to advertisers, marketers and legal professionals that practice before the Commission. Through these advertising and marketing law updates, Hinch Newman LLP provides commentary, news and analysis on issues and trends concerning developments of interest to digital marketers, including FTC and state attorneys general advertising compliance, civil investigative demands (CIDs), and administrative/ judicial process. 

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