Eleventh Circuit Holds an ATDS Must Have Capacity to Randomly or Sequentially Generate Numbers

Womble Bond Dickinson

Womble Bond Dickinson

The Eleventh Circuit has spoken on the interpretation of the automatic telephone dialing system (“ATDS”) definition, and held that to qualify as an ATDS a device must have the capacity to randomly or sequentially generate telephone numbers. Glasser v. Hilton Grand Vacations Co., LLC, No. 18-14499, 2020 WL 415811 (11th Cir. Jan. 27, 2020).

The Eleventh Circuit’s opinion is an important development within a jurisdiction that includes Florida, a hot spot of individual and class TCPA litigation.  But while the opinion is overall a very positive development, it is not all good news.  Below we break down the various aspects of the opinion, the court’s reasoning, and provide some key takeaways.

The ATDS Definition

When Congress passed the TCPA in 1991, it outlawed using an ATDS to make calls to a person's cell phone without their consent, and defined the term ATDS as:

[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.

47 U.S.C. § 227(b)(1)(B).

In addressing the interpretation of this statutory definition, the court grappled with two important issues.  The first, whether the FCC’s prior predictive dialer rulings which expanded the definition to include modern day list-based dialing devices were invalidated by the D.C. Circuit in the ACA International case.  The second, the appropriate interpretation of the statutory definition.

In tackling the validity of the FCC’s prior rulings, the court agreed with the Ninth Circuit and a substantial number of courts across the country that the D.C. Circuit wiped the slate clean in ACA International.  “The court reviewed the relevant parts of the orders and ‘set aside the Commission’s treatment of those matters.’”

Next, in addressing the interpretation of the ATDS definition, the court framed the primary question as “what to do with the clause: ‘using a random or sequential number generator.’  Does it modify both verbs (‘to store’ and ‘[to] produce;) or just one of them (‘[to] produce but not ‘to store’)?”  If the former, then random or sequential number generation is an essential function a device must perform to be considered an ATDS.  If the latter, then any device which can merely store and call phone numbers falls within the statutory definition of the term.

The court held that the clause “using a random or sequential number generated,” modified both verbs, meaning that a device must be able to randomly or sequentially generate numbers in order to fall within the statutory definition of ATDS.  The court’s holding was based upon the following key points of reasoning:

  1. The conventional rules of grammar and punctuation favor a reading in which the clause modifies both terms;
  2. The separating comma between the phrase “to store or produce telephone numbers to be called” from “using a random or sequential number generator” suggests the clause modifies both “store” and “produce”;
  3. The regulatory record supported the court’s interpretation, which demonstrated that the ATDS definition “occupied the waterfront, covering devices that randomly or sequentially generated telephone numbers and dialed those numbers, or stored them for later dialing.”

The court also dealt with some of the “hiccups” it hit along of its interpretative journey. 

First was the awkwardness of reading the clause to modify the term “store” because how can a “random or sequential number generat[or],” be “used” to “store” telephone numbers?  The court addressed the problem as follows:

The key reality is that it is difficult to think of dialing equipment that can “produce” telephone numbers and “dial” them but lacks the “capacity” to “store” them.  Somewhere between identification and production, storage occurs.  In that way, a device ‘stores’ telephone numbers ‘using’ a random or sequential number generator.”

The second hiccup hit by the court was one of superfluity.  As the court put it, “[i]f a device that produces telephone numbers necessarily stores them . . . [w]hat role does that leave for ‘store’ to play?”  While the court was candid that it did not find any perfect answers, it reasoned that there were superfluity problems with the interpretation advanced by both sides, but that the least superfluous approach was “one that acknowledges some redundancy between store and produce but does not read a key clause (‘using a random or sequential number generator’) out of the statute.”

Finally, after examining the contemporaneous regulatory record surrounding passage of the TCPA, the court found that—until the FCC’s first predictive dialer ruling in 2003—there was no question that an ATDS must have the capacity to generate numbers randomly or sequentially.  And while technology may have outgrown the specific devices Congress intended to regulate in 1991, “Congress in retrospect drafted the 1991 law for the moment but not for the duration.”

Human Intervention

Glasser is also important because it marks the first intermediate court to directly examine the issue of the level of human intervention required before a device no longer qualifies as an ATDS assuming “the statute covers devices that can automatically dial a stored list of non-randomly generated numbers.” 

