The Ninth Circuit Holds that Callers are Subject to TCPA Liability if the Callers Intend to Make Automated Calls to a Consenting Customer, but Instead Call Someone Else

Introduction
On June 3, 2020, the United States Court of Appeals for the Ninth Circuit dealt a blow to callers governed under the Telephone Consumer Protection Act (“TCPA”). The TCPA exempts callers from liability for automatic telephone dialing system-generated (“ATDS”) calls if the calls are made with “prior express consent of the called party.” In N.L. v. Credit One Bank, N.A., a three-judge panel from the Ninth Circuit joined the Seventh and Eleventh Circuits in holding that a caller’s intent to call a customer who consented to ATDS-generated calls will not exempt the caller from TCPA liability if the caller mistakenly calls another individual who did not consent. This position has also received support from the Third Circuit and D.C. Circuit. Thus, the landscape is becoming increasingly difficult for those using ATDS to place calls to customers.
 
The Case:  N.L. v. Credit One Bank, N.A.
In 2014, D.V., a Credit One customer, gave Credit One consent to call his cellular number ending in -9847. When D.V. fell behind on credit card payments, three of Credit One’s vendors began making automated calls to the -9847 number. In roughly four months, vendors called the number 189 times. However, unbeknownst to Credit One or its vendors, the -9847 number had been reassigned to Sandra Lemos. Lemos allowed her 11 year old son, N.L., to use the cellular phone with the -9847 number as his own. Neither Lemos, nor N.L., had consented to the calls. The Ninth Circuit explained that Credit One’s “vendors used dialing systems that call specific numbers from preset lists” in order to place the calls. 

N.L., through his mother, sued Credit One and its vendors for violations of the TCPA, California’s Rosenthal Fair Debt Collection Practices Act, and for invasion of privacy. The vendors settled, but N.L.’s claims against Credit One went to trial. 

According to the Ninth Circuit, at trial, “the jury heard evidence that D.V. had agreed to be contacted at the -9847 number and that Credit One’s vendors had intended to reach D.V. when they called that number.” At trial, the district court gave the following jury instruction: “[t]he law requires the consent of the current subscriber of the called phone, in this case Sandra Lemos, or the consent of the nonsubscriber, customary user of the called phone, in this case, [N.L.]. Consent from the intended recipient of the call, that is, D.V., is not sufficient.” The jury found for Credit One on the invasion of privacy claim. However, the jury found for N.L. on his TCPA claim, resulting in $94,500 in damages ($500 statutory damages for each of the 189 calls), and found for N.L. on the Rosenthal claim, awarding $1,000 in statutory damages. Credit One appealed to the Ninth Circuit.

The Issue: On appeal, the Ninth Circuit panel focused on a narrow issue: “whether Credit One can escape liability under the TCPA because the party it intended to call (its customer) had given consent to be called, even though the party it actually called had not.” 

The court rejected Credit One’s “intended recipient” interpretation and held the following: “Consistent with every circuit to have addressed this issue, we hold that this argument fails under the TCPA’s text, most naturally read. Credit One is therefore liable under the TCPA for its calls to N.L. We affirm the district court in this and all respects.” Further, “Credit One’s intent to call a customer who had consented to its calls does not exempt Credit One from liability under the TCPA when it calls someone else who did not consent.”

Textual Support: The Court explained that the text of the TCPA supports its holding and denial of Credit One’s “intended recipient” interpretation. The Court first looked to the language of the statute, which exempts from liability ATDS-generated or prerecorded voice calls made with “prior express consent of the called party.”  Specifically:

It shall be unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States--
(A) 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 or an artificial or prerecorded voice--
. . .
(iii) to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call . . .
47 U.S.C. § 227(b)(1)(A). The court first noted that the statutory section above does not reference “intended” recipients. Next, the court looked to the consent provision of 47 U.S.C. § 227(b)(1), and reasoned that “[u]nder the statute, the ‘call’ that is ‘made’ is the call that is received, for it is this received call that provides the basis for the private cause of action and thus civil liability.” Further, the court reasoned that it would be “odd if ‘called party’ referred to some third person external to the potentially actionable communication” such as the intended recipient.

“Called Party”: The court moved on to further treatment of a “called party” in the TCPA for guidance. The court addressed § 227(b)(1)(A)(iii), quoted above, which is part of a list of sources to which the TCPA’s prohibition on ATDS-generated calls apply. Under the language of subsection (iii), the court reasoned:

A “called party” that is “charged for the call” cannot be the “intended” but never-called person who had previously given consent. Instead, this “second use of ‘called party’ must mean [the] [c]ell [n]umber’s current subscriber, because only the current subscriber pays.” Soppet, 679 F.3d at 639. That this subsection (iii) treats “called party” as the current subscriber sheds light on what “called party” should mean in the ATDS “consent” provision of which subsection (iii) is a part.
 
The court cited additional references to “called party” in the TCPA, which further convinced it that “called party” in the TCPA refers to the party actually called.
 
Legislative Intent: The court next addressed Credit One’s argument that Congress’ statutory purpose supports Credit One’s “intended recipient” interpretation. The court disagreed, and outlined: “[i]n enacting the TCPA, Congress found that ‘[b]anning such automated or prerecorded telephone calls to the home, except when the receiving party consents to receiving the call ..., is the only effective means of protecting telephone consumers from this nuisance and privacy invasion.’” 
 
FCC Orders: The court also rejected Credit One’s attempt to find support from 2015 and 2018 FCC Orders. The FCC issued an Order in 2015, which, the court explained, created “a one-call safe harbor for callers who unknowingly dial reassigned numbers if they had obtained consent from the previous subscriber.”  The safe harbor provision was vacated by the D.C. Circuit. In 2018, the FCC issued another Order allowing for a comprehensive reassigned number database. The 2018 Order also created a safe harbor for callers that rely on the database. As the court explained, “[i]n Credit One’s view, these safe harbors weigh against interpreting ‘called party’ in a way that creates strict liability for callers that dial reassigned numbers.” The court rejected this argument, and reasoned that “[i]f a caller’s intent could defeat liability, the safe harbors would be unnecessary.” Additionally, the court explained, in language from the 2015 Order that was not rejected by the D.C. Circuit, the 2015 Order “clarif[ied] that the TCPA requires the consent not of the intended recipient of a call, but of the current subscriber (or non-subscriber customary user of the phone).”
 
Alternatives: The court next addressed Credit One’s argument that callers will be helpless if the court were not to adopt its “intended recipient” rule. Among other options it provided, the court pointed to the Seventh Circuit’s suggestion that callers can avoid TCPA liability by having a person call first to confirm the number is correct, or callers can “us[e] ‘a reverse lookup to identify the subscriber.’” 
 
Jury Instruction Definition: Finally, the court addressed Credit One’s challenge to the ATDS definition the district court applied in its jury instruction. The district court followed the Ninth Circuit’s precedent in Marks v. Crunch San Diego, LLC, where the Marks court held the “definition [in the TCPA] of ATDS includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator.” The three-judge panel in N.L. recognized a circuit split on this issue, but reminded that, as a three-judge panel, it was bound by Marks, and thus must affirm.
 
Conclusion
Yet another Circuit Court of Appeals has held that a caller’s intent to call a customer who consented to ATDS-generated calls will not exempt the caller from TCPA liability if the caller accidentally calls another individual who did not consent. Thus, the landscape is becoming increasingly difficult for those using ATDS to place calls to customers. The N.L. opinion can be accessed here, and coverage of the case can be accessed here.