The U.S. Court of Appeals for the Sixth Circuit recently affirmed entry of summary judgment in favor of plaintiffs alleging violations of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. ("TCPA") for calls placed by their student loan servicer to their cell phones using an alleged automatic telephone dialing system (ATDS) after they revoked consent to receive such calls.
In so ruling, the Sixth Circuit deepened a split between Circuits over the TCPA's definition of an ATDS, joining the Second and Ninth Circuits in holding that devices that dial from a stored list of numbers qualify as an ATDS, and are subject to the purview of the TCPA's autodialer bank.
A copy of the opinion is available at: Link to Opinion
A borrower and co-signor ("Borrowers") on a student loan (the "Loan") consented to receive calls on their cell phones at the time they submitted a forbearance request. The Borrowers subsequently requested that the loan's servicer ("Servicer") stop calling about the loan. Despite their requests, the Servicer subsequently placed a combined 353 allegedly automated calls to the Borrowers on a near-daily basis and leaving at least thirty voicemails.
The Borrowers filed suit against the Servicer alleging that the unconsented-to calls violated the TCPA. The trial court granted judgment in the Borrowers' favor, awarding damages in the amount of $176,500. The Servicer noticed this timely appeal.
As you may recall, the TCPA generally prohibits unconsented-to calls or texts placed by an automatic telephone dialing system ("ATDS") which it defines 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."
Interpretation of the TCPA's definition of an ATDS was the lone issue presented on appeal.
The Sixth Circuit acknowledged a split of opinions between Circuits as to whether "stored-number dialer systems" like the Servicer used here—systems that do not randomly or sequentially generate numbers to dial, but place calls from a stored list of numbers—are covered by the TCPA.
The Ninth and Second Circuits have held that stored-number systems are covered under the TCPA, while the Seventh and Eleventh have gone the other way. See Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1052 (9th Cir. 2018); Duran v. La Boom Disco, Inc., 955 F.3d 279, 2020 WL 1682773 (2d Cir. Apr. 7, 2020); Gadelhak v. AT&T Servs., Inc., 950 F.3d 458, 460 (7th Cir. 2020); Glasser v. Hilton Grand Vacations Co., 948 F.3d 1301, 1304–05 (11th Cir. 2020).
In addition, the Sixth Circuit note that it could not turn to the FCC's orders for guidance on this issue, as they were invalidated by the D.C. Circuit's ruling in ACA Int'l v. Fed. Commc'ns Comm'n, 885 F.3d 687, 700 (D.C. Cir. 2018). Thus, the Sixth Circuit was compelled to interpret the language by giving the words used their ordinary meaning, and by looking at the language and design of the statute as a whole. In re Application to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d 710, 717-718 (6th Cir. 2019).
The Sixth Circuit analyzed three potential readings of the statutory definition of an ATDS.
The first reading —- applying the phrase "using a random or sequential number generator" to modify both to "store" and "produce" -— would not qualify the Servicer's phone system as an ATDS because it did not store numbers using a random or sequential number generator, but instead using some other type of device. Acknowledging that this reading follows proper grammar, the Sixth Circuit concluded that this reading was too narrow and problematic, essentially creating a loophole by allowing companies to avoid the autodialer ban by transferring numbers from the number generator to a separate storage device, and then dialing from that separate device.
The Seventh and Eleventh Circuits accepted the first reading, though "imperfect," as the best reading considering the administrative and legislative history of the TCPA and practical effects of a more expansive interpretation of ATDS (Glasser, 948 F.3d at 1306, 1308–11; Gadelhak, 950 F.3d at 467, 468).
A second reading to mean that "using a random or sequential number generator" could apply to "produce" only would qualify the Servicer's system as an ATDS because it stores numbers and dials those numbers. However, this leaves "to store," a transitive verb, lacking a direct object, requiring adding the phrase ""telephone numbers to be called" after "store" for it to make grammatical sense. This significant modification rendered this reading "unworkable" too.
A third proposed reading offered in the dissenting opinion, in which "using a random or sequential number generator" modifies the phrase "telephone numbers to be called", was also deemed problematic by the Sixth Circuit as requiring a strained reading of "store," and introducing superfluidity into the statute.
Ultimately, the Sixth Circuit agreed with the Ninth's Circuit's assessment in Marks that the autodialer definition, viewed in isolation was "ambiguous on its face" and required an examination of the structure and context of the autodialer ban as a whole. Marks, 904 F.3d at 1051.
Viewing the larger context of the autodialer ban, because the autodialer ban contains an exception for calls "made with the prior express consent of the called party" § 227(b)(1)(A), the Sixth Circuit reasoned that consenting recipients' provided numbers are stored by the calling entity on a list. See Marks, 904 F.3d at 1051; Glasser, 948 F.3d at 1316. Thus, the call is dialed using a stored number, not one randomly generated, and an exception for consented-to calls implies that the autodialer ban otherwise could be interpreted to prohibit consented-to calls.
By this logic, the Sixth Circuit deduced that the TCPA's consent exception implies that the autodialer ban applies to stored-number systems.
The Court further noted that this rationale is consistent with Congress's 2015 amendment to the TCPA to exempt use of an ATDS to make calls "solely to collect a debt owed to or guaranteed by the United States." Although that exception was recently struck down by the Supreme Court because it "impermissibly favored [government-]debt-collection speech over political and other speech, in violation of the First Amendment." See Barr v. Am. Ass'n of Political Consultants, Inc., – S. Ct. –, 2020 WL 3633780, at *2 (July 6, 2020), the Sixth Circuit reasoned that the now-defunct government-debt-collection exception implies that the autodialer ban covers stored-number systems.
Lastly, addressing the Eleventh Circuit's concern that a more expansive interpretation of the term "store" would subject everyday use of smartphones to the purview of the TCPA (Glasser, 948 F.3d at 1309), the Sixth Circuit stated that any such concern was unfounded and rendered moot by the D.C. Circuit's rejection of the FCC's interpretation of section 227(a)(1)'s definition of "capacity" as "unreasonably, and impermissibly, expansive" in holding that a device is an ATDS only if it actually is used in the way prescribed by statute. ACA Int'l 885, F.3d at 700.
In sum, using the related provisions of the autodialer ban as guidance of how to interpret section 227(a)(1), the Sixth Circuit concluded that the definition of an ATDS should be read as:
"An ATDS is "equipment which has the capacity—
(A) to store [telephone numbers to be called];
or produce telephone numbers to be called, using a random or sequential number generator; and
(B) to dial such numbers."
This reading, joining the Second and Ninth Circuit, led the Sixth Circuit here to conclude that the Servicer's stored-number dialing system qualifies as an ATDS. Accordingly, summary judgment in the Borrowers' favor was affirmed.
Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Admitted to practice law in Illinois
Alabama | California | Florida | Georgia | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC
NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.
Our updates and webinar presentations are available on the internet, in searchable format, at:
Financial Services Law Updates
The Consumer Financial Services Blog™
California Finance Law Developments