Facebook v. Duguid – US Supreme Court to Decide Crucial Issue Affecting TCPA Liability

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Morgan Lewis

Facebook v. Duguid heads for oral argument before the US Supreme Court on December 8. The case is set to clarify one of the most confusing aspects of the Telephone Consumer Protection Act’s text affecting TCPA liability: Which dialing systems fall into the definition of “automatic telephone dialing system”?

At issue in the case is whether the US Congress intended to regulate equipment that has the capacity to simply store and automatically dial numbers as an automatic telephone dialing system (ATDS) when it enacted the Telephone Consumer Protection Act (TCPA) in 1991. The TCPA has been fertile ground for consumer class actions for decades and has led to more than one recent Supreme Court case.[1]

The TCPA’s overarching purpose seems simple—to ban certain nonconsensual telemarketing calls made with an ATDS or with a prerecorded voice. But portions of the TCPA’s 1991 statutory language are unclear, leading to wasteful litigation. As thousands of TCPA cases are filed annually—and many are putative class actions—courts and litigants spend a great deal of time struggling with the lack of clarity.

BACKGROUND

Duguid alleged in his putative class action that Facebook sent him numerous automatic text messages without his consent. Facebook moved to dismiss Duguid’s claims and argued, among other things, that Duguid did not adequately allege that Facebook used an ATDS because he failed to allege that the equipment had a random or sequential number generator. The TCPA defines an 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.”[2]

After the district court dismissed Duguid’s claim, the US Court of Appeals for the Ninth Circuit reversed, finding Duguid’s allegation sufficient: “An ATDS need not be able to use a random or sequential generator to store numbers—it suffices to merely have the capacity to ‘store numbers to be called’ and ‘to dial such numbers automatically.’” This ruling conflicts with the decisions of some other circuit court opinions—most notably a decision from the Seventh Circuit, Gadelhak v. AT&T, authored by the Supreme Court’s newest justice, Justice Amy Coney Barrett.

THE GRAMMAR ISSUE

The question before the Supreme Court is largely grammatical and hinges on whether the adverbial phrase “using a random or sequential number generator” modifies “store or produce” or just “produce.” Duguid, arguing for the Ninth Circuit’s broader ATDS definition, contends that a dialing system qualifies as an ATDS if it can store numbers to be dialed automatically, regardless of whether those numbers are randomly or sequentially generated. Facebook asserts that a system lacking the capacity to randomly or sequentially generate numbers cannot be an ATDS, even if it can store and automatically dial them.

The impact of grammatical intent in this case is huge. If Facebook’s narrower reading applies, then companies can avoid TCPA liability if they use autodialing systems that can simply store (but not randomly or sequentially generate) potential customers’ numbers and then dial them. In fact, the vast majority of dialing systems—particularly those used to send text messages—simply store and dial a list of numbers uploaded by the sender, and thus would not qualify as an ATDS. If Duguid’s broader reading applies, however, then virtually any system used to send text messages or dial numbers automatically could result in TCPA liability.

Both sides back their arguments with grammatical, interpretive, and policy rules, and numerous amici briefs have been submitted. Notably, the United States has submitted a brief supporting Facebook’s position, arguing that the expansive ATDS definition that Duguid advances is not what Congress intended in 1991 and will likely be broad enough to encompass ordinary smartphones.

LIKELY EFFECTS OF THE SUPREME COURT’S DECISION

As the definition of ATDS is unsettled and depends on the particular circuit where a company happens to be sued, significant risk exists for companies that engage in any automatic text message or telephone marketing. Regardless of how the Supreme Court rules, its decision will hopefully provide more certainty to companies seeking to align their telemarketing strategies with applicable legal requirements.

 

[1] See Barr v. American Assn. of Political Consultants, Inc., 591 U.S. ___ (2020).

[2] 47 U.S.C. § 227(a)(1).

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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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