The Only Bi-Partisan Show in D.C.: The U.S. Supreme Court Issues a Decisive Opinion Concerning TCPA Liability in Facebook, Inc. v. Duguid, et al.

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Stoel Rives - Global Privacy & Security Blog®

In a widely anticipated ruling, the U.S. Supreme Court today ruled that just because a business has calling technology that has the capacity to store and dial multiple numbers – such as a cell phone — does not automatically subject that business to Telephone Consumer Protection Act (“TCPA”) liability for calls (and texts) to consumers that otherwise lack consent.

Beyond other aspects of what constitutes a robo-call, this ruling is likely to limit the number of class actions brought against businesses under TCPA.  Still, for businesses required to comply with consumer protection laws, obtaining and retaining evidence of consumer consent for calls and texts remains the primary business action to limit risk.  Where businesses use vendors to administer call campaigns, we recommend discussing with vendors the impact this decision may have on campaign practices.  As always, contacting experienced counsel to investigate whether creative steps can be taken to incorporate aspects of today’s ruling into your relationships is a wise step to better protect your business.

In an 8-0 opinion, with Justice Alito concurring in the judgment for unanimity, the U.S. Supreme Court reversed and remanded the Ninth Circuit’s decision in Facebook, Inc. v. Duguid, et al.  Slip Op. No. 19-511, 592 U. S. ___ (2021).  In the context of consumer protections ensconced in the TCPA, the Ninth Circuit held that any company maintaining a database that stored consumer phone numbers that could also be programmed to automatically call the numbers stored therein, were operators of “automatic telephone dialing systems” (“ATDS”).  Among other things, the TCPA prohibits unsolicited telemarketing and other calls and text messages from users of an ATDS.  The Ninth Circuit’s conclusion created a rift.  The TCPA’s definition of what constitutes an ATDS was more narrow than the Ninth Circuit’s interpretation.  As Facebook pointed out to the Supreme Court, the Ninth Circuit’s interpretation not only appeared to ignore the TCPA’s complete definition of what constitutes an ATDS – it made ubiquitous forms of technology previously untouched by the TCPA open to that liability.

According to the Supreme Court – consistent with the TCPA’s terms and any non-unnatural reading of the statute – both phone systems that (i) store “or” (ii) produce consumer phone numbers for dialing must do so through technology “using a random or sequential number generator.”  47 U.S.C. § 227(a)(1).  The technology must be present in the call/text system to qualify as an ATDS.  The Court even invoked the “series-qualifier canon” to instruct that the modifier concerning a “random or sequential number generator” modifies and applies to the string of nouns and verbs in the series including “storing” or “producing” phone numbers.  While Justice Alito departed from a legal analysis relying too heavily on reference to the canon, he still concurred in the judgment.  It seems the Court as a whole was more interested in ensuring the practical application of the Act – to find that the law should not extend to the nearly universal application that it was not meant to apply to.  The decision is an interesting lesson in grammar and statutory interpretation.

But what does it mean for businesses that are required to comply with the TCPA?

It does not appear that the opinion does much to eliminate the majority of cases decided and filed before it.  The Ninth Circuit’s interpretation of the statute does not appear to have been a natural one that most readers would arrive at.  That nine out of nine justices on a polarized court seem to agree with that is really saying something.  Also, the author is not aware of many previous or existing cases where businesses were sued under the TCPA for calling customers with human-operated phones (although this opinion departed somewhat from “human intervention” being a part of the ATDS analysis).

For businesses, it is nice to finally have the Supreme Court’s conclusion that call platforms (including notification systems) need to include random or sequential number generation technology to fall into the ATDS definition.  The ruling limits somewhat the number of cases that industry will see.  But, whether certain technologies qualify as ATDS will still be litigated in many cases beyond the pleading stage.  It still may be the possession of evidence of appropriate consumer consent for calls and texts that is often the easiest thing to reference to “cut to the chase” on allegations that the TCPA was violated.  For those businesses involved in vendor relationships to administer call campaigns of any type, revisit your relationships to discuss the impact (or not) that this decision may have.

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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