Supreme Court Cuts Off an Attempt to Expand the TCPA’s Autodialer Definition

On April 1, 2021, the Supreme Court issued a decision in Facebook, Inc. v Duguid, 592 U.S. __ (2021)1 interpreting the definition of an “automatic telephone dialing system” (“autodialer”) under the Telephone Consumer Protection Act of 1991 (“TCPA”).  The Court ruled that to meet the statutory definition, an autodialer must have the capacity either to store a telephone number using a random or sequential number generator, or to produce a telephone number using a random or sequential number generator.  This decision prevents a wider swath of modern telephone devices—including ubiquitous smart phones—from potentially being subject to strict TCPA penalties reserved for the use of a discrete category of telephone equipment.

Facebook provides its users with an optional security feature that sends a “login notification” text message when an attempt is made to access the user’s account from an unknown device or browser.  This feature allows users to log in to Facebook to take action to secure their account.  To use this feature, a Facebook user provides a cell phone number to which Facebook will send these messages.  In 2014, Noah Duguid started receiving login notification text messages from Facebook, even though he does not have a Facebook account and never gave Facebook his cell phone number.  Duguid was unable to stop receiving notifications and brought a putative class action against Facebook.  In his lawsuit, Duguid alleged Facebook violated the TCPA by using a database that stored user’s telephone numbers and was programmed to automatically send text messages to users when an account was accessed from an unknown device or browser.

Facebook moved to dismiss Duguid’s lawsuit, arguing that Duguid failed to allege Facebook used an autodialer as that term is defined by the TCPA.  In particular, Facebook argued Duguid did not state a cause of action because he failed to allege the database sent text messages to phone numbers that were randomly or sequentially generated.  The federal district court agreed and dismissed the lawsuit with prejudice.  The Ninth Circuit reversed, holding that Duguid adequately stated a claim under the TCPA.  The Court of Appeals held that to meet the definition of an autodialer, the device need not have the ability to use a random or sequential number generator to store numbers.  Instead, the equipment need only to have the capacity to “store numbers to be called” and to “dial such numbers automatically.”  The Supreme Court granted certiorari to clarify whether an autodialer must have the capacity to generate random or sequential numbers.

In a decision authored by Justice Sotomayor, the Supreme Court reversed the decision of the Ninth Circuit.  The Court held that to qualify as an autodialer under the TCPA, the telephone equipment must have the capacity to either store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.  The Court rejected Duguid’s argument that the definition of an autodialer included equipment that can store and dial phone numbers automatically, even if it does not have the capacity to use a random or sequential number generator.  Applying familiar canons of statutory construction, the Court ruled the phrase “using a random or sequential number generator” modified both the equipment’s ability to “store” and “produce” telephone numbers; it did not solely modify the equipment’s ability to “produce” telephone numbers.  Because Facebook’s login notification system did not use a random or sequential number generator, it was excluded from the TCPA’s definition of an autodialer.

The Court’s decision rejects the expansion of potential liability under the autodialer provision of the TCPA.  If the Court had accepted the broader autodialer definition permitted by the Ninth Circuit, it would potentially subject an enormous number of telephone devices to liability under the TCPA.  For example, modern cell phones found in nearly every pants pocket or purse have the ability to store telephone numbers and to automatically dial numbers using speed dial or automatically send automated text message responses.  Under the expansive definition urged by Duguid, ordinary cell phone users could be affected by TCPA liability provisions, which authorize $500 or $1,500 fines per violation (per phone call or text message).  This result would not agree with the purpose of the statute, which sought to prohibit a unique type of telemarketing equipment from simultaneously tying up emergency telephone lines or multiple telephone lines of a single business, or from dialing telephone numbers for which the called party is charged for the call.

It is important not to overread this decision as the death knell of the TCPA.  This decision affects liability associated with autodialers but has no effect on other provisions dealing with pre-recorded and artificial voice calls.  It also has no effect on the provisions regarding calls made to individuals on the national do-not-call registry.  Also, the Supreme Court’s decision applies to all equipment with the “capacity” to use a random or sequential number generator—liability is not dependent on the actual use of these features.  Telemarketers can still potentially be liable for calls made using equipment that has the capacity—but is not actively using—these random and sequential number generator features.   Companies using predictive dialing systems must keep these nuances in mind to maintain compliance with the TCPA.
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1 A copy of the Court’s decision is available at the following link: https://www.supremecourt.gov/opinions/20pdf/19-511_p86b.pdf

Kenneth A. Burden is an Associate in our New Jersey office.