140 Days Later: Here Are Five Things To Know (Right Now) About How Courts Are Handling ATDS Cases Post Facebook

I know everyone is regularly checking
the Facebook Ruling Resource Page– which is, unsurprisingly, driving huge
traffic. But I also know that page is a bit sloppy right now as the cases are
not yet organized in any meaningful fashion. Once we hit about 20 or so
decisions I’ll start creating categories for ease of consumption.

But here’s what your beloved Czar has gleaned
over the last 4.5 months:

1. Many Courts Are Not
Applying Facebook at the Pleadings Stage and that’s Just Plain
Awful

Facebook was
supposed to be a huge win for TCPA Defendants–and it was–but that win has been
largely diminished by decisions that refuse to apply the Supreme Court’s
handiwork at the pleadings stage. See, for example:

•  Gross v. Gg Homes,
  Case No. 3:21-cv-00271-DMS-BGS, 2021 U.S. Dist. LEXIS 127596 (S.D. Cal. 
  July 8, 2021)(Court holds Facebook irrelevant at pleadings
  stage; holds allegations of automatic template texts sufficient to state a
  claim);

• Callier, EP-20-CV-00304-KC, 2021 U.S. Dist. LEXIS 126769 (W.D. Tex.  May 10, 2021)(allegations of a pause upon receipt of unsolicited calls sufficient to state ATDS claim post-Facebook);

• Miles v.
  Medicredit, Case No. 20-cv-01186, Doc. No. 53 (E.D. Mo. July 14,
  2021)(Following Gross and holding that Facebook not
  pertinent at pleadings stage);

• Jance v. Homerun
  Offer LLC, No. CV-20-00482-TUC-JGZ, 2021 U.S. Dist. LEXIS 143145
  (D. Ariz. July 29, 2021)(pause allegations coupled with lack of consent and
  general marketing content sufficient to allege ATDS usage at the pleadings
  stage).

For the non-lawyers, there are generally two
key places for a Defendant to “get off the bus” in TCPA class action
litigation. The first is via a pleadings stage challenge–generally a motion to
dismiss. The second is a motion for summary judgment or MSJ.

[article_ad]

Motions to dismiss can be brought easily and
relatively cheaply because they address only the allegations of the complaint.
MSJ motions are more expensive because they need to be supported by evidence.
But more importantly MSJs are only available later in a case–after some (or
perhaps all) discovery has been completed. So whereas a motion to dismiss can
end a case with minimal investment, defense fees in putative TCPA cases ending
in MSJ are usually north of $300k.

So the fact that so many courts are refusing
to apply Facebook at the pleadings stage means that defendants
are facing tons of (probably) needless cost to go through the formality of
discovery before they (probably) win the case. The practical effect is that
consumer lawyers are incentivized to continue bringing ATDS cases as the Courts
hold open the door for settlement opportunity by demanding expensive and time
consuming discovery out of Defendants.

2. Courts that Do
Apply Facebook At the Pleadings Stage Are Almost Certain to
Reject Footnote 7 Arguments– But What About the Courts that Won’t?

Mercifully a handful of cases to date have applied Facebook at
the pleadings stage and the returns from these courts have been outstanding for
Defendants. The best-refined rule from these decisions is that if the complaint
does not plead truly random calls there is no TCPA exposure.
See:

• Borden v. Efinancial, LLC, No. C19-1430JLR, 2021 U.S. Dist. LEXIS 153086 (W.D. Wash. Aug. 13, 2021)(Motion to dismiss granted. FN7 only applies to lists of random numbers.)

• Barry v. Ally Fin., Case No. 20-12378, 2021 U.S. Dist. LEXIS 129573 (E.D. Mich.  July 13, 2021)(Motion to dismiss granted as to targeted collection calls. Facebook requires usage of Random and Sequential Number Generator (R&SNG), not just capacity. FN7 only applies to lists of random numbers);

• Hufnus v DoNotPay, Case No. 20-cv-08701, Doc. No. __ (N.D. Cal. June 24, 2021)(System that called from list of customers not an ATDS because list was not randomly dialed; FN7 only applies where random numbers are called).

