Marks Defendant Files Petition for Rehearing En Banc Before the Ninth Circuit Court of Appeals

In Marks v. Crunch San Diego, LLC, No. 14-56834, 2018 WL 4495553 (9th Cir. Sept. 20, 2018), the Ninth Circuit gave us a new definition of an automatic telephone dialing system.  Crunch argues that in expanding the definition of an ATDS so broadly, the Ninth Circuit has essentially re-written the Telephone Consumer Protection Act (“TCPA”), “in a manner that directly conflicts with the statutory text, legislative history, and binding intracircuit and persuasive inter-circuit authority from the Third and D.C. Circuits regarding the definition of an “automatic telephone dialing system” (ATDS).”

Definitions at Issue

In Marks, the Ninth Circuit held,

[T]he term “automtic telephone dialing system” means equipment which has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person).

The TCPA already defines an ATDS as,

[E]quipment 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 U.S.C. § 227(a)(1).

While not a definition, Crunch also clarifies that the Ninth Circuit “erroneously concluded that Crunch did not dispute that [its] ‘system dials numbers automatically.'”  Crunch reiterates that the opposite is true: it both argued and demonstrated that a user of Crunch’s system had to manually type out message, manually determine the date and time of delivery, manually put numbers into the system and manually determine which numbers to dial.

Abrogation of the Ninth Circuit’s Own Decision

Crunch argues that Marks abrogates the Ninth Circuit’s own ruling in Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 951 (9th Cir. 2009)(holding that the statute’s clear meaning and Congress’s “clear and unambiguous” intent, was a reading of the phrase “to store or produce telephone numbers to be called, using a random of sequential number generator” to mean “store, produce, or call randomly or sequentially generated telephone numbers”).

The Marks Court restricted Satterfield’s holding to “whether a device has the “capacity ‘to store or produce telephone numbers’” which Crunch argues, reads Satterfield too narrowly.  Crunch states, “[a]fter Satterfield, and until now, it was clear that the dispute over the meaning of an ATDS centered around the phrase “using a random or sequential number generator” and not the issue of capacity.  Crunch argues that the Marks Court applied the phrase “using a sequentially generated telephone number” to have bearing only on the word “produce” not “store”  – which, it argues, drastically changes the meaning of the statutory text of the TCPA as well as misinterprets Congress’s intent.

The Crunch Team Are Astute Grammarians

Here is where things get technical. “Punctuation canon” technical.

Citing prior authority from the Ninth Circuit in Yang v. Majestic Blue Fisheries, LLC, 876 F.3d 996, 1000 (9th Cir. 2017), Crunch argues,

The grammatical structure of this provision requires reading the phrase “using a random or sequential number generator” as modifying either term—“store” or “produce”—in the preceding phrase. The “punctuation canon” dictates that “to store or produce telephone numbers to be called” must be read as the dependent phrase modified by “using a random or sequential number generator…” … The use of the disjunctive in the phrase preceding the comma compels reading the statute as requiring that an ATDS must have the capacity to either “store” phone numbers “using a random or sequential number generator,” or “produce” phone numbers “using a random or sequential number generator;…

Crunch continues that to implement the Marks interpretation of an ATDS, the statute you would have to be rewritten, either:

 [R]evising the statute’s punctuation so that it read: equipment which has the capacity (A) to store[,] or produce telephone numbers to be called [no comma] using a random or sequential number generator; and (B) to dial such numbers ….

[O]r changing the syntax with added words and subsections: equipment which has the capacity (A) to [i] store [telephone numbers to be called] or [ii] produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.

Crunch also points out that “Marks’s assertion that ‘if a device already has the numbers stored, there would be no need to produce or generate numbers’ illustrates that the phrase ‘using a random or sequential number generator’ would be a nullity.’”

BU

Crunch, we believe, correctly argues that the Ninth Circuit’s definition of an ATDS re-opens the overbreadth problem that the Third Circuit and the D.C. Circuit resolved this year in ACA Int’l v. FCC, 885 F.3d 687, 698-700 (D.C. Cir. 2018)(expressly holding that an ATDS cannot be broadly construed where every one of the over 224 million smartphones in the United States would qualify as an ATDS), and Dominguez v. Yahoo, Inc., 894 F.3d 116, 121 (3d Cir. 2018)(the device “had the present capacity to function as an autodialer by generating random or sequential telephone numbers and dialing those numbers”)(emphasis added).

Our full explanation and analysis of those decisions can be found here and here.

Post-Legislative Policies and Inaction Cannot Be the Basis to Re-Write a Statute in the Courts  

Crunch also attacks the Ninth Circuit’s reasoning that, “Congress ratified the FCC’s broader interpretation by leaving the statutory definition unchanged, while narrowly amending the TCPA to exempt debt collection calls made on behalf of the U.S.”

Citing the Ninth Circuit’s own decisions in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994) and Bruesewitz v. Wyeth LLC, 562 U.S. 223, 242 (2011), Crunch states that congressional inaction itself is not, and should not have been, persuasive to the Marks Court – or any court for that matter.

Further, Crunch notes that the initial purpose in restricting devices that generated random or sequential numbers was to prevent the influx of calls to emergency numbers (i.e., hospitals).  Restricting dialers – like your iPhone – that merely call stored numbers, would not curb the type of abuses Congress set out to prevent and would not serve the legislative intent.  Surprisingly, Crunch did not drive home the point that regular iPhone users are not the bad guy robo-callers that the nation has growth to loathe, but perhaps that is implied.

The Marks Court Relied on Irrelevant Authority

In its petition, Crunch also informs the Marks Court that it relied on irrelevant authority in reaching its new definition of an ATDS. Awkward, but true.

In Marks, the Court addressed cases concerning the Do Not Call Registry (see our blog on the DNCR here), but those cases deal with the issue of consent to be called, not the manner or device by which the consumer is called.  Crunch also rightly points out that do-not-call cases are actionable regardless of whether an ATDS is used to place the call because the cause of action arises on lack of consent, not functionality.

In Sum

Federal Rule of Appellate Procedure 35 states, “[a]n en banc hearing or rehearing is not favored and ordinarily will not be ordered unless: (1) en banc consideration is necessary to secure or maintain uniformity of the court’s decisions; or (2) the proceeding involves a question of exceptional importance.

It appears that Crunch went the “maintain uniformity of the court’s decisions” route.  However, with 2,712 TCPA cases filed to date this year, and over 224 million smart phones impacted by the Ninth Circuit’s Marks ruling, in TCPAland, there is an element of exceptional importance present here too.

Despite our collegiality with Marks’s counsel, Abbas Kazerounian (check him out on the Ramble Podcast here) …. We’re pulling for you, Crunch!

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