Back in October of 2019, the U.S. Supreme Court was petitioned to review a Ninth Circuit ruling regarding the Telephone Consumer Privacy Act (“TCPA”) on the following issues: 1) whether the TCPA’s prohibition on calls made by an automatic telephone dialing system (“ATDS”) is an unconstitutional restriction of speech, and if so whether the proper remedy is to broaden the prohibition to abridge more speech, and 2) whether the definition of ATDS in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.” Now, the Court has finally accepted writ of certiorari, limited to review of Question 2, described above.

ATDS Circuit Split

When the TCPA was enacted in 1991, most American consumers were using landline phones, and Congress could not begin to contemplate the evolution of the mobile phone. The TCPA defines “Automatic Telephone Dialing System” (ATDS) 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.” 47 U.S.C § 227(a)(1). In 2015, the Federal Communications Commission (FCC) issued its 2015 Declaratory Ruling & Order (2015 Order), concerning clarifications on the TCPA for the mobile era, including the definition of ATDS and what devices qualify. The 2015 Order only complicated matters further, providing an expansive interpretation for what constitutes an ATDS, and sparking a surge of TCPA lawsuits in recent years.

Consequently, several FCC-regulated entities appealed the 2015 FCC Order to the D.C. Circuit Court of Appeals, in ACA International v. FCC, No. 15-1211, Doc. No. 1722606 (D.C. Cir. Mar. 16, 2018). The D.C. Court concluded the FCC’s opinion that all equipment that has the potential capacity for autodialing is subject to the TCPA, is too broad. Although the FCC did say in its 2015 Order “there must be more than a theoretical potential that the equipment could be modified to satisfy the ‘autodialer’ definition”, the Court held that this “ostensible limitation affords no ground for distinguishing between a smartphone and a Firefox browser”. The Court determined that the FCC’s interpretation of ATDS was “an unreasonably expansive interpretation of the statute”.

Since the decision in ACA Int’l, courts have weighed in on the D.C. Circuit Court ruling and the status of the 2015 Order, sparking a circuit split over what constitutes an ATDS. The Second and Ninth Circuit have both broadly interpreted the definition of an ATDS, while the Third, Seventh and Eleventh have taken a much narrower reading. For example, earlier this year the Eleventh and Seventh Circuit Courts reached similar conclusions, back-to-back, narrowly holding that the TCPA’s definition of Automatic Telephone Dialing System (ATDS) only includes equipment that is capable of storing or producing numbers using a “random or sequential” number generator, excluding most “smartphone age” dialers. By contrast, the Ninth Circuit has concluded that “an ATDS need not be able to use a random or sequential generator to store numbers[.]”  The court explained that “it suffices to merely have the capacity to ‘store numbers to be called’ and ‘to dial such numbers automatically.’”

Supreme Court Petition

The Supreme Court has accepted petition for review of the Ninth Circuit ruling on the issue of whether the definition of “ATDS” in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.” The Supreme Court’s decision should help resolve the circuit split and provide greater clarity and certainty for parties facing TCPA class action litigation. The Court is expected to hear oral arguments on this dispute at the start next term, in the fall, and issue a decision by the summer of 2021.

Take Away

2020 is shaping up to be an important year for the TCPA. We recently reported on a much-anticipated Supreme Court decision, Barr v. American Association of Political Consultants, in which the court weighed in on the constitutionality of the TCPA, holding that the government debt collection exception of the TCPA violated the First Amendment, and must be invalidated and severed from the remainder of the statute. While it appears that courts are generally leaning towards the narrowing of the TCPA in a myriad of aspects, organizations are still advised to err on the side of caution, during this period of uncertainty, when implementing and updating telemarketing and/or automatic dialing practices.