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U.S. Supreme Court to Address Circuit Split on Definition of ATDS Under The TCPA

On July 9, 2020, the U.S. Supreme Court granted certiorari in Facebook, Inc. v. Duguid, to resolve a split in authority on the meaning of Automatic Telephone Dialing System (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”).  In TCPA class actions, millions of dollars of potential liability often turn on this one issue, and different courts have rendered different results.  A Supreme Court decision should establish a uniform definition that will almost certainly alter TCPA litigation nationwide.

The TCPA prohibits calls or texts to cell phones using an ATDS without sufficient prior express consent.  ATDS is defined by the TCPA as having the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator.”  The interpretation of this definition has been hotly disputed for many years, resulting in a widening Circuit split.

The majority of Circuit Courts have defined ATDS narrowly, including the Third, Seventh, Eleventh and arguably the Sixth, holding that stored numbers be generated using a random or sequential number generator.  The only two other circuits to have addressed the issue – the Second and Ninth Circuits – have defined ATDS broadly to include automatic dialing from a pre-existing customer list.

In Facebook, Inc. v. Duguid, the plaintiff alleged that Facebook violated the TCPA by sending text messages using an ATDS.  926 F. 3d 1146 (9th Cir. 2019).  The plaintiff alleged that Facebook maintained a database of phone numbers and programmed its equipment to automatically generate text messages to those stored numbers.  The district court concluded that Facebook’s platform was not an ATDS because the system, as alleged, involved direct targeting, which is inconsistent with the random or sequential number generation required by the statutory text of the TCPA.

The Ninth Circuit reversed.  It reiterated its decision in Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018) 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.’”

On July 9, 2020, the Supreme Court granted certiorari with respect to the issue of whether the definition of ATDS encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not use a “random or sequential number generator.”

What does this mean? The Supreme Court’s decision, likely in the first half of 2021, should resolve the split in authority and provide a uniform definition of ATDS.  Many pending TCPA class actions will likely be stayed pending this decision.  If the Supreme Court adopts the majority view, liability in TCPA cases will be significantly limited.  While the Federal Communications Commission (“FCC”) has also been expected to re-define ATDS, for political and other reasons, it may wait for the U.S. Supreme Court to decide the issue first.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume X, Number 192

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About this Author

Lisa Yun, Trial Practice, Bankruptcy, Attorney, Sheppard Mullin, Law Firm,
Associate

Lisa Yun is an associate in the Business Trial Practice Group in the firm's San Diego office.

Ms. Yun practices in the area of general business litigation and bankruptcy law.  She has experience representing financial institutions in civil and bankruptcy proceedings.  Ms. Yun has also successfully represented clients in class action claims involving the federal Telephone Consumer Protection Act (TCPA).

619-338-6541
Shannon Z. Petersen, Business Trial Legal Specialist, Sheppard Mullin
Partner

Shannon Z. Petersen is a partner in the Business Trial Practice Group in the firm’s Del Mar office and is co-chair of the firm’s consumer class action defense team and the firm’s TCPA class action defense team.

Areas of Practice

Dr. Petersen has substantial trial experience as a business litigator, including consumer class action defense. He has successfully represented clients in claims involving the federal Telephone Consumer Protection Act (TCPA), the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Acting (FCRA), the Truth in Lending Act (TILA), the Real Estate Settlement Procedures Acts (RESPA); California's Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA), Rosenthal Act, Automobile Sales Finance Act (ASFA or Rees-Levering), Vehicle Leasing Act, Confidentiality of Medical Information Act (CMIA); breach of contract, insurance bad faith, unfair business practices, false advertising, fraud, breach of fiduciary duty, negligence, wrongful foreclosure, wrongful repossession, unfair debt collection, unfair credit reporting, unjust enrichment, misappropriation of trade secrets, trademark infringement, quiet title, emotional distress, construction defect, privacy, and receiverships, among others.

619-338-6656