District Court (N.C.) Says TCPA Defendant Cannot Contract Around FCC Ruling in Order to Prohibit Revocation of Consent; Says Defendants Dialer was an ATDS Even Though it Lacked Present Capacity

In Cartrette v. Time Warner Cable, Inc.,  2016 WL 183483, at *4-6 (E.D.N.C., 2016), Judge Flanagan denied a TCPA defendant’s summary judgment motion, holding that its subscriber agreement could not prohibit revocation of consent.

However, such a contract does not prevent a consumer from revoking her prior express consent pursuant to the TCPA. See Gager, 727 F.3d at 273–74 (“The fact that [plaintiff] entered into a contractual relationship with [defendant] did not exempt [defendant] from the TCPA’s requirements. … [Plaintiff] retained the right to revoke her prior express consent.”); Osorio, 746 F.3d at 1255; Skinner, 2015 WL 4135269, at *3–4; Berg v. Verizon Wireless, No. 13-CV-1-BBC, 2013 WL 8446598, at *1 (W.D. Wis. June 21, 2013); see Brenner v. Am. Educ. Servs., 575 Fed. App’x 703, 703 (8th Cir. 2014). In support of this conclusion, courts have reasoned that use of an ATDS is not an essential term of an agreement, and that parties lack legal authority to contract around rights provided by the TCPA. See Gager, 727 F.3d at 273–74; Skinner, 2015 WL 4135269, at *3. . . Defendant’s other argument, that its services agreement prevented plaintiff’s revocation under the TCPA, also lacks legal support. Defendant attempts to distinguish its services agreement from courts’ readings of other contracts on the basis that it contains a clause explicitly addressing autodialing. However, that is a distinction without a difference where consumers’ provision of their telephone numbers represents the same express consent as their signature on a contract. Defendant relies on a number of North Carolina cases concerning contract modification and waiver, but these cases are inapposite in the context of the TCPA, where courts have found that such contracts do not negate consumers’ statutory rights to revoke prior express consent. See Gager, 727 F.3d at 273–74; Osorio, 746 F.3d at 1255. . . Furthermore, the services agreement at issue here resembles the contract language construed in Skinner, and it fails to preclude plaintiff’s right to revoke for similar reasons. See 2015 WL 4135269, at *2–4. The plain language of the services agreement is silent with respect to revocation of consent to autodialed and prerecorded voice calls; defendant presented an unsigned, form copy of the agreement, which it uses for all of its customers, and the terms appear not to be negotiable; and use of an autodialing system is not an essential term of the agreement. See id. at *3.

The District Court also rejected defendant’s contention that it’s dialer was not an ATDS.

By virtue of its capacities and functioning, the IVR qualifies as an ATDS. Each day, the IVR reviewed defendant’s billing system and automatically compiled a list of telephone numbers. (DE 18 ¶ 5). The IVR did not have the capacity to generate a list of numbers using a random or sequential number generator; instead, it employed an algorithm to locate numbers associated with overdue customer accounts. (Id. ¶¶ 5, 10–11). Once identified, the IVR called the numbers associated with those accounts and played a prerecorded message. (Id. ¶¶ 5–6). If a customer answered, she could respond to the IVR’s message by entering a series of numbers, which in turn caused the IVR to play other prerecorded messages. (Id. ¶¶ 6–7).  In this manner, defendant’s IVR had the “capacity” to “store” and “dial” numbers as those terms are used in § 227(a)(1). Defendant acknowledges that the “IVR is integrated with [defendant]’s billing system,” and that the IVR “calls the phone numbers associated in the billing system with those accounts.” (DE 18 ¶ 5). In this integrated system, the IVR represented hardware that, when paired with the billing system software, had the capacity to store and dial a list of telephone numbers. Cf. 2015 FCC Ruling, 30 FCC Rcd. at 7978 ¶ 24 (including within “the definition of an autodialer … hardware [that], when paired with certain software, has the capacity to store or produce numbers and dial those numbers”) (quotations omitted). Furthermore, defendant’s system stored and dialed numbers “without human intervention.” See id. at 7975 ¶ 17; 2012 FCC Ruling, 18 FCC Rcd. at 14092 ¶ 132. Therefore, defendant’s IVR was an ATDS as that term is used for purposes of the TCPA. See § 227(a)(1).   In denying that its IVR was an ATDS, defendant focuses upon the IVR’s present capacity. Defendant also argues that the IVR’s inability to use a random or sequential number generator removed it from the definition of ATDS. Defendant’s authority for its arguments, however, is inapposite. . . However, the 2015 FCC Ruling considered and dismissed such arguments: “[T]here is no evidence in the record that individual consumers have been sued based on typical use of smartphone technology. … We have no evidence that friends, relatives, and companies with which consumers do business find those calls unwanted and take legal action against the calling consumer.” 2015 FCC Ruling, 30 FCC Rcd. at 7977 ¶ 21. Defendant’s other argument, that the IVR’s lack of a random or sequential number generator removes it from the definition of ATDS, similarly fails to consider FCC guidance. Although defendant cites some district court opinions that differ, the FCC and other courts consistently have ruled that the definition of ATDS includes dialing equipment that has the capacity to store and dial numbers from a preprogrammed list without human intervention.