Second Circuit Holds TCPA’s ATDS Definition Includes Devices that Can Call from Lists and Not Just Random-Fire Dialers

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Just when it looked like things were starting to settle down in TCPAWorld, we find ourselves on fire again.

The Second Circuit Court of Appeals held today that the Telephone Consumer Protection Act (“TCPA”) applies to any system that calls or texts automatically from a list of numbers. Specifically, the Court held that the TCPA’s automated telephone dialing system (“ATDS”) definition applies to devices that store numbers–in addition to just those that can randomly or sequentially generate numbers to be dialed. The ruling is Duran v. La Boom Disco, case no. 19-600-cv, (2d Cir. 2020).

As readers of TCPAWorld.com are well aware, the case law regarding the TCPA’s ATDS definition was finally beginning to coalesce following years of uncertainty as to the reach of the statute. Indeed, a new “majority” position on the statute’s ATDS definition had finally taken shape and district courts were repeatedly ruling that the statute applied only to random-fire calls–as the statute’s definition seems to contemplate. And with back-to-back wins at the Circuit Court of Appeals level–first in the Eleventh and then in the Seventh–Defendants had much to be confident about.

Indeed, for the first time in years, it appeared the TCPA had fallen out of vogue altogether. After slight dips in filings the last two years, TCPA filings in 2020 have fallen off a cliff. And while it is true that COVID 19 is slowing all federal litigation, the downturn in TCPA filings was far more reflective of the Plaintiffs’ bar’s acceptance that their “golden goose” might really be gone forever.

And then, this.

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The lower court in Duran had held that a device requiring a human being to determine when a text campaign would run is not an ATDS because the timing was selected by a human being, and not by a computer. While the district court had not followed the new-majority position that only random-fired dialing can trigger TCPA coverage, it did determine that the “human intervention” needed to select numbers and submit “start” to initiate a campaign was sufficient to deprive the dialer of its “automated” character. That is, because a person and not a computer was deciding when to send the message and to whom the system was not an ATDS subject to the TCPA.

On appeal, the Second Circuit Court of Appeals disagreed and set aside the judgment entered in favor of the Defendant below.

The heart of the ruling is the Second Circuit’s determination that the TCPA’s ATDS definition–including devices with the “capacity to store or produce” numbers using a “random or sequential number generator”–applies equally to devices that merely store numbers to be dialed automatically as to those that produce such numbers randomly or sequentially.

To get there, the Court focuses primarily on avoiding making words within the statute’s definition superfluous. Well, really just one word– “store.” In the Court’s view the word “store” serves no purpose if the statute applies only to randomly or sequentially generated numbers since all “random” numbers “stored” within an ATDS must have been previously “generated” in that manner. So, the argument goes, the word “store” must stand alone and not be subject to the requirement that the numbers be generated randomly or sequentially.  (I note that it does not follow that all devices with the capacity to “store” must also have the capacity to “produce” those numbers, so the court's conclusion seems non-sequitor to me.)

The Duran court also notes that the TCPA’s exemptions for calls made with consent and calls made on behalf of the government would make little sense if the TCPA applies only to random-fired calls. It rejected the Eleventh Circuit’s point that the TCPA also applies to pre-recorded messages–so the defenses still have a purpose even if ATDS calls are solely random–concluding that the overall structure of the statute and its exemptions speak to an application to deliberately targeted ATDS calls.

One of the most remarkable portions of Duran, however, was the Second Circuit’s affirmation that the FCC’s 2003 and 2008 predictive dialer rulings may still be good law. The Court directly rejected any holdings that the Second Circuit’s earlier ruling in King had recognized those rulings having been set aside. And in footnote 28 the Duran panel notes that ACA Int’l had not actually set aside the 2003 and 2008 rulings as so many courts have now found: “However, as we discuss below, the earlier Orders do not suffer from the same internal contradiction since they are clear that ATDSs can dial from stored lists. As a result, there is no reason to think that the D.C. Circuit’s decision to invalidate the 2015 Order on this ground also invalidated those that came before it.”  While stopping short of affirmatively yielding to the FCC’s earlier ATDS rulings, Duran looks to the FCC’s own interpretive guidance as “still valid” and offering further support for the conclusion that the TCPA applies to more than just random-fire dialers. As Duran sees it:

The FCC’s interpretation of the statute is consistent with our own, for only an interpretation that permits an ATDS to store numbers—no matter how produced—will also allow for the ATDS to dial from non-random, non-sequential “calling lists.”

That just leaves the question of whether the equipment has issued has the capacity to dial the stored numbers “without human intervention.” In the Ninth Circuit ruling in Marks, the court stopped short of determining what “automatic” dialing means, noting only that minimal acts of human intervention–such as turning on a system–do not amount to manual dialing.

In Duran, the court holds squarely that dialing without human intervention is required to trigger TCPA coverage, but dives deeper into what human intervention actually entails.

First, the Duran panel rejects the district court’s groundbreaking formulation that a human-being selecting the timing of a call is what removes a device from statutory coverage. While this was a rather creative solution to the “human intervention” puzzle, it was flatly rejected by the Second Circuit: “We do not agree that the human-intervention test turns solely on this timing factor.”

Instead, the Second Circuit looks to limited human intervention actually at issue in the case–the requirement that the caller hit “send” to initiate the text campaign. The Court concludes that the mere act of hitting “send”–standing alone–is not sufficient to constitute human intervention because the single click may send thousands of texts. That is, it is the system that is doing the dialing, not the human being.

The real crux of the analysis is actually found in a footnote for some reason. As the Court explains:

[w]hen one clicks on the “send” button in the programs at issue here, one is not dialing a particular attached number beforehand or afterwards. Simply put, the “send” button, unlike a contact card, is not a short-cut for dialing a particular person. Rather, clicking “send” is accomplishing a different task altogether: it is telling the ATDS to go ahead and dial a separate list of contacts, often numbering in the hundreds or thousands.

That leads, inexorably, to the following holding:

[S]ince the programs here required only a human to click “send” or some similar button in order to initiate a text campaign, we conclude that the programs did not require human intervention in order to dial. Therefore, LBD’s programs have the second capacity necessary to be considered ATDSs. They both can dial numbers on their own which is to say, automatically.

Remember those words: “they both can dial numbers on their own which is to say, automatically.” We have a definition of automatic–the capacity to dial numbers on their own. Keep it in mind TCPAWorld. I suspect you’ll be seeing that phrase repeated with some regularity.

So what more need be said here? The playfield has leveled. Yes, in the Second, Ninth, Eleventh and Seventh we know what to expect. No more ATDS suits filed in Florida or Chicago, plenty to be filed in S.D.N.Y. and sunny California. And the spaces in between? In the Eighth or the First? In the Fourth or the Tenth? Well, we have new battles to fight and the skill and arguments of the advocates will continue to carry the day.

Obviously the fact that we no longer have a majority position renders the TCPA as vague as ever before. How can a statute that impacts speech and carries such enormous penalties be constitutional when its reach is determinable–if at all–only with reference to what court a caller is ultimately sued in? it is simply nuts that this statute remains on the books.

Luckily, SCOTUS will shortly review the TCPA and—unless I miss my guess—will find a way to review the ATDS definition and conclude, once and for all, that the statute applies only to devices that make use of random and sequential number generators. Until then, however, expect TCPA cases to spike.