December 10, 2020

What Is an Automatic Telephone Dialing System?

Aaron Kouhoupt, Jeremy Rzepka and Joseph Apatov

As any good regulatory compliance attorney would do when asked, “What is an automatic telephone dialing system,”, I turn to my litigation partners and say, “well, what is it?” The interplay between regulatory compliance and litigation is important and should be considered early in the development of new products and services. This may be especially true when we talk about the Telephone Consumer Protection Act (“TCPA”) where courts have taken the lead in interpreting key provisions of the law. Moral of the story? Make sure to include your litigation partners when interpreting the TCPA!

So what is an automatic telephone dialing system (“ATDS”) and could we possibly make a conversation about its definition relate to the political battle surrounding the recent appointment of Supreme Court Justice Amy Coney Barrett? Yes, we can! The Circuit Courts are split regarding what constitutes an ATDS, with the Second,[1] Sixth,[2] and Ninth[3] Circuits applying a broad interpretation, and the Third,[4] Seventh,[5] and Eleventh[6] Circuits applying a more narrow interpretation. The Supreme Court has granted Facebook’s petition for certiorari in Duguid to (hopefully) resolve this Circuit split, and the author of the Seventh Circuit’s opinion in Gadelhak is none other than President Trump’s recent Supreme Court appointee, Justice Barrett.

These Circuits are all parsing the same statutory language, which states that an ATDS is “equipment which has the capacity to – (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.”[7] Yet, the Circuits have reached dramatically different interpretations of this language.

Although they took different paths to get there, the Second, Sixth, and Ninth Circuits each concluded that a telephone system qualifies as an ATDS if it can store telephone numbers, regardless of whether it uses a random or sequential number generator to do so. These Circuits interpret the statutory language to only require a random or sequential number generator to be used if a telephone system is being defined as an ATDS based upon its ability to produce telephone numbers.

Meanwhile, the Third, Seventh, and Eleventh Circuits have found that storage is not enough. Instead, a telephone system does not qualify as an ATDS unless it either stores telephone numbers using a random or sequential number generator, or it produces telephone numbers using a random or sequential number generator. In addition, a dissenting Judge in the Sixth Circuit offered a third interpretation through which a telephone system qualifies as an ATDS if the telephone numbers it can store or produce were generated using a random or sequential number generator, regardless of whether the system used a random or sequential number generator for the storage or production functions.

So which interpretation is correct? Billions of dollars hang in the balance because the TCPA provides draconian penalties of $500 to $1,500 per call. Until the Supreme Court weighs in, we are left with uncertainty. Fortunately, the Supreme Court is set to rule in Duguid this term, with a decision expected by the Summer of 2021.

Until then, due to the conflicting decisions about what constitutes an ATDS, your compliance program should seek experienced regulatory and litigation attorneys who, based on experience, may have critical insight into the environment of the state(s) you may operate in. Further, if the definition of an ATDS is relevant to the outcome of your litigation, it may make sense to consider seeking a stay until the Supreme Court rules. Such requests have been met with mixed results by courts, with the primary driver being whether the answer to this question will be dispositive in the litigation. Therefore, if prerecorded messages or artificial voices were used and an ATDS is not necessary for liability, courts may be less receptive to the request than if the case involves only the use of a predictive dialer.

Please reach out to one of the authors for help or questions.

  1. Duran v. La Boom Disco, Inc., 955 F.3d 279 (2d Cir. 2020).
  2. Allan v. Pa. Higher Educ. Assistance Agency, 968 F.3d 567 (6th Cir. 2020).
  3. Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018); Duguid v Facebook Inc., 926 F.3d. 1146 (9th Cir. 2019).
  4. Dominguez v. Yahoo, Inc., 894 F.3d 116 (3rd Cir. 2018).
  5. Gadelhak v. AT&T Servs., Inc., 950 F.3d 458 (7th Cir. 2020), petition for cert. pending, No. 20-209 (filed Aug. 17, 2020).
  6. Glasser v. Hilton Grand Vacations Co., LLC, 948 F.3d 1301 (11th Cir. 2020).
  7. 47 U.S.C. § 227(a)(1).

Aaron Kouhoupt

McGlinchey Stafford PLLC

Aaron Kouhoupt is of counsel in the Cleveland office of McGlinchey Stafford PLLC.

Jeremy Rzepka

McGlinchey Stafford PLLC

Jeremy Rzepka is an Associate in the Cleveland office of McGlinchey Stafford PLLC.

Joseph Apatov

McGlinchey Stafford PLLC

Joseph Apatov is an Associate in the Fort Lauderdale office of McGlinchey Stafford PLLC.