In a landmark decision released this morning, the U.S. Supreme Court finally answered the question that has been at the heart of Telephone Consumer Protection Act (TCPA) litigation for decades – what constitutes an autodialer? – and the decision is a huge win for TCPA defendants. In Facebook v. Duguid, the Supreme Court unanimously held that, in order to qualify as an autodialer under the TCPA, a dialer must not only dial stored numbers using a random or sequential number generator, it must also have generated those numbers in the first place by using the same “random or sequential number generator.”

The TCPA imposes restrictions on calls and texts placed with an automatic telephone dialing system, commonly known as an “autodialer.” The statute defines “autodialer” 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.” The simple issue of whether a “random or sequential number generator” had to be used to both store and produce created a circuit split from which two very different interpretations of “autodialer” emerged.

The first interpretation, adopted by the Third, Seventh, and Eleventh Circuits, required that the autodialer equipment actually randomly or sequentially generate the telephone numbers it calls.  The second and much broader interpretation, adopted by the Second Circuit and the Ninth Circuit, interpreted “autodialer” to be any equipment capable of storing numbers and subsequently dialing from those stored numbers at random, even if those stored numbers were not originally generated using a “random or sequential number generator.” This interpretation led to an onslaught of litigation against defendants who maintain lists of stored numbers that were either provided by a customer or obtained through some other non-random means solely on the basis that the stored numbers were stored and dialed at random. This was the issue in Duguid.

Mr. Duguid alleged that he received multiple text messages from Facebook notifying him that someone had attempted to log in to his Facebook despite the fact that he did not have, and had never had, a Facebook account. Mr. Duguid sued Facebook and alleged that Facebook violated the TCPA because it used equipment that automatically sends text messages to stored phone numbers when unrecognized login attempts are made on the account associated with that number.  Facebook argued that its equipment did not qualify as an autodialer because it sends text messages to specific phone numbers associated with individual Facebook accounts and does not randomly generate those phone numbers. The Ninth Circuit sided with Mr. Duguid, but the Supreme Court reversed.

For the Supreme Court, the decision came down to statutory construction and simple grammar.  Because the phrase “using a random or sequential number generator” immediately followed both “store” and “produce” in the TCPA, that phrase was equally applicable to both under the “series-qualifier canon.” To demonstrate the same grammatical principles in a different context, the Supreme Court asked the parties to imagine a teacher advising students that they “must not complete or check any homework to be turned in for a grade, using online homework-help websites.” To interpret that instruction to mean that students were permitted to complete homework using online homework-help websites so long as they did not check their homework using the same would be “strange.” The same is true for the TCPA’s phrase defining an autodialer as equipment used “to store or produce telephone numbers to be called, using a random or sequential number generator.”

The Supreme Court held that its decision was further supported by statutory context. The TCPA specifically prohibits the use of an autodialer to dial emergency numbers or numbers that cause a called party to be charged for the call, both of which contemplate dialing equipment that produces random numbers for dialing. The Supreme Court noted that the broad definition of autodialer would include almost all modern cell phones because they conceivably have the potential ability to store and call telephone numbers.

The unanimous nature of the decision forecloses some of the variances that often evolve in subsequent lower court opinions that focus on concurring and dissenting opinions to interpret and shape the legacy of the underlying Supreme Court opinion. Despite the diversity of judicial philosophies present on the Supreme Court, only one justice filed a concurring opinion. Justice Alito’s concurrence focuses on “canons of interpretation” that the court uses in statutory interpretation and, while interesting, the concurrence will have little impact on the future application of the majority opinion.

Key Takeaways

The Supreme Court’s decision will have a massive impact on TCPA litigation and compliance for companies who call or text consumers. Practically speaking, less equipment qualifies as an autodialer under this ruling than had been included in this definition in the past. This means that a much smaller portion of previously covered communications will be regulated under TCPA. It is now a necessary feature of an autodialer to have the capability of generating random or sequential numbers. If your telephone system cannot do that, it is not an autodialer for purposes of the TCPA, even if the equipment has the capacity to store or dial numbers. Accordingly, many companies previously at risk of being held to have used an autodialer now find themselves using a device not covered by TCPA restrictions on autodialers.

Below, we highlight a few of the major impacts we expect to see:

• A National Standard – The prior split among the Courts of Appeal on the definition of an autodialer created a patchwork of standards dependent on the jurisdiction. This meant the difference between protracted litigation and an early dismissal. In class action cases, the cost to litigate and conduct discovery is often material to businesses, and this decision will create more certainty for businesses in this area. Under the prior patchwork of standards, as an additional layer of complexity, there was often no way to conclusively determine if the consumer being called was in a particular jurisdiction (because cell phones are inherently mobile), leading to additional compliance and litigation risk. Now, the Supreme Court’s decision creates a much-welcomed national standard for what constitutes an autodialer.
• Simpler Compliance – The Supreme Court’s decision should simplify compliance to some extent since the definition of an autodialer is no longer fluid from jurisdiction to jurisdiction. Companies should be sure to review the specifications of their telephone systems to see if they fit within the Supreme Court’s definition of an autodialer. Designing a telephone system that stays outside of the definition of an autodialer should be an easier task now. Also, some of the most difficult compliance challenges – determining and tracking consent and prior express written consent in some instances – can be reduced or eliminated if businesses can comfortably conclude that their equipment is not deemed to be an autodialer.
• Reduced Litigation – While TCPA litigation has been cooling in recent years, this decision should further reduce the number of new TCPA cases, especially against companies that make targeted calls to consumers or customers such as loan servicers and collection agencies. For companies that do not call consumers or customers using devices with the potential to generate random or sequential numbers, the reduction in litigation should be even more pronounced. Additionally, companies should review their pending slate of TCPA cases to determine if any are now candidates for dismissal on the pleadings or summary judgment based on the Supreme Court’s decision. It is also likely that there will be fewer class action cases stemming from bulk call campaigns, as companies will likely be able to design their equipment to avoid the capacity to randomly or sequentially generate telephone numbers in many industries.
• But . . . Don’t Forget Automated Voice! – While the Supreme Court’s decision has a massive impact on calls and texts made using an autodialer, the decision does not eliminate potential liability for “artificial or prerecorded voice” calls. Use of an artificial or prerecorded voice (without the consent of the called party) is an independent basis for liability under the TCPA, meaning whether you use an autodialer or not is not relevant when the basis for liability is artificial or prerecorded voice calls. So, even if your system does not qualify as an autodialer, you still may be subject to TCPA liability for calls made using artificial or prerecorded voice. Businesses using artificial or prerecorded voice calls should not let their guard down based on this opinion.

Stay tuned for further developments and analysis as this significant decision begins to play out in TCPA cases across the country.