Uncertainty over the definition of an “automatic telephone dialing system” (ATDS or autodialer) under the Telephone Consumer Protection Act (TCPA) has fueled a steady flow of litigation for over a decade. Last year, four federal courts of appeals addressed the issue, with no consensus on the proper scope of the statutory definition. In Facebook, Inc. v. Duguid, a unanimous Supreme Court resolves the longstanding dispute over the definition and provides much-needed clarity for businesses and consumers. The decision is a significant victory for compliance-minded companies that have faced years of unwarranted class-action litigation over their efforts to contact consumers by phone and text message.

The Disputed Statutory Language

Congress enacted the TCPA in 1991 to reduce the number of unwanted telemarketing communications consumers received. Among other restrictions, the TCPA includes a prohibition on the use of an ATDS or artificial or prerecorded voice to make any calls except with the prior express consent of the called party or for emergency purposes (or other applicable exemption).

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.” In recent years, the meaning of this language has sharply divided lower courts into two camps: those that believe the ATDS definition covers calls from stored lists (e.g., the Ninth Circuit) and those that read the statutory language to require the use of a random or sequential number generator (e.g., the Seventh Circuit).

Supreme Court Rejects Broad Reading of Autodialer Definition

In Facebook, the question before the court was a matter of statutory interpretation: should the phrase “using a random or sequential number generator” be read to modify both antecedent verbs in the preceding phrase—"store or produce”—or just the nearest one?

• Duguid argued that the phrase should apply only to the verb “produce.” This approach would allow the court to apply the TCPA’s prohibition to systems, like the one used by Facebook, that contact numbers from stored lists but do not use a random or sequential number generator.
• Facebook argued that standard principles of statutory interpretation dictate that the phrase should apply to both antecedent verbs, meaning that its automated texting system, which stores numbers to be called but does not use a random or sequential number generator, would be outside the TCPA’s purview.

The Supreme Court agreed with Facebook. The Court held that the ATDS definition does not encompass equipment that can store and dial telephone numbers, if the device does not have “the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.”

To reach this conclusion, the Supreme Court looked to principles of statutory interpretation, namely the “series-qualifier canon,” and the TCPA’s statutory history, noting for example that Congress was particularly interested in dangers presented by autodialer technology. The Court found that Facebook’s interpretation of “autodialer” better matched the scope of Congress’s concerns, and that Duguid’s approach “would take a chainsaw to these nuanced problems when Congress meant to use a scalpel.”

A New Legal Landscape?

Resolving the ATDS debate provides valuable clarity to organizations placing calls and sending text messages, but the TCPA still presents significant risks and obligations for businesses, including for example:

• The Facebook decision is limited to the “autodialer” definition. It does not touch other contested areas, including the use of “artificial or prerecorded voice,” the requisite level of consent for those calls, or Do-Not-Call issues for telemarketing calls.
• The FCC likely will continue addressing other “robocall” and consumer protection issues within its jurisdiction, including TRACED Act implementation.
• There may be additional legislative interest in regulating automated communications.

Next Steps

We encourage clients to stay vigilant about TCPA compliance in the wake of the Facebook decision.

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