In 1992, Congress attempted to address consumer complaints regarding unwanted robocalls by enacting the Telephone Consumer Protection Act (TCPA).1 The TCPA sweeps broadly with a number of provisions designed to reduce robocalls and to protect consumer privacy. For example, the TCPA gives the Federal Communications Commission (FCC) the authority to establish “do not call” lists2 and prohibits prerecorded telemarketing calls from being sent to a residential telephone number without the call recipient’s consent.3
June 30, 2021 Feature
Automated Calling after Facebook Inc. v. Duguid
By Kyle J. Steinmetz
Many of these protections are targeted primarily at residential landlines, the primary telecommunications technology used by consumers at the time. But Congress also acted to stop certain calls placed by dialing machines to the nascent technology of cell phones by making it
unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States . . . to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service for which the called party is charged for the call.4
Notably, while many other provisions of the TCPA apply only to marketing or telemarketing calls, this provision applies to all types of calls, including customer service calls, collection calls, survey calls, and calls by political campaigns to conduct polls or to get out the vote. Moreover, the statute effectively imposes strict liability for calls that violate this provision (even if the calls were made in good faith) and imposes a minimum of $500 in statutory damages per violation (i.e., per call), with the potential for trebling the damages in the event of a “knowing or willful” violation.5
As more and more people have eschewed landlines for cellular telephones, a larger volume of calls are delivered to cellular telephone lines, and, not surprisingly, what was at one time a secondary provision of the law has become a major source of litigation. The increased use of cell phones, along with the high statutory damages per call, has led to an explosion of lawsuits under 47 U.S.C. § 227(b)(1)(A)(iii), including class action suits that, due to the high level of statutory damages, threaten tens of millions of dollars and more in potential liability.
ATDS: Statutory Definition
Of course, the TCPA does not apply to all calls made to cellular telephone numbers. Instead, only calls made without the recipient’s consent that use a prerecorded voice or an “automatic telephone dialing system” (ATDS) are banned.6 The law’s prohibition on prerecorded calls is straightforward enough, but it has been less clear what constitutes an ATDS under the statute, thus generating significant uncertainty regarding how companies can ensure they comply with the law—short of making every call by hand.
The statutory definition of ATDS limits the term to “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.”7 But that definition is far from a model of clarity and is particularly unclear regarding whether the phrase “using a random or sequential number generator” applies to both of the verbs in part (A) of the definition (i.e., “to store” and “to produce”) or only applies to the second verb, making equipment that stores numbers and then dials them (like most modern devices, even potentially including “smart” mobile phones, used to dial a list of customers) an ATDS even if the system involves no random or sequential number generation.
The Removal of FCC Guidance Leads to A Circuit Split
For a number of years, most court decisions regarding what constitutes an ATDS were heavily influenced by FCC interpretations. In a series of orders, the FCC expanded the scope of what constituted an ATDS to generally cover any automated equipment that dialed numbers without “human intervention.”8 This included such equipment as predictive dialers, which dial from lists of numbers in an automated fashion without using random or sequential number generation.9 These FCC orders were generally given deference under the Hobbs Act10 and/or Chevron11 and thus presented a high bar for defendants to overcome to defeat claims.
However, a sea change in the law occurred in 2018. In ACA International v. FCC, the U.S. Court of Appeals for the D.C. Circuit “set aside . . . the [FCC’s] effort to clarify the types of calling equipment that fall within the TCPA’s restrictions.”12 In doing so, the D.C. Circuit found “[t]he impermissibility of the Commission’s interpretation of the term ‘capacity’ in the autodialer definition is compounded by inadequacies in the agency’s explanation of the requisites features [of an autodialer],” thus rendering the FCC orders unreasonable, arbitrary, and capricious.13
After ACA International, courts were left to interpret the definition of ATDS on a clean slate. The circuits quickly split, with three circuits applying a narrow definition that required plaintiffs to show that the equipment used to call them had the capacity to use a random or sequential number generator to set forth a TCPA claim.14 Three other circuits, however, adopted a broader interpretation that found equipment could be an ATDS if it had the capacity either to store numbers from a list and then call the numbers or to generate numbers randomly or sequentially.15
The Supreme Court granted certiorari in Facebook Inc. v. Duguid to resolve this split.16
The Decision in Facebook
In Facebook, the Court unanimously adopted the narrower definition of ATDS. In doing so, the Court began its analysis with the text and found that “[u]nder conventional rules of grammar, ‘when 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.’”17 It then applied this “series-qualifier” canon18 to conclude that in the statutory definition of ATDS, the phrase “using a random or sequential number generator” applies to both verbs—to store and to produce.19 The Court further noted that this construction of the statute also followed “the commands of its punctuation.”20 The phrase “using a random or sequential number generator” in the definition is separated from the rest of the sentence by a comma, which the Court found “further indicated that Congress intended” the phrase to apply to both preceding verbs.21
The Court also concluded that the broader construction of the statute that Duguid urged it to follow would lead to dramatic overbreadth in the statute. In particular, the Court noted that ordinary smartphones have the capacity to store numbers in a list and dial them automatically, through the use of tools like speed dialing or automated responses to text messages, which would thus subject them to TCPA liability under Duguid’s proposed interpretation.22 And the Court declined to solve this problem by reading a “human intervention” test (such as the one contained in the old FCC orders) into the statute, on the grounds that such a test would impose a “difficult line-drawing exercise” on courts that is not based in the statutory language.23
The Court also considered and rejected each of Duguid’s counterarguments. It first found that the Court’s interpretation did not read the term store out of the statute because the types of equipment in use at the time Congress passed the TCPA included machines that would generate numbers randomly or sequentially and then store them for dialing later.24 The Court further found that its definition aligned with Congress’s legislative intent because Congress enacted this provision of the TCPA to resolve unique problems posed by equipment using random or sequential number generation.25 Finally, the Court rejected Duguid’s argument that the decision would unleash a torrent of robocalls, pointing to the other provisions of the TCPA that limited prerecorded voice calls and finding that revising the definition to address new technologies was a question that should be presented to Congress, not the courts.26
TCPA Litigation: What’s Next?
