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

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.

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.

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 successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. The firm possesses superior knowledge and deep legal experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. Through these advertising and marketing law updates, Hinch Newman 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. This blog is sponsored by Hinch Newman LLP.

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