Sunday, November 27, 2022

FYI: 9th Cir Upholds Dismissal of TCPA Putative Class Action Applying Duguid

The U.S. Court of Appeals for the Ninth Circuit recently upheld the dismissal of a putative class action for alleged violation of the federal Telephone Consumer Protection Act ("TCPA").


In so ruling, the Ninth Circuit held that a number generator must generate and dial random or sequential telephone numbers to qualify as an "automatic telephone dialing system" under the TCPA.


A copy of the opinion is available at:  Link to Opinion


After a consumer provided his phone number to an insurance provider on a website, he began receiving texts from an insurance marketer. The consumer sued under the TCPA, claiming that the marketer used a "sequential number generator" to pick the order in which to call customers who had provided their phone numbers. The consumer alleged that this type of number generator qualified as an "automatic telephone dialing system," often known as an "autodialer," under the TCPA.


The marketer responded that it did not use an autodialer and that the TCPA defines an autodialer as one that must generate telephone numbers to dial, not to decide which pre-selected phone numbers to call.


The trial court dismissed the consumer's complaint, ruling that the marketer did not use an autodialer. The consumer timely appealed.


As you may recall, the TCPA prohibits calling telephone numbers using an autodialer in certain cases. The TCPA defines an "automatic telephone dialing system" 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.


47 U.S.C. § 227(a)(1).


Here, the Ninth Circuit held that the statutory text makes it clear that the number in "number generator" within subpart (A) of the TCPA means a telephone number.


When interpreting a modifying clause set off by commas, "the most natural way to view the modifier is as applying to the entire preceding clause." Cyan, Inc. v. Beaver Cnty. Emps. Ret. Fund, 138 S. Ct. 1061, 1077 (2018). The Ninth Circuit determined that, "to store or produce telephone numbers to be called" was dependent on the clause "using a random or sequential number generator." This meant that "using a random or sequential number generator" modified the phrase "to store or produce telephone numbers to be called." Thus, the Court reasoned that it made the most sense that the "number" referred to in the modified clause was the same as the "numbers" in the dependent clause—both were referring to telephone numbers.


Furthermore, the Ninth Circuit noted that the Supreme Court of the United States' ruling in Duguid, 141 S. Ct. 1163, underscored that an autodialer must randomly or sequentially generate and dial a telephone number. Specifically, the SCOTUS in Duguid held that "a necessary feature of an autodialer under § 227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called," Duguid, 141 S. Ct. at 1173, because the contrary interpretation "would capture virtually all modern cell phones, which have the capacity to store telephone numbers to be called and dial such numbers," id. at 1171.


The Ninth Circuit concluded that the consumer's interpretation would go against the SCOTUS holding and return the Circuit back to the pre-Duguid state in which "virtually all" cell phones were at risk of violating the TCPA.


The Ninth Circuit also noted that the SCOTUS discussion of the TCPA's policy aims supported the view that an autodialer must be able to generate random or sequential telephone numbers. The SCOTUS noted that, besides annoying consumers, the autodialer "threatened public safety by 'seizing the telephone lines of public emergency services, dangerously preventing those lines from being utilized to receive calls from those needing emergency services.'" Id. (quoting H.R. Rep. No. 102-317, at 24 (1991)). And it could "simultaneously tie up all the lines of any business with sequentially numbered phone lines." Id.


However, using a random or sequential number generator to select from a pool of customer-provided phone numbers would not cause the harms contemplated by Congress in the Ninth Circuit's view. For instance, public emergency services would presumably not be in these customer-provided lists. And if an autodialer called the phone numbers on its customer list sequentially, it would likely not reach the sequential numbers often assigned to a single business.


Accordingly, the Ninth Circuit affirmed the trial court's dismissal of the consumer's lawsuit.



Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
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Chicago, Illinois 60602
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