King v. Time Warner Cable Inc., Docket No. 15-2474-cv

• Decision Date: 29 June 2018
• Docket Number: August Term, 2016,Docket No. 15-2474-cv
• Citation: 894 F.3d 473
• Parties: Araceli KING, Plaintiff-Appellee, v. TIME WARNER CABLE INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

894 F.3d 473

Araceli KING, Plaintiff-Appellee,

v.TIME WARNER CABLE INC., Defendant-Appellant.

Docket No. 15-2474-cv

August Term, 2016

United States Court of Appeals, Second Circuit.

Argued: January 25, 2017

Decided: June 29, 2018

Stephen Taylor (Sergei Lemberg, on the brief ), Lemberg Law LLC, Wilton, CT, for Plaintiff-Appellee.

Matthew A. Brill (Matthew T. Murchison and Alexandra P. Shechtel, on the brief ), Latham & Watkins LLP, Washington, DC, for Defendant-Appellant.

Before: Winter, Cabranes, and Lynch, Circuit Judges.

Gerard E. Lynch, Circuit Judge:

Defendant-appellant Time Warner Cable Inc. ("Time Warner") appeals a decision by the district court (Alvin K. Hellerstein, J. ) granting partial summary judgment in favor of the plaintiff-appellee Araceli King on her claim that Time Warner knowingly or willfully violated the Telephone Consumer Protection Act of 1991 ("TCPA"), 47 U.S.C. § 227, by using an "automatic telephone dialing system" to call King’s cell phone 153 times without her consent. The district court’s interpretation of the statute relied primarily on a Declaratory Ruling and Order issued by the Federal Communications Commission ("FCC") in 2015 that has since been invalidated by the D.C. Circuit. See ACA Int’l v. FCC , 885 F.3d 687, 699 (D.C. Cir. 2018). We now conclude that the district court’s analysis was based on an incorrect interpretation of the statutory text. Accordingly, the district court’s ruling in favor of King is VACATED and the matter is REMANDED for further proceedings consistent with this opinion.

BACKGROUND

I. The Telephone Consumer Protection Act

In the interest of reducing the volume of unwanted telemarketing calls, the Telephone Consumer Protection Act, in relevant part, makes it "unlawful ... to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system ... to any telephone number assigned to a ... cellular telephone service, ... unless such call is made solely to collect a debt owed to or guaranteed by the United States." 47 U.S.C. § 227(b)(1)(A)(iii) ; see also ACA Int’l , 885 F.3d at 692–93. The statute defines an "automatic telephone dialing system" ("ATDS" or "autodialer") 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." 42 U.S.C. § 227(a)(1). Aggrieved parties may bring suit to recover a minimum of $500 per violation, which sum can be trebled at the court’s discretion "[i]f the court finds that the defendant willfully or knowingly violated" the statute. Id. § 227(b)(3).

The FCC has the authority to promulgate regulations implementing the TCPA. Id. § 227(b)(2) ; see also id. § 201(b) (authorizing the FCC to "prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter"). In 2015, the FCC issued a Declaratory Ruling and Order that, among other things, attempted to clarify the TCPA’s requirement that, to qualify as an autodialer under the statute, a device must have the "capacity" to dial random and sequential numbers. In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 , 30 FCC Rcd. 7961, 7973–74 (2015) [hereinafter "2015 Order"]. The Commission asserted that an expansive interpretation of the term "capacity" was consistent with both Congress’s intent that the TCPA have a broad protective reach, and with the Commission’s previous orders. Id. Accordingly, the FCC "declined to define a device’s ‘capacity’ in a manner confined to its ‘present capacity.’ Instead, the agency construed a device’s ‘capacity’ to encompass its ‘potential functionalities’ with modifications such as software changes." ACA Int’l , 885 F.3d at 693–94, quoting 2015 Order at 7974, 7976.

II. Factual Background for King’s TCPA Claims

King contends that Time Warner violated the TCPA by making numerous calls to her cell phone using an autodialer after she had withdrawn her consent for it to do so.¹ During the period at issue in this lawsuit, King was a Time Warner customer. When signing up to receive services from Time Warner, King was required to agree to the company’s terms of service, which included, in relevant part, granting the company permission to "call any number you provide to us (or that we issue to you) for any purpose," provided, however, that a customer could request to be placed on a "do not call" list so as not to receive any further calls "for marketing purposes," and that request would be honored. App. at 243. The terms of service agreement also specified that Time Warner "may use automated dialing systems or artificial or recorded voices to call" its customers. Id.

