Bad News for Sixth Circuit Creditors as Court Adopts Expansive Definition of Autodialer with Supreme Court Review Pending

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Bradley Arant Boult Cummings LLP

The Sixth Circuit has weighed in on an issue with the power to change the course of TCPA litigation nationwide: What constitutes an automatic telephone dialing system, more commonly known as an autodialer? Since the FCC’s 2015 order, which stated that any device with the potential ability to generate a list of numbers was an autodialer, was struck down by the D.C. Circuit as overly broad, the interpretation of “autodialer” has been left to the courts, with two competing interpretations emerging. The first approach, adopted by the Second Circuit and the Ninth Circuit, broadly interprets “autodialer” to be any equipment capable of storing and subsequently dialing a list of stored numbers. The second, much narrower interpretation, adopted by the Third, Seventh, and Eleventh Circuits, requires that the autodialer system itself actually have the ability to randomly or sequentially generate the telephone numbers it calls.

In a surprise decision last week, the Sixth Circuit (in a 2-1 split) sided with the Second and Ninth Circuits in Allan v. Pennsylvania Higher Education Assistance Agency. The statutory definition of an autodialer is as follows: “[E]quipment 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.” As a matter of statutory interpretation, the majority held that an autodialer is any system that can create and store a list of numbers and then dial those numbers from the list. The specific autodialer at issue in Allan was the Avaya Proactive Contact dialer, which is a popular dialing system among creditors that lacks the ability to randomly or sequentially generate random lists of numbers. In other words, the Avaya system would be considered an autodialer in the Second, Sixth, and Ninth Circuits, but not in the Third, Seventh, and Eleventh Circuits.

The majority addressed the concerns of the Court of Appeals for the D.C. Circuit (that the FCC’s order was overly broad because it made any device with the potential to store and dial from a list of numbers an autodialer) by explaining that autodialers must actually be used to store and dial numbers, as opposed to just hypothetically having that capacity.

Interestingly, the Allan majority relied heavily on the fact that the TCPA contains various exceptions, one of which is the prior consent of the called party. If there is prior consent, the majority reasoned, the calling party would have this person’s number stored somewhere, as opposed to randomly generating numbers. Stated differently, the existence of the exception implies that the TCPA applies to devices autodialing sets of stored numbers; if the stored numbers were randomly generated, prior consent would be an impossibility.

Allan is hardly the end of the road on this issue. For starters, the parties in Allan may still seek en banc review by August 12. But more importantly, the Supreme Court granted a certiorari petition on July 9 to presumably resolve the circuit split and decide this issue once and for all. Nonetheless, that may prove to be little comfort to debt collectors in the Sixth Circuit, as a decision is not expected on the pending Supreme Court case until next spring. In the meantime, creditors operating nationwide should continually review their policies, procedures, and litigation strategy on a regional basis to effectively navigate the TCPA minefield.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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