Antitrust Law Daily Wrap Up, PRIVACY—3d Cir.: Yahoo!’s text notifications could lead to $13.9M judgment, (Oct 26, 2015)

By Greg Hammond, J.D.

A consumer that received nearly 28,000 unsolicited text messages from Yahoo, Inc., representing over $13.9 million in possible damages, successfully overturned a district court’s order of summary judgment, which concluded that no reasonable juror could find Yahoo!’s text-messaging system qualified as an “automatic telephone dialing system” (ATDS) under the Telephone Consumer Protection Act (TCPA). In vacating and remanding the lower court’s opinion, the U.S. Court of Appeals in Philadelphia determined that, in light of the Federal Communications Commission’s (FCC) intervening statutory interpretation of the TCPA, the question of what was meant by the word “capacity” must be addressed more fully in whether Yahoo!’s equipment met the statutory definition of an ATDS (Dominguez v. Yahoo, Inc., October 23, 2015, Ambro, T.).

The consumer allegedly purchased a cell phone in 2011 that came with a reassigned telephone number. The previous owner of the telephone number, however, failed to cancel his subscription to Yahoo!’s email-notification service, which sent a text message to the consumer’s cell phone every time the previous owner received an email. The lower court granted summary judgment in favor of Yahoo!, finding no evidence that Yahoo!’s system could generate random or sequential numbers, as required under the TCPA. The consumer appealed.

The only issue on appeal, according to the appellate court, was whether a reasonable trier of fact could find Yahoo!’s system qualified as an ATDS. Under the TCPA, an “autodialer” is “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.” As dialing technology evolved, however, the FCC’s interpretation of “autodialer” also changed. Most recently, the FCC clarified that neither “present ability” nor the use of a single piece of equipment was required. Therefore, as long as equipment was part of a “system” that had the latent “capacity” to place autodialed calls, the statutory definition was satisfied, the court noted.

Given the FCC’s clarification of the term “autodialer,” the appellate court vacated and remanded the lower court’s order of summary judgment. Specifically, the court concluded that the only evidence Yahoo! pointed to that was probative of whether its equipment had the requisite capacity was the conclusory affidavit of its expert. However, because the issue of what was meant by the word “capacity” was of heightened importance, in light of the FCC’s recent ruling, and because the lower court did not have the benefit of the FCC’s ruling at the time it made its decision, the appellate court concluded that remand would be appropriate to allow the lower court to address more fully whether Yahoo!’s equipment met the statutory definition of an “autodialer.”

The case number is 14-1751.

Attorneys: James A. Francis (Francis & Mailman) for Bill H. Dominguez. Ian C. Ballon (Greenberg Traurig) for Yahoo, Inc.

Companies: Yahoo, Inc.

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