To Be or Not To Be an Autodialer? The Supreme Court Gives the Answer

In “To Be or Not To Be an Autodialer” (October 2018), I discussed the technical, yet raging, legal controversy in the telemarketing world over the meaning of an “autodialer” under the Telephone Consumer Protection Act (“TCPA”), the federal law governing marketing calls and texts using an Automatic Telephone Dialing System, or ATDS.  The implications of this fierce debate for telemarketers have been huge because the TCPA, including, most crucially, its requirement to have prior consent from every consumer to whom a commercial call or text is placed, and the class action and civil penalty risk of violating the statute, apply only to marketing messages sent via an ATDS.  The debate, which has played out in the federal appellate courts and now, in the Supreme Court, has centered on the meaning of an ATDS.  

The TCPA defines an ATDS 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.”  The central controversy surrounding the definition is whether it encompasses “predictive dialing,” a system which makes automated calls to a pre-loaded list of telephone numbers using algorithms to predict the best times to connect with the called parties. Because predictive dialers have come into such prolific use, whether they are an ATDS under the TCPA, and thus subject to the law’s calling restrictions and private right of action permitting class actions, is a question of enormous import to all TCPA stakeholders – sellers, call centers, consumers, predictive dialer makers, and, last but not least, plaintiff’s lawyers who have been feasting on an epidemic of TCPA litigation for years.

The federal circuits have split on the question, which teed it up for resolution by the high court.  The first decision, in ACA International v. FCC in 2018 out of the D.C. Circuit, rejected an interpretation of the TCPA’s ATDS definition by the Federal Communications Commission that would have included dialing equipment with not only the “present” but also the “potential” (through reconfiguration) capacityto randomly or sequentially generate numbers, and dial them, even if it is not presently used for such purposes.  This interpretation was broad enough to encompass predictive dialers and other technology that may have the potential capacity to randomly or sequentially generate numbers even though they are not presently using it but instead are using pre-loaded calling lists.  By including predictive dialers, the FCC felt it was carrying out Congress’s intent to apply the definition of ATDS to new technology so that the millions of consumers who would be automatically dialed by that technology would have the protections of the TCPA against unwanted telemarketing messages.    

The court rejected the FCC’s ATDS interpretation as impermissibly overbroad, saying it was expansive enough to apply to smartphones which could be modified to gain ATDS functionality.  An ATDS definition of such “eye-popping sweep,” which would make nearly every American a “TCPA-violator-in-waiting, if not a violator-in-fact,” was simply a bridge too far.

Since ACA, three other circuits have addressed the question.  The Second Circuit, in King v. Time Warner Cable, and the Third Circuit, in Dominguez v Yahoo, concurred with the D.C. Circuit that to be an ATDS within the meaning of the TCPA, a dialing system must have the current capacity to randomly or sequentially generate numbers and to dial those numbers. The Ninth Circuit, however, in Marks v. Crunch San Diego, took a broader view and a different analytical path, holding that a dialing system designed to send promotional text messages to a list of stored telephone numbers was an ATDS under the TCPA, even though it lacked a random or sequential number generator. Viewing the text and structure of the TCPA holistically, it concluded that while Congress focused on regulating the use of equipment that dialed blocks of sequentially or randomly generated numbers—a common technology at that time of the TCPA’s enactment in the early 1990s – “language in the statute indicates that equipment that made automatic calls from lists of recipients was also covered by the TCPA.” Accordingly, it concluded that the definition of an ATDS is “not limited to devices with the capacity to call or text numbers stored or produced by a ‘random or sequential number generator,’ but also includes devices with the capacity to dial stored numbers automatically.  Citing Marks, the Ninth Circuit reached the same result later in 2019 in Facebook v Duguid.    

On April Fool’s Day this month, the Supreme Court, in a unanimous “non-joking” decision in Facebook v Duguid, settled the circuit split, holding unequivocally that an auto-dialer is exactly what the TCPA expressly says it is, a device that must have the capacity to randomly or sequentially generate numbers to be stored, produced, and dialed.  The Court reached this result in a classic case of statutory interpretation, utilizing various canons of interpretation to parse the language of the law’s ATDS definition to derive its meaning. Applying the “series-qualifier canon,” the Court said the modifying phrase, “using a random or sequential number generator,” related to both “store” and “produce” telephone numbers to be called, rather than only to one or the other, as Facebook had argued under another canon of interpretation. Thus, a pre-loaded and stored list of numbers that is not randomly or sequentially generated, as might be found in a predictive dialer or a modern cell phone, would not be an ATDS under the TCPA. The presence of a comma separating the preceding phrase from the modifier, “using a random or sequential number generator,” further supported the Court’s interpretation, as “‘[a] qualify­ing phrase separated from antecedents by a comma is evi­dence that the qualifier is supposed to apply to all the ante­cedents instead of only to the immediately preceding one….’ The comma…thus fur­ther suggests that Congress intended the phrase “using a random or sequential number generator” to apply equally to both preceding elements, “store” and “produce.” Based on these principles of statutory construction, the Court held that “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.”  

Addressing Duguid’s warning that accepting the Court’s interpreta­tion would “unleash” a “torrent of robocalls,” the Court said his “quarrel is with Con­gress, which did not define an autodialer as malleably as he would have liked…This Court must interpret what Congress wrote, which is that “using a random or sequential number generator” modifies both “store” and “produce.”

Indeed, as the Court spoke, Congress was already considering different bills to respond to consumer and consumer organization complaints about a “torrent of robocalls.” The clear message from the Supreme Court is that the problem is Congress’s to fix, not the judiciary’s.  Telemarketing reform has bipartisan support, and the Facebook decision should provide fresh impetus for a legislative solution.   Meanwhile, until and unless that happens, the predictive dialing industry and the many telemarketers that use that technology can breathe easier, although best practice has been, and remains, to have prior permission to tele-market to consumers, whether using a dialer with random or sequential generating capacity, or not.

Talking about Direct Response, FTC, Online Marketing

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