The Supreme Court Is Positioning to Take On TCPA – JD Supra

[co-author: Elyse Echtman]

In its July 6 decision, the Supreme Court seemed to endorse the need for a broad ban on robocalls. The Court referred back to the context in which the TCPA was enacted in 1991, characterizing it as a time when more than 300,000 solicitors called more than 18 million Americans every day.[2] According to the Court, [t]he Act responded to a torrent of vociferous consumer complaints about intrusive robocalls.[3] The Courts July 6 decision shifts the universe of acceptable practices back to a pre-2015 framework, prior to the enactment of the government-debt-collection exception.

Later in the same week, on July 9, the Supreme Court granted certiorari in another case, taking issue with the TCPAs robocall provision, Facebook, Inc v. Duguid. In that case, the Supreme Court will address what qualifies as an automatic telephone dialing system (ATDS) an issue that has been brewing in the courts with materially different interpretations across several circuits.[4] The Facebook decision should have significant implications on the scope of the robocall restrictions.

Passed in 1991, 47 U.S.C. 227(b)(1)(A)(iii) of the TCPA prohibits a caller from using an ATDS to call a cell phone and prohibits calls using an artificial or prerecorded voice, unless the caller has obtained prior express consent. The TCPA defines an ATDS as equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.[5] This definition, and the FCCs expansive interpretation of it, has been the subject of intense litigation. The proper scope of the ATDS definition is a high-stakes question. This TCPA provision imposes strict liability with statutory damages of $500 per violationtrebled to $1,500 per violation if the violation is deemed willful or knowing.[6] A company found to have used a telephone system that qualifies as an ATDS to call cell phones without prior consent can find itself subject to millions (or even billions) of dollars in damages.

In 2015, the FCC issued a Declaratory Ruling setting forth its interpretation of the ATDS definition. According to the FCC, an ATDS includes dialing equipment [that] has the capacity to store or produce, and dial random or sequential numbers [without human intervention] even if it is not presently used for that purpose, including when the caller is calling a set list of consumers.[7] The Declaratory Ruling explicitly stated that the capacity of an autodialer is not limited to its current configuration but also includes its potential functionalities.[8] This interpretation drastically broadened the scope of equipment implicated by the Act to potentially include almost all technology that is capable of being upgraded with software to permit automated dialing.

In 2018, the D.C. Circuit in ACA International v. Federal Communications Commission struck down the FCCs 2015 interpretation of an ATDS, holding that it offered no meaningful guidance to affected parties on whether their equipment was covered by the TCPA restrictions.[9] The Court noted that the FCCs interpretation was so expansive that it could lead to unreasonable outcomes such as conventional smartphones being considered covered equipment.[10] The opinion was most critical of the potential future capacity aspect of the FCCs interpretation, explaining that [i]t cannot be the case that every uninvited communication from a smartphone infringes federal law, and that nearly every American is a TCPA-violator-in-waiting, if not a violator-in-fact.[11] With the D.C. Circuits invalidation of the FCCs 2015 interpretation, the courts have been left to interpret the provision based on the plain language of the statute.

Courts have disagreed on the critical issue of the functions a device must have the capacity to perform in order to qualify as an ATDS. In its 2018 decision in Marks v. Crunch, the Ninth Circuit succinctly stated that [t]he question is whether, in order to be an ATDS, a device must dial numbers generated by a random or sequential number generator or if a device can be an ATDS if it merely dials numbers from a stored list. [12] The Ninth Circuit answered that question with an expansive interpretation, holding that the statutory definition of ATDS includes a device that stores telephone numbers to be called, whether or not those numbers have been generated by a random or sequential number generator.[13] The Ninth Circuits interpretation potentially means that any telephone system with the capacity to automatically dial a stored list of telephone numbers without human intervention qualifies as an ATDS. The Second Circuit recently adopted an interpretation similar to that of the Ninth Circuit in Marks.[14]

The Third, Seventh and Eleventh Circuits adopted starkly different interpretations of the ATDS definition based on a plain reading of the statutory language. In Gadelhak v. AT&T, for example, the Seventh Circuit held that the capacity to generate random or sequential numbers is necessary to the statutory definition, expressly rejecting the Ninth Circuits reading of the statute in Marks.[15] The Third and Eleventh Circuits adopted a similar approach in Dominguez v. Yahoo and Glasser v. Hilton, respectively.[16]

The Supreme Courts decision in Facebook v. Duguid will likely once and for all resolve this circuit split and provide litigants with a uniform interpretation of what constitutes an ATDS under the Act. The adoption of a narrow interpretation will likely result in a dramatic decrease in TCPA litigation where fewer dialing systems would qualify as an ATDSmost modern telephone systems do not generate random or sequential telephone numbers for dialing. However, a broad interpretation may result in an influx of litigation, particularly in circuits such as the Third, Seventh and Eleventh, where recent rulings had limited such cases and led serial litigators to file suit elsewhere.

[1] Barr v. Am. Assn of Political Consultants, Inc., No. 19-631, 2020 WL 3633780 (U.S. July 6, 2020).

[2] Id. at *3.

[3] Id.

[4] The Supreme Court granted certiorari on question 2 of the petitioners brief, which reads: Whether the definition of ATDS in the TCPA encompasses any device that can store and automatically dial telephone numbers, even if the device does not us[e] a random or sequential number generator. Facebook, Inc. v. Duguid, no. 19-511.

[5] 47 U.S.C. 227(a)(1)(A)-(B).

[6] 47 U.S.C. 227(3).

[7] In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 30 F.C.C. Rcd. 7961 (2015).

[8] Id.

[9] ACA Intl v. Fed. Commcns Commn, 885 F.3d 687, 701 (D.C. Cir. 2018).

[10] Id. at 692.

[11] Id. at 698.

[12] Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1050 (9th Cir. 2018), cert. dismissed, 139 S. Ct. 1289, 203 L. Ed. 2d 300 (2019).

[13] Id. at 1043.

[14] See Duran v. La Boom Disco, Inc., 955 F.3d 279, 280 (2d Cir. 2020).

[15] Gadelhak v. AT&T Servs., Inc., 950 F.3d 458,469 (7th Cir. 2020).

[16] Dominguez on Behalf of Himself v. Yahoo, Inc., 894 F.3d 116, 117 (3d Cir. 2018); Glasser v. Hilton Grand Vacations Co., LLC, 948 F.3d 1301, 1304 (11th Cir. 2020).

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The Supreme Court Is Positioning to Take On TCPA - JD Supra