District Court's Decision in TCPA Case Follows Supreme Court's Duguid Opinion

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Highlights

  • A recent decision by the U.S. District Court for the District of South Carolina granted defendant USAA Federal Savings Bank's Motion for Summary Judgment on the plaintiff's Telephone Consumer Protection Act (TCPA) and negligent, reckless, and/or wanton training and supervision claims.
  • The decision in Margueritte Timms v. USAA Federal Savings Bank, which follows on the heels of the U.S. Supreme Court's decision earlier this year in Facebook v. Duguid, further strengthens the narrow interpretation of the definition of an automatic telephone dialing system (ATDS) following Duguid in both the Fourth Circuit and nationwide.
  • The precedent set with each such decision in favor of businesses promises to erode the ability of future plaintiffs to bring such claims based on the same types of systems involved in the Timms and Duguid.

The U.S. District Court for the District of South Carolina, in the matter of Margueritte Timms v. USAA Federal Savings Bank, 2021 WL 2354931 on June 9, 2021, granted defendant USAA Federal Savings Bank's (USAA) Motion for Summary Judgment on plaintiff Margueritte Timms' (the plaintiff) Telephone Consumer Protection Act (TCPA) and negligent, reckless, and/or wanton training and supervision claims.

Background

In July 2020, the U.S. Supreme Court granted certiorari in Facebook v. Duguid to answer the question of whether the definition of automatic telephone dialing system (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." On April 1, 2021, the Supreme Court held that "a necessary feature of an autodialer under § 227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called." (See Holland & Knight's previous alert, "Supreme Court's Facebook Decision Impacts TCPA Litigation," April 1, 2021)

Following the decision in Duguid, USAA moved for summary judgment on the plaintiff's TCPA claim, arguing that its use of the dialing equipment known as Aspect Unified IP (Aspect UIP) and Aspect Agent Initiated Contact (Aspect AIC) did not violate the TCPA because neither are capable of generating random telephone numbers or generating sequential blocks of telephone numbers. Through a supporting declaration, USAA outlined how each day a representative identifies accounts he or she wishes to call the next day based on different criteria. A list of numbers to be called is then generated based upon these criteria and loaded into the equipment for dialing. USAA argued that such equipment does not meet the definition of an ATDS following Duguid.

The plaintiff's opposition consisted of two arguments. First, the plaintiff argued that the dialer at issue must have only the capacity to store or produce numbers using a random or sequential number generator, and USAA's internal documents establish that the Aspect UIP has that capacity. Second, the plaintiff relied on footnote 7 in the Duguid opinion to assert that the Aspect UIP has capabilities that render it an ATDS. According to the plaintiff, footnote 7 leaves open the possibility that the Aspect UIP's ability to use a random number generator to determine the order in which numbers are dialed from a pre-produced list may qualify it as an ATDS.

District Court's Decision

The District Court in Timms rejected the plaintiff's first argument and reaffirmed that automatic dialing capability alone is not enough to qualify that system as an ATDS. The court then turned to the plaintiff's argument that the reference to a "predictive mode" in the Aspect UIP documentation (by which calls are made using an algorithm that predicts when an agent will be available to take the call) was "not evidence that the Aspect UIP stores or produces telephone numbers using a random or sequential number generator." The court dismissed this argument as "nothing more than a rehash of the now-rejected Ninth Circuit conclusion" and reaffirmed the system at issue must store numbers using a random or sequential number generator, or produce numbers using a random or sequential number generator, to qualify as an ATDS. Similarly, the District Court rejected the plaintiff's argument that the Aspect UIP's "blaster" setting, which allows automatic dialing with transfer to a prerecorded voice, was not relevant and did not evidence the capacity to store or produce telephone numbers using a random or sequential number generator.

The Timms court next addressed the plaintiff's argument regarding footnote 7 of the Duguid decision. In footnote 7, the Supreme Court specifically addressed Duguid's argument that the definition of an ATDS was superfluous because "a device that stores numbers using a random or sequential number generator would necessarily produce those numbers using the same process." The Supreme Court concluded that this is "no superfluity" if Congress included both functions in the auto-dialer definition, and the Supreme Court followed with an example of an auto-dialer that might use a random number generator to determine the order in which to pick phone numbers from a pre-produced list. Seizing on this example, the plaintiff argued that, even if Aspect UIP was using a stored list of numbers that were not randomly generated, it can still qualify as an ATDS if it "used a random number generator to determine the order in which to pick phone numbers from a pre-produced list" (emphasis added).

The Timms court rejected the plaintiff's argument, highlighting how the plaintiff's own Statement of Facts alleged that the Aspect Advanced List Management (ALM) equipment "specifically generates the numbers in a sequential order" and finding that the plaintiff had offered no evidence that the Aspect UIP randomly selected the dialing order of the telephone numbers from the predetermined list.

More importantly, the Timms court minimized the importance of the example cited in footnote 7 by the Supreme Court. The Timms court concluded that this example was a reference to specific technology from 1988 described in the Professional Association for Customer Engagement's amicus brief, which had the capacity to randomly select the dialing order of the telephone numbers from the predetermined list. Because there was no evidence that systems utilized by USAA in Timms had the same functionality as this 1988 equipment, the court held that the language from footnote 7 was inapposite in the Timms case.

Adhering to the decision in Duguid, the Timms court concluded that both the Aspect UIP or Aspect AIC systems "are capable of making telephone calls only to specific telephone numbers from dialing lists created and loaded by [USAA]" and granted USAA's motion for summary judgment on the plaintiff's TCPA claim.

Takeaways and Considerations

The Timms decision further strengthens the definition of an ATDS following Duguid in both the Fourth Circuit and nationwide. Notably, the District Court was able to resolve the ATDS issue only at the summary judgment stage, but the Aspect UIP and Aspect AIC systems are commonly used.

Although it may require taking these cases to summary judgment to prevail, the precedent set with each such decision promises to erode the ability of future plaintiffs to bring such claims based on the same types of systems. Presuming the vast majority of decisions in these cases go in favor of the defense, as they did in Timms and Duguid, in another 12 to 18 months the weight of authority on these issues could prove an effective deterrent to plaintiffs' firms bringing such cases.

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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