While the Facebook decision creates a potent tool to avoid TCPA litigation for companies that use automated equipment to text or call preexisting lists of their customers, it should not be viewed as a free pass. First, the TCPA continues to include other strong prohibitions on automated calling, including a ban on making prerecorded calls to cell phones without consent and a ban on calling numbers on the “do not call” list.27 Litigation will no doubt continue under these provisions should companies not adopt rigid compliance policies. Moreover, the FCC remains active via enforcement actions under these provisions, including recently imposing a record $225 million fine for spoofed robocalls.28
Second, the Supreme Court suggested in a footnote that even under the narrower definition, equipment that used a random or sequential number generator to select and store which numbers to dial from a list may still be subject to TCPA liability.29 Surveys or marketing messages that rely on a random sample and call cellular phones may thus still generate TCPA exposure, and companies should carefully consider the capabilities of their equipment before engaging in any calling. Moreover, plaintiffs are likely to latch onto this qualification to try to avoid motions to dismiss using the rationale of the Facebook decision, thus raising the costs of defense for claims that would otherwise be barred by Facebook.
Finally, as the Court noted, Congress may revisit the scope of the autodialing prohibition as applied to new calling technologies.30 Given consumer distaste for many types of robocalls, companies may want to consider the risk of new legislation limiting their ability to call or text lists of contact numbers before engaging in an expanded use of automated dialing.
Endnotes
1. 47 U.S.C. § 227 et seq.
2. Id. § 277(c)(1)–(3); 47 C.F.R. 64.1200(d).
3. 47 U.S.C. § 227(b)(1)(B).
4. Id. § 227(b)(1)(A)(iii).
5. Id. § 227(b)(3).
6. Id. § 227(b)(1)(A)(iii).
7. Id. § 227(a)(1).
8. See In re Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, 18 F.C.C.R. 14014, 2003 WL 21517853 (1993) [hereinafter 2003 FCC Order]; In re Rules and Regulations Implementing the Tel. Consumer Protection Act of 1991, 23 F.C.C.R. 559, 2003 WL 21517853 (2008); In re Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, 27 F.C.C.R. 15391, 2012 WL 5986338 (2012); In re Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, 30 F.C.C.R. 7961, 2015 WL 4387780 (2015).
9. 2003 FCC Order, 2003 WL 21517853, at 14093.
10. 28 U.S.C. § 2342(1).
11. Chevron v. Nat’l Res. Def. Counsel, Inc., 467 U.S. 837 (1984).
12. ACA Int’l v. FCC, 885 F.3d 687, 687 (D.C. Cir. 2018).
13. Id. at 701.
14. Gadelhak v. AT&T Servs., Inc., 950 F.3d 458 (7th Cir. 2020); Glasser v. Hilton Grand Vacations Co., 948 F.3d 1301 (11th Cir. 2020); Dominguez v. Yahoo Inc.!, 894 F.3d 116, 199 (3d Cir. 2018).
15. Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1051 (9th Cir. 2018); Duran v. La Boom Disco, Inc., 955 F.3d 279, 289–90 (2d Cir. 2020); Allan v. Pa. Educ. Assistance Agency, 968 F.3d 567 (6th Cir. 2020).
16. Facebook Inc. v. Duguid, 141 S. Ct. 1163 (2021), https://www.supremecourt.gov/opinions/20pdf/19-511_p86b.pdf.
17. Id. at 1169.
18. Justice Alito separately concurred to stress that the “series-qualifier canon” was a “useful tool” for interpreting text and not an “inflexible rule.” Justice Alito thus stressed that lower court judges should continue to give reasonable, commonsense readings to statutes rather than relying purely on canons. Id. at 1173–75 (Alito, J., concurring).
19. Id. at 1169.
20. Id. at 1170.
21. Id.
22. Id. at 1171.
23. Id. at 1171 n.6.
24. Id. at 1171–72.
25. Id. at 1172.
26. Id. at 1172–73.
27. See discussion supra.
28. See In re John C. Spiller et al., Case No. 21-35 (Mar. 2021) (forfeiture order) (File No. EB-TCD-18-0027781), https://docs.fcc.gov/public/attachments/FCC-21-35A1.pdf.
29. Facebook, 141 S. Ct. at 1172 n.7.
30. Id. at 1173.