The federal Telephone Consumer Protection Act can no longer apply to devices that do not "us[e] a random or sequential number generator," according to an April 1, 2021 decision from the U.S. Supreme Court.
For businesses that use telephone technology that does not use a random or sequential number dialer – and there are many that do not – the Court's 9-0 ruling in Facebook, Inc. v. Duguid should significantly reduce the risk of TCPA litigation for businesses using telephone technology to call their customers.
The case arose after Duguid received on his cell phone several text messages from Facebook warning him that someone had accessed his Facebook account. Duguid did not have a Facebook account. Facebook believed Duguid was assigned a cell phone number that had once belonged to a customer who requested to receive these notifications. Duguid sued Facebook alleging it violated the TCPA when it stored cellular phone numbers and then used its equipment to send automated messages to him without his consent.
Facebook argued that its text messaging system was not an "automatic telephone dialing system" (ATDS) subject to the TCPA. The trial court agreed and dismissed the case. The Ninth Circuit Court of Appeals reversed, holding that because Facebook's equipment had the capacity to "store numbers" to be texted and could "dial such numbers automatically" it was an ATDS subject to the TCPA. The Supreme Court reversed the decision of the Court of Appeals finding that the Facebook equipment was not an ATDS because it lacked the capacity "to store or produce telephone numbers . . . using a random or sequential number generator" and to call those numbers.
Although Duguid concerns text messages, it equally applies to calls to cellular phones.
The TCPA and Its Litigation Machine
To fall within the TCPA, the call must be made using an ATDS. The TCPA itself provides a definition that would seem to limit its application to equipment which has the capacity "to store or produce telephone numbers to be called, using a random or sequential number generator" and to call those numbers.
Enacted in 1991 with the stated purpose of curtailing robocall solicitations, courts and even the federal agency tasked with TCPA rulemaking – the Federal Communications Commission – gave such broad interpretations to what constitutes an ATDS that at times any type of device, save for a rotary telephone, could be construed as subject to the TCPA.
Calls made by businesses to their customers were often the target of TCPA lawsuits and because of the expansive interpretations, a business need not have used equipment that used a random or sequential number generator to find itself paying out TCPA awards and settlements. With statutory damages of up to $1,500 per violating call, TCPA litigation was lucrative, especially TCPA class actions.
A Present Capacity as a Random or Sequential Number Generator
Under the decision, to come within the ambit of the TCPA, an ATDS must have the capacity to store telephone numbers using a random or sequential number generator or produce telephone numbers using a random or sequential number generator.
Some will argue that the reference to "capacity" leaves open the argument that although the dialed number did not originate from a random or sequential number generator, the equipment still had the capacity to do so and would bring the call within the TCPA.
But as the decision noted, "Congress' definition of an autodialer requires that in all cases, whether storing or producing numbers to be called, the equipment in question must use a random or sequential number generator" and "[t]he statutory context confirms that the autodialer definition excludes equipment that does not 'us[e] a random or sequential number generator.'"
"Capacity," as the decision is using it, is better read to mean the equipment's present capacity, and not a potential capacity to do so. This leaves businesses and their telephone equipment vendors in a far better position to control TCPA risk.
"Human Intervention" Takes a Punch
The absence of "human intervention" is how one line of TCPA case law interpreted an ATDS. Simply put, if a human did not punch a button to initiate the call, the device was construed to be an ATDS subject to the TCPA and Duguid asked the Court to adopt this interpretation.
The Court refused to stretch the TCPA "as malleably" as he would like. In a footnote, the Court also rejected the approach, reasoning that "all devices require some human intervention . . ."
Storing and Dialing Alone Is Not Sufficient To Demonstrate an ATDS
The decision certainly puts an end to the interpretation that the TCPA is triggered by merely storing and dialing numbers automatically. "Expanding the definition of an autodialer to encompass any equipment that merely stores and dials telephone numbers would take a chainsaw to these nuanced problems when Congress meant to use a scalpel," Justice Sotomayor wrote in delivering the Court's opinion.
The Future of TCPA Litigation
In reversing Duguid, the decision also overrules an earlier decision from the Ninth Circuit Court of Appeals which afforded a broad interpretation to what constitutes an ATDS; namely, equipment that stores and dials telephone numbers.
A significant number of cases are still pending in trial and appellate courts that have been awaiting the Duguid decision and we will soon see how it will be applied by a varied number of courts. Expect a good deal of argument concerning the meaning of "capacity."
Ralph T. Wutscher
Maurice Wutscher LLP
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