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TCPA Compliance Case Update: Favorable ruling in California on ATDS Issue and Fax Opt Out Clarified by FCC

Federal Court in California decides FCC may not modify the statutory definition of an ATDS.

The Federal District Court for the Southern District of California recently granted the defendant’s motion for summary judgment in the case of Marks v. Crunch Sand Diego, LLC. In doing so, the court held that the defendant’s web-based system that was used to send text messages was not an automatic telephone dialing system (“ATDS”) because it lacked the capacity to store or produce telephone numbers to be called using a random or sequential number generator. The court also held that the Federal Communication Commission (“FCC”) did not have the statutory authority to change the TCPA’s definition of an ATDS, as the Ninth Circuit had previously found that the statutory definition of an ATDS was “clear and unambiguous.”

This decision comes as some additional good news from the federal courts in California. Whether or not the court’s rejection of the FCC’s broad interpretation of an ATDS will be followed by other courts, or upheld should there be an appeal, remains to be seen.

FCC issues order reaffirming opt out requirement on faxes sent with prior express consent

On October 30, 2014 the FCC released an order affirming the requirement that senders of fax ads must include certain information on the fax that will allow consumers to opt out, even if they previously agreed to receive fax ads from such senders. The FCC also recognized that there may have been reasonable uncertainty on the issue, and therefore granted a retroactive waiver to the various petitioners and gave them a six month window to come into compliance. In granting this waiver the FCC stressed that this did not affect the prohibition against sending unsolicited fax ads. Similarly situated parties may also seek waivers such as those granted by the FCC’s order, but they must do so within six months.

The FCC also denied an Application for Review and several related requests for declaratory ruling insofar as they sought a ruling that the Commission lacked the statutory authority to require opt-out information on fax ads sent with a consumer’s prior express permission, or, alternatively, that section 227(b) of the Communications Act of 1934, as amended (the Act), was not the statutory basis of that requirement.

It also should be noted that two of the five FCC commissioners dissented from the majority’s ruling, and argued that the FCC did not have the statutory authority to require opt-out notices on fax advertisements sent at a recipient’s request. This raises the questions as to whether this issue might be readdressed in the future, once the makeup of the current commission changes.