It’s about time. That was my reaction when I first saw the U.S. Supreme Court’s unanimous holding in Facebook v. Duguid on April 1.
For more than a decade, compliance-minded American companies have been asking courts and the Federal Communications Commission to provide a clear answer to an issue driving some of the nation’s most prolific and vexatious class action consumer protection litigation: What exactly is an “automatic telephone dialing system” (ATDS) under the Telephone Consumer Protection Act?
Importance of the Defining ATDS
This definition is important because it triggers certain consent requirements for calls to wireless numbers and residential landlines.
The plain language of the ATDS definition, as well as Congress’s intent in passing the TCPA in 1991, have been clear all along. But the plaintiffs bar and their allies—driven by the potential windfall of $500 per call statutory damages—time and again sought to rewrite the TCPA to cover as many possible potential defendants as they could.
While these lawsuits enriched plaintiffs’ lawyers and threatened many good U.S. call center jobs, they did very little for consumers. The suits don’t go after the actual bad actors—scammers and fraudsters—but target credible, household-name companies.
Consumers have received very little of the eye-popping settlement proceeds, and perhaps most importantly, they continue to receive millions of unlawful robocalls from bad actors.
Counsel for Duguid wanted the court to bless an interpretation that could have made typical consumer smartphones an ATDS, meaning every phone call that you make could have made you the next TCPA defendant. But the court was not fooled.
It took the justices only 10 pages to address the issue, and in doing so they gave meaning to all of Congress’s words, reaffirmed existing consumer protections against unwanted and illegal calls, and made clear that it is Congress, not the courts, that must write and amend the law.
The TCPA defines 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.”
Over the years, two competing ATDS interpretations have emerged based on conflicting readings of the statutory text. The interpretation generally favored by plaintiffs counsel is that an ATDS includes equipment that can either (1) store numbers, or (2) produce numbers using a random or sequential number generator.
Thus, equipment that can dial from stored lists, as is the case with most calling and dialing technologies, would qualify, and those communications would generally require prior express consent. Your smartphone contacts list might be sufficient.
A more reasonable interpretation, of course, is that an ATDS must have a random or sequential number generator that either stores or produces numbers. Any equipment that lacks a random or sequential number generator—as is the case with most marketplace technologies today—falls outside the autodialer definition.
In context, this interpretation makes perfect sense. When Congress passed the TCPA, it was focused on limiting telemarketers from placing scattershot calls to anyone who was willing to answer the phone. They dialed numbers randomly, or in numerical sequence, to avoid calling the same number twice.
Unfortunately, the plaintiffs bar over the years had used the “stored list” interpretation to pursue multimillion-dollar claims against health-care providers sending appointment reminders, airlines calling about flight changes, banks providing identity theft notifications, and more.
These companies and many others, of course, have no need to dial random or sequential numbers. The competing interpretations deepened into a circuit split, with at least two courts of appeal taking each side.
In a concise decision, the court unanimously concluded that an ATDS must have the capacity to either (1) store a telephone number using a random or sequential generator; or (2) produce a telephone number using a random or sequential number generator. In adopting this interpretation, the court was mindful not to interpret the TCPA in a way that could make every smartphone user potentially liable for unconsented calls and texts.
By contrast, the court did not assign much relevance to the plaintiff bar’s argument that requiring a random or sequential number generator would unleash a “torrent” of unwanted calls and texts. It noted that numerous other federal and state consumer protection laws remain unaffected by the decision.
The court did not have occasion to define “capacity,” or to confirm whether the TCPA applies to text messages; the parties in the Facebook case conceded for purposes of the case that the TCPA applies to texts.
Despite immediate outcry from consumer advocates and a few partisan statements from members of Congress promising new legislation, the sky is not falling; Facebook leaves in place all the meaningful consumer protections against robocalls.
It does not change the legal framework for prerecorded calls, as the TCPA still generally prohibits these calls unless you have consent. The federal and state do-not-call rules also remain in intact. The ruling also does not affect other state robocall laws, and it has no impact on the TRACED Act, the bipartisan legislation enacted to stem the tide of illegal robocalls.
In practical terms, the Facebook ruling means that most equipment used in the commercial marketplace is not an autodialer because it cannot store numbers using a random or sequential number generator, nor can it produce numbers using a random or sequential number generator. Instead, the equipment dials from fixed lists of specific numbers that are stored in databases.
Companies may want to conduct a fresh compliance assessment of their calling and texting practices to confirm how best to update their approach considering this decision and other evolving consumer protection requirements.
Companies that seek to comply in good faith with applicable laws can take comfort that this decision is a helpful shield against abusive TCPA class-action litigation.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Mark W. Brennan is the global lead innovation partner for Hogan Lovells and the head of the firm’s Technology & Telecoms Industry Sector group. He represents a wide range of clients on a variety of matters including privacy, communications, and artificial intelligence.