The Supreme Court Weighs in on the Telephone Consumer Protection Act

 

By: Caren D. Enloe

On April 1, 2021, the United States Supreme Court unanimously held that in order to qualify as an automated telephone dialing system under the Telephone Consumer Protection Act (the “TCPA”), a device must have the capacity either to store a telephone number using a random or sequential number generator or to produce a telephone number using a telephone number using a random or sequential number generator.  Facebook, Inc. v. Duguid, 592 U.S. __, 41 S. Ct. 1163, 2021 U.S. LEXIS 1742 (Apr. 1, 2021).  The decision will have significant ramifications on TCPA litigation nationwide.

Historical Background

The TCPA was passed in 1991 to address the “proliferation of intrusive, nuisance calls” from telemarketers. In doing so, the TCPA prohibited, with limited exceptions, calls made using an automated telephone dialing system (“ATDS”) or “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.” Id. §227(a)(1).   For years, parties have debated what constitutes an ATDS.  In 2015, a split FCC issued an Omnibus Declaratory Ruling and Order in which it broadly interpreted an ATDS to include dialing equipment that generally has the capacity to store or produce, and dial random or sequential numbers (and thus meets the TCPA’s definition of “autodialer”) even if it is not presently used for that purpose, including when the caller is calling a set list of consumers.  In the Matter of Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling & Order, 30 FCC Rcd, 7961 (2015).  The FCC 2015 Order rejected any “present use” or current capacity test and held that capacity of an autodialer is not limited to its current configuration and includes its potential functionalities even if it currently lacks the requisite software. Thus, the FCC affirmed that “dialing equipment that has the capacity to store or produce, and dial random or sequential numbers… [is an autodialer] even if it is not presently used for that purpose.” FCC 2015 Order at ¶ 10 (emphasis supplied).  The Order further confirmed the majority’s focus on whether the equipment can dial without human intervention and whether it can “dial thousands of numbers in a short period of time”.  Id. at ¶ 17.  In 2018, the D.C. Circuit set aside the FCC’s interpretation, calling it an “eye-popping sweep.”  ACA International v. Federal Communications Commission, 885 F.3d 687, 697 (D.C. Cir. 2018).  Since then, the definition of an ATDS has been rigorously debated in the courts, creating a split.  See Dominguez v. Yahoo, Inc., 894 F.3d 116 (3^rd Cir. 2018) (SMS Service did not qualify as an ATDS because it did not have the present capacity to function as an ATDS); but see Marks v. Crunch San Diego, 904 F.3d 1041 (9^th Cir. 2019) (holding that the statutory definition of ATDS includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator).

Factual Background

Enter Noah Duguid who received several text messages from Facebook notifying him that someone was attempting to access his Facebook account from an unknown device or browser.  Duguid, who did not have an account with Facebook and had not provided his phone number or consent to be contacted by Facebook, brought a putative class action alleging violations of the TCPA.  Facebook moved to dismiss arguing that Duguid had failed to allege that the numbers were randomly or sequentially generated.  The trial court agreed and dismissed.  On appeal, the Ninth Circuit reversed and in keeping with its prior decision in Marks, held that an ATDS does not have to use a random or sequential generator to store numbers – it only has to have the capacity to “store numbers to be called” and “to dial such numbers automatically.” Duguid v. Facebook, Inc., 926 F. 3d 1146, 1151 (2019).  The Supreme Court granted Facebook’s petition for certiorari on a single issue: whether the definition of ATDS in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.”

The Court’s Holding

In a unanimous decision by Justice Sotamayor, the Court  reversed.  In doing so, the Court first examined the text of the statute in the context  of conventional rules of grammar and punctuation.  The Court concluded that the qualifying phrase “using a random or sequential number generator” applies to both verbs – store and produce.  Slip Op. at 5. Simply put, “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.”  Id. at 7. 

The Court went on to examine the definition in the statutory context and likewise concluded that it likewise affirmed their conclusion.  The Court noted that the other prohibitions within the TCPA target a unique type of telemarketing equipment that risks dialing emergency lines or tying up all sequentially numbered lines of a single entity.  “[E]xpanding 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.” Id. at 8.  The Court additionally found problematic a definition which would encompass all modern-day cell phones as autodialers. Id. at 9.

The Decision’s Impact

The impact of the decision remains to be seen, but it will not eliminate TCPA litigation which has proven itself to be a profitable business for the consumer bar.  A number of cases were stayed pending the outcome of Facebook. While many of the cases may be resolved by the Court’s decision.  Others will not be.  See, e.g., McEwen v. National Rifle Assoc., 2021 U.S. Dist. LEXIS 72133 (D. Me. Apr. 14, 2021) (dismissing four of six claims and allowing the remaining two to proceed forward).  Cases involving automated messages, automated voices and the Do Not Call List will continue forward as they are not impacted by the Court’s decision.  Additionally, it is likely that consumer litigants will continue to poke holes in the definition of an ATDS by examining the boundaries of capacity and the role of human intervention. Finally, with a Democratic majority, it would not be surprising to see Congress revisit the TCPA in response to the Court’s decision.