Unanimous Supreme Court Decision Narrows the Scope of the TCPA

Arent Fox

Arent Fox

An April Supreme Court ruling significantly reduced the scope of communications platforms that could be considered autodialers subject to the Telephone Consumer Protection Act (TCPA).

The decision in Facebook, Inc. v. Duguid, 141 S. Ct. 1163 (2021), is largely a great decision for companies engaging consumers via text message or live calling through modern platforms – as it should significantly reduce class action exposure under the private right of action for unsolicited autodialed calls or text messages. In fact, Arent Fox has been able to obtain walk-away voluntary dismissals in two separate TCPA class actions by pressing the frivolousness of autodialer claims in the wake of Facebook

That said, companies that routinely obtain prior express written consent should not necessarily alter their practices in the wake of Facebook, and the decision may result in the TCPA Plaintiffs’ Bar shifting their focus on TCPA’s separate Do-Not-Call private right of action – as discussed in more detail below. 

TCPA Overview 

Under the TCPA, all non-emergency calls – which include text messages under the TCPA – placed via automated telephone dialing systems (“ATDS” or “autodialer”) require some form of consent if placed to a wireless telephone number, with the form of consent dependent on the nature of the call.

The TCPA is primarily enforced through a private right of action enabled by the statute itself – 47 U.S.C. 227(b)(3). This provision of the TCPA permits any claimant who has received an allegedly autodialed call or text message to their cell phone without the requisite consent to file suit in state or federal court. The TCPA provides for statutory damages of $500 per violation – meaning every call or text message sent in violation of the statute entitles the plaintiff to a separate award of $500 – and a court can award treble damages if “the court finds that the defendant willfully or knowingly violated this subsection or the regulations prescribed under this subsection.” Id. at 227(c)(3)(C). 

Further, such cases are often brought as class actions, particularly in the case of mass texting campaigns, because the perceived commonality and typicality shared by the putative class, along with uncapped statutory damages permitted by the TCPA. That is, a company that initiates 10,000 text messages to its customer base would potentially face between a $5 million to $15 million judgment simply by the mathematical application of the statute, and the prospect of such large statutory damages certainly attracts less than meritorious lawsuits by the plaintiffs’ bar to extract in terrorem settlements. 

The Supreme Court Greatly Reduced The Dialing Systems That Could Be Considered Autodialers

As noted above, the TCPA makes it unlawful to (1) initiate (2) an autodialed text message (or call) to a wireless telephone number (3) without the recipient’s prior express consent. It is therefore critical to understand what is – and what is not – an autodialer, and the pronounced circuit split that was finally resolved by the Supreme Court. 

The TCPA itself 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.” A very pronounced circuit split developed concerning the interpretation of this definition, and the crux of the split was based on what the phrase “using a random or sequential number generator” modifies in the preceding clause.  That is, in several circuit courts, and consistent with normal rules of grammar, “using a random or sequential number generator” modifies both “store” and “produce” – meaning that if a system does not have the ability to randomly or sequentially generate telephone numbers to be called either immediately or at a later time, the system would not be an autodialer See, e.g., Gadelhak v. AT&T Services, Inc., 2020 WL 808270 (7th Cir. Feb. 19, 2020) (dialing system must store or produce “numbers using a random or sequential number generator” to be an autodialer); Glasser v. Hilton Grand Vacations Co., LLC, No. 18-14499, 2020 WL 415811 (11th Cir. Jan. 27, 2020) (dialing system not an autodialer unless it can randomly or sequentially generate numbers); Dominguez v. Yahoo, Inc., 894 F.3d 116, 121 (3rd Cir. 2018) (same).

In contrast to this approach, other courts looked beyond the statutory definition of what constitutes an autodialer and analyzed whether the platform could be used to send calls or text messages without human intervention, i.e., “automatically.” See, e.g., Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1053 (9th Cir. 2018) (rewriting statute to interpret autodialer to mean “equipment which has the capacity—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically (even if the system must be turned on or triggered by a person)”) (emphasis added). Or as one court framed the test under Marks, a system as a whole must be “incapable of ‘non-manual’ dialing,” such as by only having the capacity to initiate messages individually through click-to-call/message functionality. Meier v. Allied Interstate, LLC, No. 18-CV-1562-GPC-BGS, 2020 WL 819014, at *6 (S.D. Cal. Feb. 19, 2020).

