The U.S. District Court for the Northern District of Alabama recently clarified the meaning of "automatic telephone dialing system" under the federal Telephone Consumer Protection Act, explaining that the TCPA applies only to telephone systems with the present capacity to dial automatically, at the time calls are made, but not to telephone systems requiring "substantial modification or alteration" to enable automatic dialing.
A copy of the opinion is available at: Link to Opinion.
Plaintiff consumer ("Consumer") brought an action under the federal Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA") and federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et. seq.("FDCPA"), alleging that defendant mortgage company ("Company") made harassing phone calls to him using an automated dialer and pre-recorded messages in violation of the TCPA and the FDCPA. Days before Consumer filed his lawsuit and after Consumer's wife had filed a virtually identical suit in state court, Company switched over to a new phone system, replacing the old phone system used to place calls to Consumer and putting it in a storage closet on Company's premises.
During discovery in his lawsuit, Consumer sought to inspect Company's facilities, telephones, telephone systems, and any computer software used in the collections process when Company made calls to Consumer. Objecting to the requests, Company argued that it always used manual dialing in its communications with Consumer, that an inspection of its facilities would be fruitless because there was nothing for the Consumer to see since Company had replaced the phone system it previously used to make calls to Consumer, and that its phone system was not covered by the TCPA because it used a dialing system that lacked the "capacity" to dial numbers using a number generator. Claiming spoliation and willful concealment of evidence, Consumer moved to compel inspection.
Granting Consumer's motion to compel, the District Court ruled that an "automatic telephone dialing system" under the TCPA refers to the present capacity of a telephone system to store or produce and call numbers from a number generator, but does not include phone systems that require "substantial modification or alteration" to achieve that capability.
As you may recall, the TCPA prohibits certain businesses from "initiating any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party and the use of an "automatic telephone dialing system" in making calls. The TCPA also provides: "(1) The term 'automatic telephone dialing system' means 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." 47 U.S.C. § 227(a), (b).
Rejecting Company's assertion that there was nothing for Consumer to see because it had upgraded its phone system and the prior phone system was no longer in operation, the District Court pointed out that, although the former phone system used to place calls to Consumer had been dismantled and moved elsewhere on Company's premises, the prior phone system could be turned back on and inspected for its dialing and recording capabilities.
Next, highlighting the fact that the case was only at the discovery stage, the court turned to Company's argument that the TCPA did not apply to its phone system because the phone system lacked the "capacity" to be an "automatic telephone dialing system." Thus, focusing on the definition of "capacity" under the TCPA, the court took issue with Consumer's broad interpretation that even a manually-dialed phone system would be covered by the TCPA if the phone system could be modified, however extensively, to make automatic dialing possible.
Illustrating how even cell phone users could be subject to TCPA requirements by using a number-generator "app," the court clarified that to be an "automatic telephone dialing system" under the TCPA, a phone system must have the present capacity, at the time calls are made, to store or produce and call numbers from a number generator.
The court further explained that a defendant could not be liable under the TCPA for using an automated dialing system if "substantial modification or alteration" of the system were required to achieve that automatic dialing capability.
Therefore, stressing that a phone system had the "capacity" for such an automatic dialing system if such dialing system was either currently or easily installed in a phone system, the court granted Consumer's motion to compel, but, agreeing with Company that Consumer's request to inspect its entire collections facilities was too broad, imposed certain limitations on Consumer's discovery so as not to permit Consumer "to scour the entirety" of Company's premises and files.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
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Email: RWutscher@mwbllp.com
Admitted to practice law in Illinois
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