Consumer Finance Insights
April 13, 2021

Supreme Court Adopts Narrow Definition of Autodialer in TCPA Case

On April 1, 2021, the United States Supreme Court resolved a circuit split on what technology constitutes an “automatic telephone dialing system” (ATDS) under the Telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C. § 227 et seq.  In the TCPA class action Facebook, Inc. v. Duguid, et al., No. 19-511 (Apr. 1, 2021), the Supreme Court unanimously ruled that to qualify as an ATDS, “a device must 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.”  The decision is a victory for entities defending against TCPA actions, as it rejects the expansive interpretation of the statutory ATDS definition previously endorsed in some Circuits.

The TCPA, in part, prohibits making calls or sending text messages to mobile telephones using an ATDS without the prior express consent of the recipient or an exemption.  What type of equipment qualifies as an ATDS was hotly disputed in TCPA litigation.  The statute 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.”  Lower courts had spilt on the provision’s meaning.  Some Circuit Courts (D.C., Third, Seventh and Eleventh) followed the statutory definition, holding that that equipment qualifies as an ATDS only if it uses a random or sequential number generator to produce or store telephone numbers to be called, and then dial.  Other Circuit Courts (Second, Sixth and Ninth) adopted a broader definition and held that equipment qualifies as an ATDS if it automatically dials numbers from a stored list.

In a decision largely based on grammatical and statutory interpretation, the Supreme Court resolved the question of whether a device constitutes an ATDS if it can “store” and dial telephone numbers, even if it does not “us[e] a random or sequential number generator.”  It does not.  The Court found that the narrower interpretation better matched the scope of the TCPA, and the problems caused by autodialers that Congress sought to address.  Duguid’s interpretation, on the other hand, would encompass any equipment that stores and dials telephone numbers, including virtually all modern cell phones.

While the Supreme Court’s decision changes the TCPA-compliance landscape in many respects, it does not, as some have suggested in the media, end the TCPA and open the door for companies to engage in unlimited texting and automated calling without fear of TCPA liability.  The Court’s ruling does not impact the TCPA’s restrictions on placing calls to residential and wireless numbers using a prerecorded or artificial voice.  Nor does it impact the TCPA’s Do Not Call rules.  Companies should still be cautious about what equipment they use to contact customers and comply with other provisions of the TCPA.

Brooks Brown and Kyle Tayman, who lead the Goodwin TCPA team and represent numerous clients in TCPA litigation and compliance matters, have closely monitored the Duguid case and recently hosted a webinar about the Supreme Court’s decision and its potential implications with respect to future lawsuits and regulation concerning text messages and automated calls.  Clients are strongly encouraged to review TCPA compliance practices in light of the Supreme Court’s decision, and to ensure policies and procedures unaffected by the decision remain compliant with the TCPA and its ever-evolving regulations.  In addition, companies also must continue to comply with other state and federal restricting or limiting certain calls and text messages.  Given that unwanted calls and text messages is a bipartisan issue, Congress or state legislatures may pass new laws to cover new technologies or codify the broader interpretation of an ATDS that the Supreme Court rejected.

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