Time Warner uses an "interactive voice response" calling system to, among other things, contact customers with overdue accounts. The system automatically references Time Warner’s billing records to determine which customers are more than 30 days late on their payments, and then dials the number associated with those accounts. If a person answers the call, the system is programmed not to call that number again until the following day (and it will stop altogether if the customer’s account becomes current). If the call is not answered, the system is programmed to leave a voicemail and attempt to call back two more times that day. Time Warner admits that its system has "the capacity to store numbers" and dial them, App. at 222, but asserts that it "does not have the capacity to make random or sequentially generated calls," id. at 221.

Beginning on July 3, 2013, Time Warner’s system began making calls to a cell phone number belonging to King in an effort to collect on an overdue account. Unfortunately, King was not the customer Time Warner was seeking; instead, her phone number had erroneously been associated with the account of another, apparently delinquent, customer. King claims that, on October 3, 2013, after she had received ten calls from the system, she asked Time Warner to stop calling her number regarding the other customer’s account. But the calls continued unabated through January 7, 2014, when King again called Time Warner in another unsuccessful attempt to stop the calls, and beyond.² In total, Time Warner’s system called King 163 times between July 2013 and August 2014.

In March 2014, King filed the instant suit, claiming that Time Warner’s calls violated the TCPA. The parties cross-moved for summary judgment. Time Warner interpreted the term "capacity" in the TCPA’s definition of an autodialer to mean that a device was "capable at the time of use" of performing the functions of an autodialer. App. at 265; see also id. at 266 (referring to a system’s "present capacity"). Accordingly, it argued that, in the absence of any evidence that its system had the present ability to perform the requisite functions, its system could not qualify as an autodialer under the statute. The district court disagreed, because it adopted a broader understanding of the term "capacity." Relying on a press release announcing the FCC’s 2015 Order, which was not formally issued until a few days after the court’s ruling, the district court determined that the TCPA’s definition of an autodialer included "any technology with the capacity to dial random or sequential numbers," such as "robo-callers," and concluded that Time Warner’s system met that "low bar." Id. at 282 (emphasis in original). The court thus rejected as irrelevant Time Warner’s contention that there was no evidence that its system "actually dialed King’s number randomly or from a list," and did not investigate whether Time Warner’s system had the current ability to perform the functions of an autodialer. Id. (emphasis in original).

The court also concluded that although King’s assent to the company’s terms of service constituted blanket consent to receive calls from an autodialer, she effectively withdrew that consent on October 3, 2013. Accordingly, the court granted summary judgment to Time Warner as to the ten calls made before King withdrew her consent, and granted summary judgment to King as to the 153 calls made thereafter. The court further held that, because Time Warner had knowingly violated the statute, treble damages were warranted for each of the violating calls.

Time Warner filed the instant appeal.

III. The D.C. Circuit’s Invalidation of the FCC’s 2015 Order

While Time Warner’s appeal was being briefed to this court, the United States Court of Appeals for the District of Columbia Circuit heard a challenge to the FCC’s 2015 Order.³ In ACA International v. FCC , 885 F.3d 687 (D.C. Cir. 2018), that court decided in relevant part that the FCC’s definition of "capacity" in the 2015 Order, which included a device’s "potential functionalities" after modification, id. at 693–94, would allow the statute to extend well past what Congress intended, and that the 2015 Order therefore failed "the requirement of reasoned decisionmaking," id. at 703.

DISCUSSION

The district court’s order granting in part King’s motion for summary judgment is reviewed de novo . See Reyes v. Lincoln Auto. Fin. Servs. , 861 F.3d 51, 54 (2d Cir. 2017), as amended Aug. 21, 2017. As noted above, in concluding that Time Warner’s calls to King violated the TCPA, the district court relied on the FCC’s 2015 Order, which broadly construed the term "capacity" and thus extended the TCPA to reach any device that could be modified by software changes to perform the functions of an autodialer. In the wake of ACA International , which invalidated that Order and thereby removed any deference we might owe to the views the FCC expressed in it, we must decide independently whether the district court’s broad understanding of the "capacity" a device must have in order to qualify as an ATDS under the TCPA is a supportable interpretation of the statute. We conclude that it is not. Although we are not bound by the D.C....