The Duguid Decision
Background
Duguid arose when the plaintiff received automated text messages from social media giant Facebook on his cell phone. The texts were generated as part of a security feature intended to alert Facebook users of a potentially fraudulent login to their account; however, the plaintiff had never had a Facebook account and had never given Facebook his phone number. The plaintiff filed a putative class action alleging that Facebook violated the TCPA by “maintaining a database that stored phone numbers and programming its equipment to send automated text messages to those numbers.” Facebook moved to dismiss on the basis that the plaintiff failed to allege use of an ATDS because the plaintiff asserted that Facebook sent targeted text messages linked to specific accounts and failed to allege that Facebook sent texts to numbers that were randomly or sequentially generated.
The U.S. District Court for the Northern District of California sided with Facebook, and dismissed the case. On appeal, the Ninth Circuit reversed, holding that the plaintiff sufficiently alleged that an ATDS was used by alleging that Facebook automatically dialed stored numbers. The Ninth Circuit relied on its recently issued decision Marks v. Crunch San Diego, LLC, in which the court had held that the phrase “using a random or sequential number generator” in the statutory definition of ATDS “modifies only the verb ‘to produce,’ and not the preceding verb, ‘to store.’” The Marks decision meant that for a device to constitute an ATDS it was not necessary that it “use a random or sequential generator to store numbers,” but that an ATDS only needed to “have the capacity to ‘store numbers to be called’ and ‘to dial such numbers automatically.’” Therefore, the plaintiff ’s allegation that Facebook programs its equipment to automatically generate messages to a stored database of phone numbers sufficiently alleged the use of an ATDS.
Facebook then appealed to the U.S. Supreme Court, asking the Court to determine “[w]hether the definition of ATDS in the TCPA encompasses any device that can ‘store’ and ‘automatically dial’ telephone numbers, even if the device does not ‘us[e] a random or sequential number generator.’” The Court granted Facebook’s certiorari petition.
The Supreme Court’s Ruling
In a unanimous opinion authored by Justice Sotomayor, the Supreme Court reversed the Ninth Circuit, concluding that the clause “using a random or sequential number generator” modifies both of the verbs “store” and “produce” in the ATDS definition. Applying “conventional rules of grammar,” the Court reasoned that “‘[w]hen there is a straightforward, parallel construction that involves all nouns or verbs in a series,’ a modifier at the end of the list ‘normally applies to the entire series.’” The Court explained that this common interpretive rule, known as the series qualifier canon, “generally reflects the most natural reading of a sentence.”
The Court explained that the phrase “store or produce telephone numbers to be called” was an “integrated clause” immediately followed by the modifying phrase “using a random or sequential number generator,” further indicating that the modifier applied to both “store” and “produce.” The Court also noted that the placement of the comma after the phrase “store or produce telephone numbers to be called” served as additional “evidence that the qualifier is supposed to apply to all of the antecedents instead of only to the immediately preceding one.” Finally, the Court rejected Duguid’s reliance on the “rule of the last antecedent,” pointing out that that rule does not apply where the modifying phrase appears after an integrated clause.
Aside from grammatical rules, the Supreme Court also relied on the statutory context and what it viewed as the impractical consequences of the Ninth Circuit’s interpretation. The Court explained that the TCPA’s prohibitions “target a unique type of telemarketing equipment that risks dialing emergency lines randomly or tying up all the sequentially numbered lines at a single entity.” The Court stated that “[e]xpanding the definition of an autodialer 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.” The Court also warned that such an interpretation would extend liability to ordinary cell phone users when operating speed dial.
The Court then addressed Duguid’s argument that the “sense” of the text required the phrase “using a random or sequential number generator” to modify only “store.” Duguid contended that “at the time of the TCPA’s enactment, the technical meaning of a ‘random number generator’ invoked ways of producing numbers, not means of storing them.” While acknowledging that it seemed “odd to say that a piece of equipment ‘stores’ numbers using a random number ‘generator,’” the Court justified its interpretation by noting that, at the time the TCPA was enacted, devices existed that “used a random number generator to store numbers to be called later (as opposed to using a number generator for immediate dialing).”
