SCOTUS Clarifies ‘Autodialer’ Definition for Purposes of TCPA-Compliant Calls and Texts

Farleigh Wada Witt examines the Supreme Court’s recent decision to narrow the definition of an automatic telephone dialing system under the TCPA.

4/6/2021

Editor’s Note: The following is a contributed piece from the legal experts at credit union law firm, Farleigh Wada Witt.

Ever since the Federal Communications Commission’s 2015 Declaratory Ruling (which was overturned in 2018) and subsequent Ninth Circuit holdings, credit unions have struggled to effectively communicate with members due to broad restrictions on the use of telephone equipment that could have autodialing capabilities.

On April 1, the U.S. Supreme Court issued its opinion in Facebook, Inc. v. Duguid, et. al, narrowing the definition of an automatic telephone dialing system (ATDS) under the Telephone Consumer Protection Act (TCPA).

The TCPA imposes consent requirements for calls and texts to mobile phones using an ATDS. The TCPA defines an ATDS as equipment with the capacity both to “store or produce telephone numbers to be called, using a random or sequential number generator,” and to dial those numbers.

The class action, brought in the Ninth Circuit, alleged that Facebook violated the TCPA by maintaining a database that stored phone numbers and programmed its equipment to send automated text messages to those numbers. In the case of Noah Duguid, Facebook sent text messages alerting him to login activity on a Facebook account linked to his telephone number, although Mr. Duguid never created a Facebook account.

Facebook argued that the TCPA does not apply because the technology it used to send the text messages did not use a “random or sequential number generator” and therefore was not an ATDS. The U.S. Court of Appeals for the Ninth Circuit disagreed with Facebook and held that the TCPA applies to notification systems like Facebook’s that merely have the capacity to automatically dial stored numbers.

The case went up on appeal to the Supreme Court to answer the question of whether the clause “using a random or sequential number generator” in the TCPA modifies both of the two verbs that precede it (“store” and “produce”), as Facebook contended, or only the closest one (“produce”), as Plaintiff contended. In other words, whether the TCPA encompasses any device that can store and dial telephone numbers, even if the device does not use a random or sequential number generator. The Supreme Court, in using conventional rules of grammar, agreed with Facebook and held that to qualify as an automatic telephone dialing system under the TCPA, a device must have the capacity either to store a telephone number using a random or sequential number generator, or to produce a telephone number using a random or sequential number generator.

In disagreeing with the Plaintiff’s arguments, the Court noted that “[Plaintiff’s] interpretation of an autodialer would capture virtually all modern cell phones, which have the capacity to “store … telephone numbers to be called” and “dial such numbers.” The TCPA’s liability provisions, then, could affect ordinary cell phone owners in the course of commonplace usage, such as speed dialing or sending automated text message responses.”

For credit unions, this means that telephone equipment that lacks the current capability to either store numbers using a random or sequential number generator, or to produce numbers using a random or sequential number generator, should not be treated as autodialing equipment. Credit unions may make marketing and transactional calls and texts to mobile numbers using equipment that is not autodialing equipment without undue fear of TCPA litigation.

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