Unsurprisingly, these cases reject Plaintiff’s Footnote 7 arguments–that using
an R&SNG to determine the sequence of dialing can trigger the TCPA in and
of itself. The Plaintiff’s bar is not giving up on this argument, however, and
I strongly suspect they will eventually win a case or two (or perhaps several)
leveraging this argument. The footnote is just too vague for comfort–even with a
number of cases now explaining that what the Supreme Court meant to
say is that using an R&SNG to determine the sequence of numbers drawn from
a RANDOM list of numbers triggers the TCPA. If only the Supremes had actually
said that!

Indeed at least one case has already held that
a fn7 challenge survives the pleadings stage. See

• Atkinson v. Pro Custom Solar Lcc, CIVIL NO. SA-21-CV-178-OLG, 2021 U.S. Dist. LEXIS 112396 (W.D. Tex.  June 16, 2021)(ATDS allegations survive the pleadings stage where present use of R&SNG to determine dial sequence alleged).

We’ll continue to monitor this critical
argument.

3. Triggered Text
Alerts Seem Safe After Facebook

The day after Facebook was
decided I did a webinar breaking it down for all of you–the
first of its kind by any law firm in the nation to my knowledge.

I highlighted that the biggest winners
from Facebook would be triggered text alert platforms and AI
text platforms. These systems operate on a one-to-one basis responding to real
life events and simply cannot be an ATDS post-Facebook: they neither
generate numbers nor store them as part of their dialing function, so no
R&SNG can be operating to snag them. Plus these systems are “on all fours”
with the system in Facebook–it too was using a triggered text alert
platform.

While there is only one case directly on point
so far, it was a pretty resounding win for the good guys:

• Watts v. Emergency Twenty Four, No. 20-cv-1820, 2021 U.S. Dist. LEXIS 115053 (N.D. Ill. June 21, 2021)(Motion to dismiss granted where allegations demonstrated calls at issue were triggered by alarms and not called as a result of an R&SNG).

4. “Click to Dial”
Systems Are Likely No Longer Relevant–But the Case Law Has Not Bourne That Out
Just Yet

One of the biggest changes brought about
by Facebook is the seeming death of the human intervention
test.

Long-time TCPAWorld readers will recall that
after the Omnibus TCPA ruling in 2015 courts began pushing back at the
tremendous breadth of the newly-expanded ATDS definition by holding that only
systems that dialed without human intervention triggered the TCPA.

Notably the TCPA’s ATDS definition never
required “automatic” dialing as a statutory element and does not exempt dialers
that call with human intervention. So this entire framework was dreamed up out
of whole cloth. Plus it was very difficult to apply. The same system would
appear “manual” to one court but “automatic” to another. This “eye of the
beholder” test was certain to go sway at some point–and footnote 6 of Facebook seems
to be its death knell.

Unfortunately, a huge amount of time and
resources were sunk into the development of “click to dial” systems pre-Facebook–those
that had a modicum of “human intervention” required to launch calls. These
systems were bulletproof pre-Facebook but now find themselves
firmly in the “yellow” category post-Facebook as callers move
toward “human selection” systems to avoid FN7 and Florida-style dialer definitions:

The TCPA and its ATDS definition will remain
forever enigmatic owing to the peculiar manner in which the statute seeks to
regulate technology.

As has been observed time and again, the statute
triggers upon the use of a system with the “capacity” to perform designated
functions–but those functions do not actually have to be used in connection
with any specific call to trigger the statute.

Or do they?

The Supreme Court’s loose/intentional
(depending on your point of view) language regarding the “use” of an R&SNG
in a system might be interpreted to require that only calls actually made as a
result of an R&SNG trigger the statute. At least one court has said so
directly, albeit in dicta:

• McEwen v. Nra of Am. & Infocision, No. 2:20-cv-00153-LEN, 2021 U.S. Dist. LEXISUnited (D. Me. April 14, 2021)(ruling ATDS must make “use” of R&SNG, not just have capacity to do so).

But other courts are sure to disagree and find
the TCPA is triggered anytime a system with the “capacity” to dial using an
R&SNG is deployed–even if no R&SNG is “used” to make the calls at
issue.

Equally problematic–what “system” are we
looking at? While dialer technology can be carefully configured to strip
R&SNG processes from the code, integrated systems will almost certainly
have random number generators available, if not actively in use. Where the
courts eventually draw the line between what is part of the dialing “system”
and what is a separate operating or record-keeping “system” is amongst the
biggest battles yet to be waged.

We’ll keep an eye on all of this for you.