July 24, 2021

Volume XI, Number 205

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It's No Joke: In 1 April 2021 Decision, Supreme Court Significantly Limits Definition of "ATDS" Under the TCPA

On 1 April 2021, the United States Supreme Court answered the question of what type of dialing equipment qualifies as an “automatic telephone dialing system” (ATDS) under the Telephone Consumer Protection Act (TCPA), finally putting to rest years of litigation stemming from differing interpretations of the term. In Facebook, Inc. v. Duguid, the Court held that “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.”1 Thus, technology that merely places calls from a preexisting database of customer numbers does not constitute an ATDS. The Court’s decision is a major victory for business entities that rely on dialer technology to reach existing customers regarding their accounts.

The Court had granted certiorari to resolve the split among the federal circuit courts of appeals that had construed the meaning of the term ATDS. In Duguid, the 9th U.S. Circuit Court of Appeals adhered to a broad definition of ATDS, but other recent courts of appeals decisions had construed the term narrowly. In its decision, the Court rejected the 9th Circuit’s reading of the TCPA and adopted a narrow interpretation.

The Court began its analysis by examining the plain language of the TCPA.2 The statute states that an ATDS is “equipment which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.”3 The Court noted 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.”4 Applying this canon of interpretation requires “qualifying both antecedent verbs, ‘store’ and ‘produce,’ with the phrase ‘using a random or sequential number generator.’”5 Thus, the Court held that a dialer system cannot constitute an ATDS where it lacks the capacity either to (1) store telephone numbers to be called using a random or sequential number generator or (2) produce telephone numbers to be called using a random or sequential number generator.6 This holding is in accord with the rulings of the 3rd, 7th, and 11th U.S. Circuit Courts of Appeals.7 The holding rejected the 2nd, 6th, and 9th U.S. Circuit Courts of Appeals’ broad view that to constitute an ATDS, a dialing system need only have the capacity to “store numbers to be called” and “to dial such numbers automatically.”8

In rejecting a broad interpretation of ATDS, the Court noted that “Duguid’s interpretation of an autodialer would capture virtually all modern cell phones, which have the capacity to ‘store … telephone numbers to be called’ and ‘dial such numbers.’”9 “The TCPA’s liability provisions, then, could affect ordinary cell phone owners in the course of commonplace usage, such as speed dialing or sending automated text message responses.”10 That would “take a chainsaw to these nuanced problems when Congress meant to use a scalpel.”11 The Court concluded by discounting any of Duguid’s other arguments. In particular, the Court did not give credence to the notion that Congress meant to use the TCPA to “restrict nuisance calls” generally.12 The Court stated that “Duguid’s quarrel is with Congress, which did not define an autodialer as malleably as he would have liked. … This Court must interpret what Congress wrote, which is that ‘using a random or sequential number generator’ modifies both ‘store’ and ‘produce.’” Id.

The Court’s ruling will likely benefit business entities that rely on using dialing technologies to reach their customers using a database of numbers provided by the customers. At the same time, the ATDS provision, and other provisions in the TCPA that restrict the ability to place certain types of calls in certain circumstances, remain in effect and warrant careful analysis for compliance purposes.

1 Facebook, Inc. v. Duguid, No. 19–511 (2021).

Duguid, slip op. at 5.

3 47 U.S.C. § 227(a)(1).

Duguid, slip op. at 5.

Id.

Id. at 7.

See Gadelhak v. AT&T Servs., Inc., 950 F.3d 458, 464, 469 (7th Cir. 2020) (Coney Barrett, J.); Glasser v. Hilton Grand Vacations Co., 948 F.3d 1301, 1310 (11th Cir. 2020); Dominguez v. Yahoo, Inc., 894 F.3d 116, 119-21 (3d Cir. 2018).

See Allan v. Pa. Higher Educ. Assistance Agency, 968 F.3d 567, 574 (6th Cir. 2020); Duran v. La Boom Disco, Inc., 955 F.3d 279, 283-84 (2d Cir. 2020); Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1052-53 (9th Cir. 2018).

Duguid, slip op. at 8.

10 Id.

11 Id.

12 Id. at 12.

Copyright 2021 K & L GatesNational Law Review, Volume XI, Number 92
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Andrew Glass, KL Gates Law Firm, Financial Litigation Attorney
Partner

Mr. Glass is a partner resident in K&L Gates’ Boston office, and a member of the firm's Consumer Financial Services Litigation and Class Action Litigation Defense groups, with extensive experience in complex commercial litigation. Mr. Glass's practice focuses on the defense of federal and state class action litigation brought against consumer financial services, mortgage lending, and consumer credit institutions. These class actions concern challenges under federal statutes, including the Fair Housing Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Real...

617-261-3107
Gregory Blace, KL Gates Law Firm, Class Action Litigation Attorney
Partner

Mr. Blase is a partner in the Boston office of K&L Gates where he is a member of the firm's Class Action Litigation Defense group. Mr. Blase has experience in complex commercial litigation, and has represented mortgage lenders, servicers and other financial institutions in class action and individual suits under the Telephone Consumer Protection Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, Truth in Lending Act, Fair Housing Act, Equal Credit Opportunity Act, Real Estate Settlement Procedures Act, and various state unfair and deceptive practices...

617-951-9059
Pamela Garvie, KL Gates Law Firm, Public Policy Attorney
Partner

Ms. Garvie represents transportation, media, retail, and other business clients before the Congress and federal agencies on issues dealing with economic, safety, and security regulation, advertising and programming restrictions, and taxes and trade.  She also provides customized intelligence and analysis to institutional investors and hedge funds on a broad range of federal legislative and regulatory activities that impact their investments.  Among other matters, she led the firm’s successful efforts to create federal funding programs in rail safety and...

202-661-3817
Joseph C. Wylie II, KL Gates Law Firm, Commercial Litigation Attorney
Partner

Mr. Wylie’s practice focuses on complex class-action defense and complex commercial litigation with a particular emphasis on consumer and securities matters. He represents clients in defending against a wide range of individual and class-action consumer claims, including consumer fraud actions and claims brought under the Telephone Consumer Protection Act. He also represents investment advisers and mutual fund families in connection with government investigations and investor claims, including claims made under the Investment Company Act. Mr. Wylie also represents...

312-807-4439
Molly K. McGinley, KLGates Law Firm, Complex Litigation Attorney
Partner

Molly K. McGinley concentrates her practice at K&L Gates in commercial litigation with a focus on complex litigation, including investment company litigation, securities litigation and consumer class action defense. Ms. McGinley is a member of the firm’s Securities and Transactional Litigation Practice and Class Action Litigation Defense Groups. Ms. McGinley has litigated in numerous state and federal jurisdictions, representing a broad range of clients, including small companies, Fortune 500 Companies and investment advisers. She has handled various commercial...

312-807-4419
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