Advertising Law Blog

In Sherman v. Yahoo! Inc., decided on February 3, 2014 in the Southern District of California, Yahoo! failed to convince the court that a lawsuit against it should fail because Yahoo! did not use an Automatic Telephone Dialing System (ATDS) to send text messages, as that term is defined under the Telephone Consumer Protection Act (TCPA).  A class action against Yahoo! was therefore allowed to go forward. On March 3, 2014, Yahoo! moved for reconsideration of the decision.

The TCPA prohibits unsolicited text messages sent via an ATDS. Yahoo! claimed that an ATDS was not involved in sending the single text message upon which Plaintiff sued. The TCPA defines an ATDS as “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.”  The FCC, however, has given the term ATDS a broader definition.

The court decided that because Yahoo!’s technology could “dial all of the telephone numbers in its database [and send] a notification text message by writing new software code instructing the system to do so,” it wanted a full evidentiary trial on whether an ATDS was used. In reaching its decision to deny Yahoo!’s motion for summary judgment, the Court relied on the FCC’s interpretation of what constituted an ATDS.

Yahoo!’s motion for reconsideration contested this ruling, arguing, “Congress specifically defined ATDS to refer to a specific type of machine and not just any technology with the future potential to be modified by software in the future. The Court therefore erred in ruling that Yahoo!’s ability to write new code to redesign its SMS Service creates a genuine issue of material fact.” According to Yahoo!, a court must consider the technology’s present capacity to generate, store and dial telephone numbers, and the Court was wrong to consider potential software modifications to the equipment. Yahoo! cited a 2009 decision (Satterfield v. Simon & Schuster) holding that the TCPA’s definition of ATDS is clear, and that the Court’s reliance on the broader FCC construction was inappropriate.

Another basis upon which Yahoo! sought reconsideration was that the TCPA should not apply to a confirmatory text sent in response to the Plaintiff’s initial message. The Court disagreed, finding Yahoo!’s text was not confirmatory in nature. The Court can either grant Yahoo!’s request for reconsideration, deny it and order the case to proceed, or allow an immediate appeal to the Ninth Circuit, which is the same court that issued the Satterfield v. Simon & Schuster ruling in 2009.