In a unanimous decision we sincerely hope was not a cruel April Fool’s Day gag, yesterday the United States Supreme Court ruled in favor of Facebook in a high-profile TCPA class action, drastically narrowing the definition of “autodialer” embraced by several Federal Circuits and the FCC. The ruling is likely to purge court dockets across the land of many TCPA class action lawsuits and may unleash a wave of text message campaigns previously chilled by the prospect of such litigation. The case, Facebook Inc. v. Duguid, did not address one hotly contested concept (the meaning of “capacity,” discussed below) but the Court’s reasoning suggests the TCPA will be largely de-fanged as applied to many consumer-facing text campaigns. FB FTW!!
Turns out an autodialer is…an autodialer
The case arose when Mr. Duguid alleged that he received text alerts from Facebook regarding a suspicious login to his account, notwithstanding he was not a Facebook user and did not consent to receive such texts. Duguid was not able to stop the messages and sued Facebook.
Duguid’s claim surfaced an extremely boring but critical issue in the TCPA’s drafting and subsequent interpretation. The statute defines “automatic telephone dialing system” as “equipment which has the capacity . . . to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.” 47 U.S.C. § 227(a)(1). The issue before the Court was whether the clause “using a random or sequential number generator” modifies both verbs that precede it, “store” and “produce,” or only “produce.”
Duguid advocated the latter reading, which would cause the TCPA’s prior consent requirement to apply to any text message sent using equipment that stores and dials from a database of numbers. That position has been adopted by the Second and Ninth Circuit Courts of Appeal and, perhaps more critically, has pulled virtually all commercial text message programs into the TCPA’s reach. The possibility of courts applying Duguid’s reading has inspired business to seek prior consent for most text message programs, including non-promotional relationship messaging, and has fueled decades of multimillion dollar TCPA settlements when consumers’ consent is in dispute.
Facebook, in contrast, argued that “using a random or sequential number generator” modifies both “store” and “produce.”
Justice Sotomayor, writing for the Court, agreed with Facebook’s reading, holding that “[b]ecause Facebook’s notification system neither stores nor produces numbers ‘using a random or sequential number generator,’ it is not an autodialer.” (Scalia fan boys will appreciate Sotomayor’s embrace of the series-qualifier canon and eschewing of the distributive canon and the context-dependent rule of the last antecedent.) As such, Facebook’s text messages, which were sent to a database of numbers presumably populated during its user registration process, did not require consent pursuant to the TCPA. By extension, other business’s text and call programs should similarly fall outside the TCPA’s autodialer prohibitions if they too simply use computerized methods of dialing pre-loaded numbers that are not random or sequential.
What about “capacity”?
SCOTUS did not grapple with the portion of the TCPA autodialer definition that invokes the concept of mere “capacity” to store or produce random or sequential numbers. Instead, the Court simply found that Facebook was not using technology that engaged in such conduct. The Court’s decision to apply the “random or sequential dialing” modifier to both storage and production of numbers, however, should help narrow the “capacity” concept.
Similarly, in its discussion of Congressional intent, the Court found that the TCPA was targeted to nuisance behavior (e.g., tying up business and emergency lines), which signals that lower court decisions broadly applying the “capacity” concept may not fare well on appeal. That said, a long line of TCPA cases has relied on a device’s capacity, rather than its present capability, to engage in autodialing, so it would be prudent to proceed with caution before unleashing substantial text message campaigns based on Duguid.
First, don’t go crazy with the text messages. The case will be remanded to the Ninth Circuit, which may have some things to say about that pesky “capacity” concept. Unless your business is chomping at the bit to be an early test case to gage the breadth of this holding, it would be prudent to let others carry out that experiment first. Our guess is many courts will embrace this ruling as an invitation to rid themselves of annoying TCPA cases clogging the dockets, but our advice is to wait and see. It won’t be a long wait; many courts have granted stays on TCPA litigation pending an outcome in Duguid.
Second, although the prior express consent requirements in TCPA are among the most contentious and oft-litigated of its provisions, the statute and accompanying regulation have other requirements that are not impacted by Duguid. For example, the prohibition on pre-recorded and artificial voice messages remains intact, and the federal Do Not Call list remains applicable to marketing calls, regardless of the delivery method. The FTC’s Telemarketing Sales Rule also remains in effect for robocalling, and many state laws also restrict phone-based messaging programs.
Last, be mindful of consumer expectations and preferences, as well as your privacy promises. If your organization’s privacy notice advises consumers that they will be asked to consent to text messages…guess what? You may need to obtain prior consent to avoid a deceptive trade practices claim and, importantly, to avoid being a jerk SMH. Even without any affirmative promise by your business, it won’t necessarily ingratiate itself to consumers by peppering them with unsolicited text messages. We suggest simple steps that are less burdensome that the TCPA’s prior consent obligation, such as providing a clear notice about texts and promoting consumer choice through in-message opt-out mechanisms.
IRL, effective privacy programs engender consumer trust, so it would be prudent to ease the reigns on text communications in the wake of Duguid, rather than letting a stampede of horses out of the barn. TAFN EOM