On July 30, the Northern District of Texas issued the first opinion by a federal court in Texas addressing the impact of ACA International on the definition of an automatic telephone dialing system (“ATDS”). In Adams v. Safe Home Security Inc., the Court rejected the Ninth Circuit’s rationale in Marks and held that “an ATDS must both store and produce numbers that are randomly or sequentially generated and not merely store any numbers.” The Court expressly held that the TCPA “does not prohibit the use of predictive dialers as they fall outside the definition of an ATDS.”

Adams alleges that, after the expiration of her contract with Safe Home Security, she received multiple calls to collect a debt claimed to be past due. Adams alleges she disputed the debts and, on multiple occasions, requested that Safe Home Security stop calling. Despite her request for calls to stop, Adams alleges she received at least twenty additional calls. She claims that when she answered the calls from Safe Home Security, “there would be a pause of several seconds before a live representative spoke.”

Safe Home Security moved to dismiss the complaint for failure to state a claim, arguing Adams failed to adequately plead the use of an ATDS. In addressing this argument, the Court first addressed the impact of ACA International and held that ACA International invalidated the 2003, 2008, and 2015 FCC Orders. The Court then looked to the plain language of the statute and conducted a detailed exercise in grammar. In doing so, the Court “respectfully disagree[d]” with the Ninth Circuit’s decision in Marks that an ATDS is a device that stores numbers or produces numbers with a random or sequential number generator. When interpreting the definition of an ATDS, the Court found that “‘using a random or sequential number generator’ modifies both ‘to store’ and ‘to produce.’” Accordingly, an ATDS is a device that “both store[s] and produce[s] numbers that are randomly or sequentially generated.”

The Court also opined on the issue of capacity. It found that the TCPA requires that the dialing system have the current capacity to store or produce randomly or sequentially generated numbers, but the analysis of capacity does not require the call at issue to be placed using the ATDS. Instead, the capacity question is answered by looking at the dialing system as a whole.

Applying its interpretations of the definition of an ATDS and current capacity, the Court found that Adams’ allegation that there was a pause before a live agent joined the call was “sufficient to allege the use of an automated calling machine of some kind” and defeat Safe Home Security’s motion to dismiss.

While the Court’s focus on random or sequential number generation when defining an ATDS is a positive development for companies, especially those facing TCPA lawsuits in Texas, this is tempered by its belief that this functionality does not have to be actually used to make the call in question for there to be TCPA liability.