On April 1, 2021, the US Supreme Court issued its long-awaited landmark ruling in Facebook v. Duguid, resolving a Circuit Court split on the definition of an automatic telephone dialing system (ATDS) under the Telephone Consumer Protection Act (TCPA). The Court has conclusively narrowed the type of dialing systems that qualify as an ATDS, ruling that 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 random or sequential number generator. The decision provides much needed clarity in the TCPA landscape and will likely significantly limit the scope of both pending and future TCPA litigation.
The Supreme Court’s ruling comes after years of inactivity by the Federal Communications Commission (FCC) to provide meaningful direction on the definition of ATDS. The FCC’s inaction left federal courts to interpret the meaning of the TCPA’s statutory language, leading to a split among several federal appellate courts.
The TCPA, enacted in 1991, defines 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.” In 2015, the FCC interpreted the definition broadly, sweeping in any equipment that has the capacity or even potential capacity to dial numbers without the use of human intervention, even if the device did not actually use the random or sequential number generator capacity to place calls. In early 2018, the D.C. Circuit Court of Appeals, in ACA International v. FCC, 885 F.3d 687, 697, 703 (D.C. Cir. 2018), struck down the FCC’s definition of ATDS as arbitrary and capricious, but did not provide or suggest a new definition. The ACA International decision prompted the FCC to solicit public comments so that it could develop a new rule aimed at providing an updated ATDS standard. Despite the fact that the FCC’s comment period closed more than two years ago in October 2018, the FCC remained idle, leaving federal courts to fill the noticeable absence left by the FCC.
The key question before the Supreme Court, and the issue with which the federal judiciary (both at the district and appellate court levels) has had to grapple, is whether devices that “store” numbers qualify as autodialers even if the equipment does not use a “random or sequential number generator.” In the opening paragraph of her opinion, Justice Sonia Sotomayor answered with an unequivocal: “no.” Rather, a device must have the capacity to either store a number generated by a random or sequential generator or produce a number using a random or sequential number generator. In other words, the device must have the ability to do either of those two functions (storing or producing), but it must do so using a random or sequential number generator.
The Supreme Court’s decision reverses the more expansive view of the Ninth Circuit (and those of the Second and Sixth Circuits), which held that the TCPA’s reference to “random or sequential number generator” impacts only the statutory term “produce,” meaning a device could qualify as an ATDS even if it just has the capacity to store numbers to be called regardless of whether those numbers were generated using a random or sequential number generator, and then automatically dial such numbers.
The Supreme Court instead sides with the narrow view adopted by the Third, Seventh, and Eleventh Circuits, which have held that “random or sequential number generator” impacts both “store” and “produce,” so a device must have the ability to store numbers using such technology or produce numbers using such technology. Simply dialing from stored lists is not enough. The Supreme Court recognized that if ATDS were to apply broadly to any device with the capacity to simply store and dial numbers, the TCPA could expose even “ordinary cell phone owners in the course of commonplace usage” to liability.
The Supreme Court’s ruling, in agreeing with the narrower definition of ATDS, has significant implications for the TCPA litigation landscape. The Supreme Court’s decision affects existing cases that rely on a broad ATDS definition, or that have been filed in jurisdictions adopting a broad definition. The decision also impacts the scope of future litigation. As the Supreme Court’s decision heightens the pleading and evidentiary standards for ATDS, we may see a decrease in the number of TCPA complaints filed in federal court, or at least more artful complaints.
Companies are also now afforded further opportunities to mitigate, and avoid, TCPA risk and liability if they use autodialing systems that can simply store (but not randomly or sequentially generate) numbers.
Although the Supreme Court’s decision is a welcome limitation on the TCPA, it is important to note that Congress still may have the final word and consider a long-overdue update to the TCPA.
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