Finally, the Court disagreed with Duguid’s contention that a broad definition of autodialer was necessary to fulfill Congress’ privacy-protection goals. The Court emphasized that the TCPA was enacted specifically to combat random or sequential number generator technology, which Congress found to wreak havoc on business, emergency, and cellular lines, and it therefore made sense that “the autodialer definition Congress employed includes only devices that use such technology.” The Court also disagreed with Duguid’s concern that a narrow autodialer definition “will ‘unleash’ a ‘torrent of robocalls,’” noting that the TCPA still prohibits calls using artificial or prerecorded voices, regardless of the dialer used. And, “[i]n any event,” the Court stated, “Duguid’s quarrel” was with Congress, “which did not define autodialer as malleably as he would have liked.” The Court thus concluded that “a necessary feature of an autodialer under § 227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called.”
Footnote 7 and Predictive Dialers
In a now infamous annotation known as “footnote 7” (“Footnote 7”) the Duguid Court sought to further explain how a device could store numbers using a random or sequential number generator, taking into account that generating a number is not usually associated with the storage of a number. The Court rejected Duguid’s position that the Court’s interpretation actually focused on the word produce, and that it rendered the word store superfluous. The Court explained as follows:
“It is no superfluity,” however, for Congress to include both functions in the autodialer definition so as to clarify the domain of prohibited devices. BFP v. Resolution Trust Corporation, 511 U.S. 531, 544, n.7, 114 S. Ct. 1757, 128 L. Ed.2d 556 (1994). For instance, an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list. It would then store those numbers to be dialed at a later time. See Brief for Professional Association for Customer Engagement et al. as Amici Curiae 19.
Given the Court’s suggestion that an autodialer could be something that calls numbers from a preproduced list, it could be argued that this footnote supports labeling predictive dialers as ATDSs, potentially extending TCPA liability to the many entities that use such dialers to call lists of customers and potential customers. However, a close reading of the footnote in the context of the amicus brief it cites shows that the Court likely did not intend to include predictive dialers within the scope of ATDSs by referring to a device that calls numbers from a preproduced list.
The footnote cites the amici brief of the Professional Association for Customer Engagement (“PACE”), in which PACE described devices that existed at the time of the TCPA’s enactment that both stored and produced numbers using random or sequential number generators. PACE explained that any assumption that the word “storage” in the statutory definition of ATDS was superfluous or that it logically could not be modified by “using a random or sequential number generator” was “inconsistent with basic electrical/computer engineering technology, as well as certain examples of dialer technology of the late 1980’s.” As an example of a device that used random or sequential number generators to both store and produce numbers, PACE described a patent that was filed in 1986 for a device that used random and sequential number generators to create a more efficient calling tool for telemarketers. The device would first generate random numbers and dial them, but at some point the device would switch to dialing any remaining numbers sequentially. PACE explained that the device used random and sequential number generation to both store and produce numbers to be called:
[A] dialer implementing this technology could use a sequential number generator for storing 10,000 telephone numbers in an array in RAM. The dialer then uses a random number generator to produce the numbers (i.e., select, retrieve, and provide the number from memory) for immediate or subsequent dialing. The random number generator may also be involved in further storing the number (albeit in a different manner, i.e., in a file) for dialing at a later time.
Because the patented device thus separated the storage and generation functions, Congress had to prohibit both storage and production of randomly generated numbers so that such a device could not escape TCPA liability. PACE thus concluded that the TCPA’s inclusion of devices that stored numbers using a random or sequential number generator was neither surplusage nor illogical.
Viewed in the context of the patent described by PACE, it seems unlikely that predictive dialers were the target of Footnote 7. Indeed, predictive dialers do not generate phone numbers, whether randomly or sequentially, and instead are used to dial a list of selected customers for some target audience. In other words, predictive dialers are really nothing more than an advanced type of speed dialer. The Supreme Court specifically rejected a broad ATDS definition that could include speed dialers over concern that it would extend liability to “ordinary cell phone owners in the course of commonplace usage.” Therefore, it is reasonable to conclude that the Supreme Court did not intend to classify predictive dialers as ATDSs through Footnote 7.
The Question of Capacity Versus Actual Use
The decision in Duguid will not end disputes regarding the definition of ATDS. In addition to the troublesome descriptions addressed above in section 227(a)(1)(A) and (B), it must be noted that a device’s status as an ATDS ultimately turns on its capacity. The statute says: “(1) The term “automatic telephone dialing system” means 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.” Duguid made clear that a device did not qualify as an autodialer merely by virtue of calling numbers from a stored list, and that it instead needed to either store or produce the numbers through a random or sequential number generator. However, the Court was not entirely clear about whether a device needed to actually use one of those “storing” or “producing” functions to qualify as an ATDS, or whether a device could qualify as an ATDS if it had the theoretical capacity to perform those functions.