The court examined Hilton’s Intelligent Mobile Connect System which required agents to click a button to launch a call.  The court found that while some aspects of the process were automated—namely pulling and queuing calls from Hilton’s database—the “system demands more from its human operators than just ‘turning on the machine or initiating its functions.’” 

According to the court, the human click of a button required by the system was “meaningful human interaction to dial telephone numbers,” because “[a]n employee’s choice initiates every call.”

Willfulness Standard

The Glasser opinion was not all roses, as the court articulated a fairly liberal standard for determining whether a TCPA violation is willful, and thus subject to enhanced penalties of up to $1,500 per call. 

Glasser also involved a consolidated appeal of another case involving a debt collection agency which had the same legal issues.  Notably, the Eleventh Circuit’s opinion did not result in a complete victory for the agency because their case also involved prerecorded calls (a separate prohibition under the TCPA unaffected by the ATDS definition). 

The court examined the evidentiary record and found that the record supported the lower court’s finding of willfulness because it showed: (a) the plaintiff revoked her consent to be called during a call with a representative; and (b) the agency continued to make prerecorded calls to the plaintiff after revocation.  The court found on this record that the lower court did not err in finding a willful violation because the agency had “knowingly used prohibited technology to contact someone it knew had revoked her consent.”

Practically speaking, there are any number of reasons why calls might continue after a person revokes consent.  It could be as simple as human error in following the appropriate procedures to honor a consumer’s request to stop calls.  But if all it takes for a willfulness finding is a record of revocation, followed by continued calls, this standard will likely give lower courts far more latitude in assessing enhanced penalties for TCPA violations. 

Understanding Glasser’s Practical Impact

While Glasser’s excellent analysis of the ATDS definition is certainly welcomed, companies who communicate with consumers through text message or using equipment that helps to automate the dialing process must proceed with an appropriate level of caution and appreciate that Glasser’s impact will be limited.  With this in mind, we offer a few practice pointers for those assessing how Glasser impacts their business:

1.    Glasser’s Reach is Geographically Limited: It is important to understand that the Eleventh Circuit’s analysis of the ATDS issue in Glasser will be binding only on the district courts in the Eleventh Circuit, which includes the federal courts in Alabama, Georgia, and Florida.  Courts in other states will not be required to follow this precedent.  In fact, in the Ninth Circuit, which includes Alaska, Arizona, California, Idaho, Montana, Nevada, Oregon, and Washington, the federal courts will likely be unable to follow Glasser’s holding insofar as it conflicts with the Ninth Circuit’s holding in Marks v. Crunch.  Thus, while the decision may have an immediate impact on cases pending in Alabama, Georgia, and Florida, its long-term effect may be limited.  We would expect to see fewer TCPA cases filed in these states, but Plaintiffs’ attorneys may file cases in other jurisdictions where the ATDS definition has been or may be interpreted more broadly.  In short, rather than limiting the total volume of TCPA cases, Glasser may simply shift TCPA litigation into the courts of other states. 

2.    Time for the FCC to Act: The split of authority between the Eleventh Circuit, Third Circuit, and Ninth Circuit, makes it incumbent upon the FCC to act quickly to provide definitive guidance on interpreting the ATDS definition so that companies can have a uniform national standard.  The FCC has requested public comment on this issue on two separate occasions, including after the Ninth Circuit’s Marks decision.   Back in June 2018, we represented a coalition of 33 companies urging the FCC to clarify the definition of ATDS by ensuring that it adhered to the original, narrow view of the definition understood by Congress when the TCPA was originally adopted.  (Comments available here and here.)  The FCC should act now and adopt the Glasser  analysis.

3.    Impact on TCPA Compliance Plans Will Be Limited: Until the FCC acts, and because the Glasser decision is geographically limited, most companies who communicate with consumers using automated technology, and the platform providers that facilitate these communications, must continue to plan their compliance operations based on the potential that their equipment could be found to be an ATDS in another jurisdiction.  Unfortunately, despite this well-reasoned decision, companies must proceed cautiously and continue their robust compliance efforts.

4.    No Impact on Other Types of TCPA Claims: It is important to remember that use of an ATDS is only one reason why a company may have to comply with the TCPA and that the TCPA also extends to the use of pre-recorded or automated voices and to the transmission of faxes.  Companies must also comply with the Do Not Call registry requirements.  Glasser does not impact any of these other types of claims that are governed by the TCPA.

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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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