In a 9-0 opinion, the U.S. Supreme Court today sided with Facebook and with what defendants have been arguing for years: that equipment that lacks capacity to generate random or sequential numbers to be called, and merely dials set lists of numbers, is not regulated autodialer equipment under the TCPA. This case resolved a split among circuit courts, rejecting the views of more liberal courts such as the Ninth Circuit.  The decision clarifies the definition of an “automatic telephone dialing system” or “ATDS” found in the statute, which is equipment that “has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator.”  As a result, most modern dialers—which call set lists and do not randomly or sequentially dial numbers—appear to no longer be regulated ATDS technology under the TCPA. Artificial and prerecorded voice calls remain subject to the statute.

Of course, businesses can expect Congress and the Federal Communications Commission to act quickly to reimpose liability for dialer calls, though there may be an opportunity to persuade regulators to modernize the statute, differentiating between legitimate businesses and telemarketers.

The question before the court was whether the “ATDS” definition encompasses equipment that can “store” and dial telephone numbers, even if the device does not “us[e] a random or sequential number generator.” The court held: “It does not.” Instead,  “[t]o qualify as an ‘automatic telephone dialing system,’ 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.”

This case turned on whether the clause “using a random or sequential number generator” in §227(a)(1)(A) modifies both of the two verbs that precede it (“store” and “produce”), as Facebook argued, or only the closest one (“produce”), as maintained by Duguid. The court held that “[t]he most natural reading of the text and other aspects of §227(a)(1)(A) confirm Facebook’s view.”

The Court further reasoned that “Congress found autodialer technology harmful because autodialers can dial emergency lines randomly or tie up all of the sequentially numbered phone lines at a single entity. Facebook’s interpretation of §227(a)(1)(A) better matches the scope of the TCPA to these specific concerns. Duguid’s interpretation, on the other hand, would encompass any equipment that stores and dials telephone numbers.”  And, “[i]t [makes] little sense […] to classify as autodialers all equipment with the capacity to store and dial telephone numbers, including virtually all modern cell phones.”  Finally, considering the human intervention test, the court “decline[d] to interpret the TCPA as requiring such a difficult line-drawing exercise around how much automation is too much.”

Key takeaways:

  • While equipment commonly used when the TCPA was enacted in 1991 generated and dialed numbers randomly, modern equipment generally does not; modern dialers instead store and dial specific telephone numbers—e.g. customers’ numbers stored in companies’ systems of record.
  • The court acknowledged that the TCPA was intended to protect consumer privacy, but noted that Congress ultimately chose to use a precise autodialer definition.
  • In response to plaintiff’s argument that a random or sequential number generator was technology that was likely to become outdated quickly, the Supreme Court found that it could not rewrite the TCPA to update it for modern technology.
  • The Court specifically noted that the statute continued to prohibit calls made using artificial voice or prerecorded messages, unless an exception applies, turning aside plaintiff’s warning that this decision would “unleash a torrent of robocalls.”
  • Although businesses can expect action by Congress or the FCC to bring dialer assisted live agent calls back within the scope of this statute, there may be an opportunity to better protect businesses making legitimate attempts to reach their customers using dialer technology.