In the beginning of the opinion, the Court stated 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.” However, the Court subsequently seemed to emphasize use over capacity, stating, “Congress’ definition of an autodialer requires that in all cases, whether storing or producing numbers to be called, the equipment in question must use a random or sequential number generator.”
The text of the TCPA, meanwhile, provides that a device qualifies as an ATDS if it has the “capacity” to store or produce telephone numbers to be called, using a random or sequential number generator. Prior to Duguid, courts had wrestled with how to define the scope of “capacity” for purposes of the ATDS definition. In 2015, the FCC indicated that a device’s “capacity” included its potential functionalities, such that a device could qualify as an ATDS if, through a software modification, it would have the ability to store or produce telephone numbers to be called. However, in ACA International v. FCC, the D.C. Circuit rejected this interpretation of an ATDS as arising from an “unreasonable, and impermissible, interpretation of the statute’s reach,” given that it would expand liability to cover ordinary smartphones.
Following ACA International, the Third Circuit opined that only a device’s present capacity was pertinent to qualification as an ATDS. The Second Circuit likewise endorsed a narrow interpretation of capacity that is limited to a device’s present functionalities, rather than “the hazily defined universe of things that have only a theoretical potential” to cause the problems Congress sought to remedy with the TCPA. No other circuit has waded into the debate on current versus latent capacity, leaving lower courts to debate what a device’s “capacity” means and what degree of modifications to a device would be necessary to take it outside the scope of an ATDS.
The meaning of capacity was not before the Duguid Court, as it focused on the phrase “store or produce” in the statutory definition of ATDS. However, the Court’s references to a device’s “use” of a random or sequential number generator, combined with its criticism of a broad definition of ATDS that could extend to smartphones, likely signals that the Court would also endorse a narrow interpretation of capacity that focuses on a device’s current capacity.
Initial Application of Duguid in Lower Courts
To date, at least some courts have rejected reliance on Footnote 7 of Duguid as a way to expand the definition of ATDS, while also emphasizing how a device was used in a particular case over its theoretical capacity to function as an ATDS. For instance, in Barry v. Ally Financial, Inc., the court dismissed a putative class action with prejudice for failure to allege that the defendant “used a random or sequential number generator to store or produce, and then dial, [the plaintiff ’s] number.” The plaintiff claimed that the defendant bank violated the TCPA by placing calls to relatives of its customers in an attempt to pressure the borrowers to make payments. The plaintiff conceded that the defendant did not use a random or sequential number generator to place the calls at issue, and that it instead called numbers from a stored list. However, the plaintiff contended that she was entitled to discovery to determine whether the defendant’s dialer had the capacity to store or produce numbers using a random or sequential number generator.
The court disagreed, noting that “[t]he TCPA prohibits the unlawful ‘use’ of an ATDS to ‘make any call.’” The court held that “Plaintiff ’s mere speculation . . . that Defendant’s dialing system might have the capacity to use randomly generated number systems to call other unknown persons, for some other unknown reason, without any factual basis in the pleadings to support that speculative possibility, fails to satisfy Twombly, which limits claimants to plausible claims, not possible ones.” Barry’s focus on use over capacity is in line with other post-Duguid courts, which have likewise emphasized a device’s actual use in evaluating qualification as an ATDS.
Barry also addressed Footnote 7, rejecting the plaintiff ’s argument that the defendant could be subject to TCPA liability under the footnote if it used a random number generator to determine the order it called phone numbers on a list. The court noted that “‘the preproduced list’ of phone numbers referenced in the footnote was itself created through a random or sequential number generator.” Because the plaintiff alleged that the phone numbers called by the defendant were called in connection with specific accounts, and were not randomly or sequentially generated numbers, Footnote 7 was inapplicable.
Other courts have reached similar interpretations of Footnote 7 in finding that the Supreme Court’s reference to calling numbers from a “preproduced list” refers to a list of phone numbers that “was itself created through a random or sequential number generator,” as opposed to a list of phone numbers associated with customers’ accounts that were “obtained in a non-random way.” However, others have refused to draw a hard line over ATDS allegations at the pleadings stage, instead viewing the question as more appropriate for summary judgment. While it remains to be seen how Duguid will continue to play out in the lower courts, the initial case law suggests that plaintiffs advocating for a broad ATDS definition likely face an uphill battle.
