SCOTUS Adopts Narrow Autodialer Definition, Fundamentally Alters TCPA Landscape

On Thursday, the U.S. Supreme Court issued its long-awaited decision in Facebook, Inc. v. Duguid, which significantly restricts the scope of the Telephone Consumer Protection Act (TCPA). The Act prohibits certain calls and texts if they are made using an "automatic telephone dialing system" (ATDS/autodialer).

The Court held unanimously that the TCPA's definition of an autodialer is limited to equipment that "use[s] a random or sequential number generator" to "produce" or to "store" called numbers—and does not include equipment that does not contain such a generator but that stores and automatically dials a pre-existing list of numbers. The Court's opinion overturns interpretations reached by courts including the Ninth, Second, and Sixth Circuits that broadly defined the scope of autodialers subject to the TCPA's restrictions to include equipment that automatically dialed stored numbers.

The Duguid decision effectively eliminates TCPA liability based on text messaging or purely live-operator calls to cell phones sent through modern texting or dialing systems lacking the capacity to store or produce numbers to be called using a random or sequential number generator. It therefore substantially scales back marketers' risk of TCPA liability and fundamentally alters the TCPA landscape moving forward.

Background

The TCPA prohibits making calls using an autodialer—without prior express consent or in an emergency—to certain telephone numbers, including most importantly cell phones. (The rule also prohibits autodialed calls to emergency telephone lines, patient or guest rooms in a hospital, and pagers—the same restriction applies to calls using an artificial or prerecorded voice with or without an autodialer.)

The Federal Communication Commission (FCC) has long interpreted the TCPA's ATDS definition broadly to include any dialing or messaging equipment that has the "capacity"—that is, the existing or potential future capability—to automatically dial stored lists of numbers regardless of how those numbers were generated. The agency reiterated that view in its 2015 TCPA Omnibus Declaratory Ruling and Order, but the broad autodialer definition in that order was struck down by the D.C. Circuit in its 2018 ACA International decision.

Thereafter, federal courts—now unconstrained by the FCC's prior ATDS guidance—took different approaches in construing what qualifies as an ATDS, resulting in a morass of autodialer decisions that varied from jurisdiction to jurisdiction.

By early 2020, a major circuit split regarding the TCPA's autodialer definition had developed, with at least three circuits interpreting the term narrowly to cover only equipment that had the capacity to randomly or sequentially generate telephone numbers to be called and dial them. Three other circuits, including the Ninth Circuit, interpreted the term broadly to include any equipment that had the capacity to store and automatically dial telephone numbers regardless of how the numbers were generated.

Given the split, and the sheer number of TCPA cases filed on a monthly basis, the Court agreed to address the question, granting a petition for certiorari that Facebook filed challenging the broad autodialer definition the Ninth Circuit adopted.

The Court's Decision

In a unanimous decision, the Court held that the autodialer definition, as drafted and adopted by Congress in 1991, applies narrowly: "in all cases, whether storing or producing numbers to be called, the equipment in question must use a random or sequential number generator." Because most if not all modern dialing systems lack the capacity to randomly or sequentially generate phone numbers to store or dial, the Court's decision should largely eliminate the need for companies to obtain prior express consent to send text messages or place purely live-operator calls to cell phone numbers—even for advertising or marketing purposes.

This result plays squarely into the argument that TCPA defendants have been advocating for years, i.e., that Congress never meant for the TCPA to cover any and all equipment that could automatically dial numbers but lacked the capacity to randomly or sequentially generate the numbers to be dialed. As the Court explained, "[e]xpanding the definition … to encompass any equipment that merely stores and dials telephone numbers would take a chainsaw to these nuanced problems when Congress meant to use a scalpel."

Importantly, though, while the Court's decision consistently and expressly notes that equipment will fall under the TCPA's autodialer definition only where a random or sequential number generator is "used," the Court failed to weigh in on what it means for a device to have the "capacity" to generate random or sequential numbers (as the statute specifies). Thus, the decision does not directly address the question whether equipment that merely has, but does not use, such capacity qualifies as an autodialer under the Court's new autodialer definition.

This issue is significant as to potential TCPA liability—the FCC has ruled, and some courts have agreed, that what matters is the theoretical capacity of the equipment to function as an autodialer, regardless of whether the autodialer function was actually in place or used to dial the calls at issue. Thus, the Duguid decision potentially leaves open the door for TCPA plaintiffs to argue that while a defendant did not use a random or sequential number generator at the time the call was made, the defendant's equipment is still an autodialer if it had the capacity to make random or sequentially generated calls based on the equipment's underlying operating system.

Effect Moving Forward

By decisively and unanimously agreeing on a narrow interpretation of the TCPA's autodialer term, the Court's decision has fundamentally changed the landscape for companies interested in transmitting informational and marketing messages to consumers, thus limiting the scope of potential TCPA liability. However, and importantly, this decision by no means does away with all telemarketing and robocalling regulations, including other TCPA provisions, FCC and FTC prohibitions on prerecorded or artificial voice calls and messages sent to telephone numbers without prior express consent of the called party, and prohibitions on calls to numbers on the National Do Not Call Registry.

Indeed, the Court cautioned that "[t]he statute separately prohibits calls using 'an artificial or prerecorded voice' to various types of phone lines, including home phones and cell phones, unless an exception applies. See 47 U. S. C. §§227(b)(1)(A) and (B). Our decision does not affect that prohibition." Thus companies still should not place artificial or prerecorded voice calls without the called parties' prior express consent—or prior express written consent for marketing calls.

Moreover, and as explained above, the Court's failure to address the "capacity" term could result in nuisance litigation spurred by creative plaintiffs' attorneys who will be interested in seeing if courts interpret the autodialer "capacity" term as independent from the Court's ruling—and thus fodder for potential TCPA liability moving forward.

Companies engaged in telephone and text message marketing must also be cognizant of the attention "robocalls" have received from Congress and state governments over the past couple of years, and that a narrow Court decision could bring about a reactive response from the nation's legislative bodies. To that end, some federal legislators have already decried the decision and threatened to amend the statute.

Consequently, we surely have not heard the last of the TCPA. It will be important for industry participants to take this opportunity to engage in responsible informational and marketing campaigns and show governing and administrative officials the social and pro-consumer benefits that a narrow autodialer definition can provide.