Ninth Circuit Rules that, for Do-Not-Call Purposes, “Mixed-Use” Cellular Numbers are “Presumptively Residential”

The federal “Do-Not-Call” (“DNR”) Registry is intended to protect “residential telephone subscribers[]” from unwanted telephone solicitations. Business telephone subscribers are not entitled to the protection afforded by the DNR Registry. While, in theory, this distinction may seem simple enough, the U.S Court of Appeals for the Ninth Circuit recently muddied the waters, holding that a “mixed-use” cellular phone number – that is, a mobile number that is used for both personal and business purposes – is presumptively a residential phone number that can be included on the DNR Registry.

Pursuant to the federal Telephone Consumer Protection Act (the “TCPA”) – specifically, 42 U.S.C. § 227(c) (“Section 227(c)”) – the U.S. Federal Communications Commission (“FCC”) was authorized to “initiate a rulemaking proceeding concerning the need to protect residential telephone subscribers’ privacy rights to avoid receiving telephone solicitations to which they object” (emphasis added). Pursuant to this authority, the DNR Registry was established.

In Chennette v. Porch.com, Inc., 50 F.4th 1217 (9th Cir. 2022), the plaintiffs “allege[d] that they have ‘residential [cell] phone numbers which [they] use in their home-based[] businesses.” Certain of the plaintiffs also alleged that they had “placed their cell phone numbers on the national do-not-call registry.” Nonetheless, they further alleged the defendants had sent thousands of purportedly unauthorized text messages to certain of those phone numbers. Accordingly, certain of the plaintiffs claimed a violation of, among other provisions, Section 227(c).

“Noting, correctly, that [Section] 227(c) and its implementing regulations apply only to ‘residential’ telephone subscribers,” in Chennette, the “defendants argue[d] that because plaintiffs use their cell phones both for personal calls and for calls associated with their … businesses, they do not qualify as residential subscribers.”

The Ninth Circuit did not agree.

Addressing whether the plaintiffs had standing under Section 227(c), that federal appellate court opined:

The disputed question is whether a cell phone that is used for both business and personal purposes can be a “residential” phone within the meaning of [Section] 227(c). In [a] 2003 … Order, the FCC concluded that a cell phone registered on the do-not-call registry is presumptively a residential phone:

As a practical matter, since determining whether any particular wireless subscriber is a “residential subscriber” may be more fact-intensive than making the same determination for a wireline subscriber, we will presume wireless subscribers who ask to be put on the national do-not-call list to be “residential subscribers.” Such a presumption, however, may require a complaining wireless subscriber to provide further proof of the validity of that presumption should we need to take enforcement action.

In the wake of [that] Order, the Direct Marketing Association (“DMA”) petitioned the FCC, asking it to exempt calls to business numbers that have been registered on the national do-not-call list. The FCC declined to do so, writing:

[W]e disagree with the DMA that the rules should be revised to expressly exempt calls to business numbers. The [aforementioned] Order … provided that the national do-not-call registry applies to calls to “residential subscribers” and does not preclude calls to businesses …. We … decline to exempt from the do-not-call rules those calls made to “home-based businesses”; rather, we will review such calls as they are brought to our attention to determine whether or not the call was made to a residential subscriber.

Thus, in the view of the FCC, a subscriber’s use of a residential phone (including a presumptively residential cell phone) in connection with a home-based business does not necessarily take an otherwise residential subscriber outside the protection of § 227(c) (emphasis added) (citations omitted).

The Ninth Circuit also explained that, while “[a] few district courts have held, despite the view of the FCC, that a phone used for both personal and business purposes is not a residential phone for purposes of [Section] 227(c)[,] … the majority of district courts have concluded that a phone used for both personal and business purposes can still be regarded as residential within the meaning of [Section] 227(c), depending upon the facts and circumstances.”

“Relying on the FCC’s regulations and orders,” the court continued, “we agree with the view of the majority of the district courts and conclude that a presumptively residential cell phone can be residential even when used for both personal and business purposes” (emphasis added).

The presumption, however, is a rebuttable one, as the Ninth Circuit explained:

Defendants may overcome the presumption by showing that plaintiffs use their cell phones to such an extent and in such a manner that the presumption is rebutted. That is, defendants may rebut the presumption and show that the cell phone is a business line. Consistent with the decisions of most district courts to have addressed the issue, in determining whether the presumption is rebutted, we will consider the following factors: (1) how plaintiffs hold their phone numbers out to the public; (2) whether plaintiffs’ phones are registered with the telephone company as residential or business lines; (3) how much plaintiffs use their phones for business or employment; (4) who pays for the phone bills; and (5) other factors bearing on how a reasonable observer would view the phone line.

The Ninth Circuit added: “The FCC is free in future regulations or orders to interpret [Section] 227(c) differently. If the FCC does so, we will of course defer to its interpretation, provided that the interpretation is consistent with a reasonable understanding of the statutory language.”

That said, in Chennette, the appellate court ultimately concluded:

We know … that the FCC has concluded that a cell phone is presumptively residential. We also know … that the FCC has concluded that a phone – whether a landline or a cell phone – can be residential even when used for both personal and business purposes. What we do not know, because the FCC has explicitly declined to say, is when a mixed-use phone – whether a landline or a cell phone – ceases to become a residential phone and becomes a business phone. In the absence of FCC guidance on this precise point, we hold that plaintiffs’ registered cell phones that are used for both personal and business purposes are presumptively “residential” within the meaning of [Section] 227(c).

The court’s ruling, of course, is only binding within the Ninth Circuit. That said, especially when it comes to cellular phones, it is hard for any business to avoid the potential reach of this recent opinion. A business may not know, for example, whether it is calling someone who resides in one of the states within the Ninth Circuit, which includes California. As subscribers often keep their cell phone numbers when they move, it is not always simple for a caller to determine the location of a called number and/or the applicable case-law.

As such, callers everywhere should proceed with caution.

The cost of failing to act carefully may be significant. While a business may ultimately be able to rebut the presumption that a phone number it called is residential, it is likely to incur significant cost and time in doing so.

In Chennette, for example, the Ninth Circuit ruled:

The complaint alleges that some of the plaintiffs have placed their “residential” cell phone numbers on the national do-not-call registry. At the motion to dismiss stage and based on the particular allegations in the plaintiffs’ complaint, plaintiffs’ phones are presumptively residential for purposes of [Section] 227(c). … After discovery, defendants may seek to argue that they have rebutted the presumption by showing that plaintiffs’ cell phones are used to such an extent and in such a manner as to be properly regarded as business rather than “residential” lines.

In other words, a defendant may not be able to escape similar TCPA litigation at the motion-to-dismiss stage and could be forced to engage in fact-intensive, time-consuming, and costly discovery before it can extricate itself from such litigation.

If you have any questions about this recent decision or the TCPA, please contact Michael H. Sampson.

Michael H. Sampson is a partner at Leech Tishman and a member of the firm’s Litigation Practice Group and Data Privacy and Cybersecurity Group. Mike can be reached at msampson@leechtishman.com or at 412.261.1600.

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