3rd Cir. Says It’s Probably an ATDS — But the Key Is, Did the Caller Use It?

In Panzarella v. Navient Sols., Inc., No. 20-2371, 2022 U.S. App. LEXIS 16324, at *11-12 (3d Cir. June 14, 2022), the Court of Appeals for the 3rd Circuit held that Navient’s dialer was an ATDS, but it’s ATDS-capacity was not “used” to call .  As to the ATDS question, the Court of Appeals held:

Applying this construction here, we find that the District Court erred in holding that Navient’s dialing system was not an ATDS because it viewed the SQL Server’s capacities as distinct from the ININ System’s. Navient relied on the SQL Server alongside the ININ System’s other components to conduct dialing campaigns. This server not only stored the telephone numbers that Navient contacted during campaigns, but it also communicated with the ININ System’s other servers, so the system could call them. Indeed, the Interaction Dialer’s manual confirms that this dialer cannot conduct these campaigns without a database server, like the SQL Server. Navient points out that Microsoft rather than ININ developed the SQL Server, and this server resides on its own dedicated hardware. But this does not matter. As the TCPA requires us to consider whether all the devices employed together to conduct dialing campaigns constitute an ATDS, we conclude that Navient’s “equipment” includes the SQL Server. Because the District Court determined that Navient’s dialing system was not an ATDS only after it excluded the SQL Server from this system, we cannot affirm the District Court’s grant of summary judgment on these grounds. . . .Still, Navient insists that we should find that the ININ System, including the SQL Server, could not qualify as an ATDS under section 227(a)(1). It claims that, in its recent decision Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 209 L. Ed. 2d 272 (2021), the Supreme Court held that a dialing system “must presently and actually use a random and sequential telephone number generator” to qualify as an ATDS. Appellee’s Br. 28-29 (emphasis in original). Navient contends that the record contains no evidence that the ININ System actually generated random or sequential telephone numbers, and, therefore, because it did not use an ATDS, it is still entitled to summary judgment. We disagree. Both Navient and the concurrence seize on language in Duguid, claiming that it constitutes a holding that an ATDS must actually use a random or sequential number generator. But that is not the case. The issue before the Court was quite different. . . Instead, under section 227(a)(1), whether “equipment” qualifies as an ATDS turns on that equipment’s “capacity” to employ a random or sequential number generator to store or produce telephone numbers, not its actual use of a such a generator. § 227(a)(1). We have held that, for a dialing system to qualify as an ATDS, it need only have the “present capacity to function as an autodialer by generating random or sequential telephone numbers and dialing those numbers.” Dominguez, 894 F.3d at 119, 121; see also King v. Time Warner Cable, 894 F.3d 473, 481 (2d Cir. 2018) (adopting a similar interpretation of “capacity”); ACA Int’l, 885 F.3d at 696 (explaining that whether a particular function is a “capacity” of that device turns on the significance of the modification needed to employ that function). Here, there is conflicting evidence in the record concerning the “present capacity” of the entire ININ System (inclusive of the SQL Server) to employ random-or sequential-number generation to store or produce telephone numbers. For this reason, we cannot hold that ININ System does or does not qualify as an ATDS.

The Court of Appeals held that the proper inquiry was whether the ATDS-triggering “capacity” was used to make the call(s).

While the District Court erred in granting summary judgment based on whether the ININ System qualified as an ATDS, summary judgment may still have been properly granted if we find the record makes clear that, when Navient called the Panzarellas, it did not “make [these calls] . . . using any [ATDS].” § 227(b)(1)(A) (emphasis added). That is so because a violation of section 227(b)(1)(A)(iii) requires proof that the calls at issue be made “using” an ATDS. This issue turns not on whether Navient’s dialing equipment was an ATDS but on whether Navient violated the TCPA when it employed this dialing equipment to call the Panzarellas. . . Here, the Panzarellas’ claims fail because the record establishes that Navient did not rely on random-or sequential-number generation when it called them. Even if we assume that the ININ System, through the SQL Server, had the capacity to generate lists of random or sequential telephone numbers and was thus an ATDS, Navient did not use the ININ System in this way. Instead, it selected a dialing campaign’s potential targets from “specific, curated borrower lists.” App. 124 ¶ 22. These lists contained contact information drawn from Navient’s internal database of account information rather than computer-generated number tables. Consequently, the lists that served as the basis for its calling campaigns contained “specific numbers associated with [Navient’s] student loan accounts.” App. 125 ¶ 30. When it placed the calls at issue, Navient drew the Panzarellas’ cellphone numbers from such a list. The Panzarellas have identified no evidence that even suggests Navient called them in anything but a targeted manner. This, of course, makes sense. Navient wanted to speak specifically to the Panzarellas because Matthew’s loans had become delinquent.  Besides, what reason would Navient have to call phone numbers unrelated to borrowers’ accounts when following up on delinquent loans?  At bottom, as the record contains no evidence that Navient used the ININ System to randomly or sequentially produce or store the Panzarellas’ cellphone numbers and therefore no evidence that Navient made a telephone call using an ATDS in violation of the TCPA, Navient is entitled to summary judgment on the Panzarellas’ TCPA claims.