On May 10, 2024, the Second Circuit held in Soliman v. Subway Franchisee Advertising Fund Trust Ltd., No. 22-1726 (2d Cir. May 10, 2024), that a device that selects and dials numbers from a stored list does not constitute an “automatic telephone dialing systems” (ATDS) under the Telephone Consumer Protection Act (TCPA). Nearly a decade in the making, the Soliman decision tracks the US Supreme Court’s landmark opinion in Facebook, Inc. v. Duguid, 592 U.S. 395 (2021), and is welcome news for companies that may use such dialing mechanisms in their telemarketing practices.

Background and Allegations

In Soliman’s complaint, originally filed in 2016, she alleged that Subway sent a text message to her cell phone advertising a free bag of chips with the purchase of a sandwich. The plaintiff had previously opted in for Subway’s promotional text messages, but after receiving this message, the plaintiff responded “STOP.” Subway responded with a text message that stated Soliman would “no longer receive any text alerts.”

Four days later, however, Subway allegedly sent another text message to Soliman’s cell phone, this time advertising a different weekly promotion. In her complaint, the plaintiff alleged that Subway send the texts through an automated text messaging system that was able to “dial telephone numbers stored as a list or in a database without human intervention.” According to the plaintiff, Subway’s dialer then fell within the TCPA’s definition of an ATDS. Because the plaintiff had withdrawn her prior express written consent, Subway allegedly ran afoul of the TCPA. The plaintiff sought to certify a class of similarly situated individuals based on TCPA violations, and sought $500 per violation.

Fact discovery revealed that Subway employed a third party vendor that used an algorithm where a random or sequential number generator selected a number to dial from the stored list of numbers and “sequence[d] those numbers in order to automatically dial the numbers and send out text messages en masse.” In her appeal, the plaintiff argued that a “number generator” is a programming tool used to generate random or sequential series of numbers, but not necessarily telephone numbers. According to the plaintiff, this type of system falls within the TCPA’s definition of ATDS.

The Second Circuit’s Decision

The Second Circuit, relying on both the text of the TCPA itself and the Supreme Court’s decision in Duguid, found that the dialer used by Subway’s vendor does not fall within the federal definition of ATDS. In Duguid, as we have previously noted, the Supreme Court held that a device must have the capacity to either store a number generated by a random or sequential generator or produce a number using a random or sequential number generator. In other words, the device must have the ability to do either of those two functions (storing or producing), but it must do so using a random or sequential number generator.

The Second Circuit concluded that a dialing system only qualifies as ATDS under the TCPA if it randomly or sequentially generates telephone numbers. A system that simply selects and dials telephone numbers from pre-existing lists, as the Subway vendor’s system did, would not qualify as an ATDS under the TCPA. Accordingly, there was no ATDS violation.

Implications

This ruling is certainly a win for companies that employ similar dialing systems as part its telemarketing practices. Furthermore, the Second Circuit in its holding noted that it believed that its decision was in line with three other circuit courts and, of course, the Supreme Court’s decision in Duguid. There has been a decline in the number of TCPA complaints filed under the ATDS provision since the Supreme Court issued Duguid and we expect that trend to continue. Overall, however, TCPA filings remain generally consistent, as plaintiffs continue to file claims arising from violations of the Do Not Call regulations and restrictions on the use of prerecorded voice messages. A healthy compliance program is key to mitigating the risk associated with telemarketing, including to ensure adequate consent is obtained prior to calling and texting consumers and customers.

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