Against this backdrop, the Supreme Court resolved the circuit split – in a unanimous 9-0 decision – by overturning the Ninth Circuit’s expansive interpretation of what constitutes an autodialer stemming from the Marks precedent. Like the Seventh, Eleventh, and Third Circuits before it, the Supreme Court specifically held that to qualify as an autodialer within the meaning of the TCPA, a device must have the capacity either (1) to store a telephone number using a random or sequential generator or (2) to produce a telephone number using a random or sequential number generator.  That is, “using a random or sequential number generator” modifies both “store” and “produce.” The Supreme Court also rejected the plaintiff’s appeal that its decision would usher in a flood of unsolicited texts by not allowing the lower courts to interpret the definition along with changes in technology, ruling that the plaintiff’s “quarrel is with Congress, which did not define an autodialer as malleably as he would have liked. … This Court must interpret what Congress wrote.” 

At bottom, the Supreme Court’s ruling should greatly reduce the litigation exposure to companies or organizations using texting platforms or predictive dialers to communicate with large numbers of consumers. In practice, almost no modern dialing equipment or text messaging platform has the present capability to generate telephone numbers, randomly, sequentially, or otherwise. Instead, nearly all modern calling/texting platforms rely on the user to import a curated list of telephone numbers, such as from the company’s CRM database or even third-party lists. Folkerts v. Seterus, Inc., CIV No. 17-C-4171, 2019 WL 1227790, at *6 (N.D. Ill. Mar. 15, 2019) (“equipment that merely has the ability to dial numbers from a stored list, as opposed to producing numbers using a random or sequential number generator, does not qualify as an ATDS”). Thus, under this interpretation, even text messages sent automatically and in bulk would not be considered autodialed under the TCPA where the texting platform cannot separately generate telephone numbers to be messaged. 

Best Practices For Complying With The TCPA’s Autodialer Restrictions After Facebook

Although there is a footnote or two that the TCPA Plaintiffs’ Bar will try to latch onto, Facebook is a great decision for companies and organizations engaging consumers via bulk texting or call centers – as it should significantly reduce litigation exposure under the private right of action for unsolicited autodialed calls or text messages. This type of claim has been, by far, the most frequently litigated under the TCPA. That said, plaintiffs’ attorneys may still pursue frivolous autodialer claims, and wireless carrier guidelines – which are not enforceable by consumers – can still mandate consent. Accordingly, because consent is a complete defense to an autodialer claim – regardless of the technology used to send the message – it is still advisable to obtain a consumer’s prior express consent.

Second, consumers should be presented with a link to Terms when they are opting in, and these Terms should contain provisions that further reduce litigation exposure. Again, while not strictly necessary to defeat an autodialer claim after Facebook, obtaining proper consent and binding consumers to favorable terms will independently protect your brand.

The TCPA’s Separate Do-Not-Call Provisions

As noted above, there is a second private right of action under the TCPA that plaintiffs’ attorneys will likely shift toward after the Supreme Court’s Facebook ruling: the do-not-call and privacy restrictions contained in Subsection (c) of the statute. Broadly, what these regulations prohibit are sending unsolicited telemarketing calls to individuals – regardless of the technology used – as well as requiring companies that engage in telemarketing to develop policies and procedures to comply with these requirements. To put a finer point on it, even non-autodialed telemarketing calls are subject to these rules, but non-autodialed informational messages fall outside the TCPA completely. 

Through Subsection (c), Congress directed the Federal Communications Commission (“FCC”) to develop rules “concerning the need to protect residential telephone subscribers’ privacy rights to avoid receiving telephone solicitations to which they object.” Id. § 227(c)(1) (emphasis added). As defined by Congress, “telephone solicitations” are a limited subset of telemarketing calls, expressly excluding telemarketing calls to, among others, “any person with whom the caller has an established business relationship” or “with that person’s prior express invitation or permission.” Id. § 227(a)(4). In other words, a “telephone solicitation” is unsolicited telemarketing. And the TCPA allows telephone subscribers to sue for alleged violations of the FCC’s regulations adopted under this section of the TCPA – provided they have received two or more allegedly unlawful calls within a 12-month period. 

Importantly, while Congress created a private right of action to enforce these do-not-call rules, at the same it also provided that having “reasonable practices and procedures to effectively prevent telephone solicitations in violation of the regulations prescribed under this subsection” as an affirmative defense to any such claim.  Id. § 227(c)(5)(C) (emphasis added). That is, recognizing mistakes happen and wanting to avoid strict liability for telephone solicitations sent in violation of the FCC’s regulations, Congress mandated that if a defendant had implemented reasonable practices and procedures to honor DNC requests, this would be a complete bar to Subsection (c) claims. Specifically, a caller will not be liable under Subsection (c) if it can demonstrate that the violation is the result of error and that as part of its routine business practice, it meets the minimum standards mandated by the FCC’s regulations. 

At bottom, after Facebook, there will likely be a significant shift to DNC class action cases under the TCPA – and it will be critical for companies to ensure that they have adopted DNC policies and trained their personnel involved in telemarketing on it, as again, this would a complete defense to any potential Do-Not-Call claim. 

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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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