As we discussed in a post last year the Supreme Court issued a landmark decision in the Spring of 2021, on the TCPA’s definition of an “automatic telephone dialing system.” In that decision, called Facebook v. Duguid, the Supreme Court determined that to be considered an ATDS under the TCPA, equipment must “in all cases, whether storing or producing numbers to be called . . . use a random or sequential number generator.” We and others predicted that this holding would cause the TCPA to be largely de-fanged as applied to many consumer-facing text messaging campaigns.

District courts seeking to apply Duguid’s holding in TCPA cases on their dockets, however, have since been wrestling with some key questions left open by the decision. This post examines those questions, how district courts have dealt with them, and what their decisions mean for businesses that use text messaging to communicate with consumers.

Use v. Capacity

One oft-litigated issue that the Court did not directly address in Duguid was the portion of the TCPA’s ATDS definition that focuses on equipment’s “capacity” to store or produce random or sequential numbers. Seizing on that opening, TCPA plaintiffs have continued to argue that the only thing necessary to find that a technology is an ATDS is whether it has the mere capacity to randomly or sequentially produce or store telephone numbers to be called—not whether it has the present capability to do so.

District courts evaluating these arguments have reached different conclusions.

Some courts, for example, have concluded that “capacity” should be understood narrowly. In Grome v. USAA Savings Bank, for example, the District of Nebraska adopted the view that a technology’s present capacity should be evaluated based on its “current functions, absent any modifications to the device’s hardware or software.” Similarly, in McEwen v. National Rifle Association, the District of Maine concluded that after Duguid, an ATDS claim must state that a random or sequential number generator was used to place calls, not merely that the technology used to place the calls had that capability.

In Jance v. Homrun Offer LLC, by contrast, the District of Arizona concluded that “the central issue is not whether the defendant used an ATDS when making the call, but whether the defendant’s equipment has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator.”

Footnote 7

The real conundrum after Duguid is the interpretation of footnote 7 of the Court’s opinion. In Duguid, the plaintiff argued that the term “using a random or sequential number generator” should not modify the verb “store” as this verb in § 227(a)(1) would be superfluous. In footnote 7 of its opinion, the Court explained that “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.” (emphasis added). But that explanation cited an amicus brief that described a hypothetical preproduced list as one randomly or sequentially generated itself. Footnote 7 has thus created some confusion as to whether and the extent to which calls made to numbers from a preproduced list that was not generated randomly or sequentially can ever involve an ATDS.

Some courts have declined the invitation to broadly interpret the definition of an ATDS based on footnote 7 of Duguid.  In Brickman v. Facebook, for example, the Northern District of California explained that the mere fact that a technology selects the order in which to place phone calls or text messages would not automatically implicate the use of an ATDS. According to this court, it is necessary that the telephone numbers called are themselves randomly or sequentially generated.

Some plaintiffs, as in Tehrani v. Joie de Vivre Hospitality LLC, have argued that there is an ATDS when the system generates a random or sequential index number that it assigns to telephone numbers in a preexisting list and the system stores the information to place calls later. In that case, the Northern District of California explained that it is not enough that a number is randomly or sequentially generated by a technology; the number generated must be a telephone number. Under that reasoning, the fact that a dialing technology assigns a random or sequentially generated index or ID number to establish the dialing order for each telephone number in a preproduced list would not cause that technology to become an ATDS.

Other courts, by contrast, such as the Western District of Texas in Libby v. National Republican Senatorial Committee have found that plaintiffs have a cause of action merely for pleading that the defendant placed calls or text messages “using an automatic telephone dialing system that ‘calls phone numbers from a stored list using a random or sequential number generator to select those phone numbers.’” Similarly, in Montanez v. Future Vision Brain Bank the District of Colorado found that the plaintiff had plausibly alleged the use of an ATDS by alleging that defendant used a platform that “automatically retrieved each telephone number from a list of numbers in a sequential order, generated each number in the sequential order listed, [combined the numbers with specific messages, and transmitted each message] in a sequential order.” These decisions suggest that a device that uses a random number generator to determine the order in which to pick phone numbers to be stored and called later from a preproduced list, regardless of the characteristics of this list, can implicate the use of an ATDS.

Pleading Standards

Courts have also reached different conclusions about the standard plaintiffs must meet in pleading a TCPA claim to avoid dismissal under Rule 12(b)(6). Some courts, such as the Northern District of California in Brickman require more than a plausible allegation that the defendant placed the calls using an ATDS. These courts consider whether the plaintiff gave his phone number to the defendant, or whether the defendant instead generated plaintiff’s phone number. Courts that favor defendants usually find that ATDS claims are suitable for resolution at the pleadings stage of the case.

Other courts, by contrast, have allowed cases to move forward if the plaintiff alleges that the calls or text messages were not targeted or individualized, but instead included generic messages. In Garcia v. Pro Custom Solar LLC the Eastern District of Texas, explained that “no plaintiff will have personal knowledge of the defendant’s telephone system at the pleadings stage.” For this reason, plaintiffs need only plead sufficient facts to proceed to discovery and uncover the facts about the technology defendant used. This court also considered that it did not need to decide whether the dialing system had the capacity to dial telephone numbers in a random or sequential fashion at the pleadings stage of the case.

Key Practical Takeaways

Given the continuing uncertainty surrounding what constitutes an ATDS under Duguid, companies using calls or text messages for consumer outreach should keep the following practical takeaways in mind to minimize the risk of falling victim to frivolous TCPA lawsuits:

• Think about the TCPA’s legislative purpose: to prevent autodialers from causing inconvenience to consumers or from tying up emergency or businesses’ sequentially numbered phone lines. Avoid placing calls that seize emergency lines or tie up sequential numbers.
• Place targeted or individualized calls or text messages instead of random or blasted messages. The more personal or specific a message is to the recipient, the safer it is to send it. Placing calls or text messages after a triggering event that is directly tied to the customer you are contacting is also a point in your favor.
• Avoid using technologies that randomly or sequentially generate any numbers in connection with the dialing process, especially telephone numbers.
• Avoid sending repetitive messages over a short time period.
• Dial numbers in the same order as you input them into your system. This would help defeat claims of using an ATDS to select the order in which to place calls or text messages.