On April 1, 2021, the Supreme Court released its unanimous decision in Facebook v. Duguid, holding that to be considered an ‘automatic telephone dialing system’ (Autodialer), equipment must have the capacity to either: (1) store numbers using a random or sequential number generator; or (2) produce numbers using a random or sequential number generator. Although this new clarity regarding the definition of an Autodialer will help accounts receivable entities ensure compliance with the Telephone Consumer Protection Act (TCPA), it does not signify an end to TCPA litigation, and no one should be throwing away their TCPA policies and procedures just yet. 

The Statute and History of the Facebook Case

The TCPA prohibits “any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing systems or an artificial or prerecorded voice” to cellular telephones. 47 U.S.C. § 227(b)(1)(A)(iii). An Autodialer is defined 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.” Id. at § 227(a)(1)

The Facebook case was the result of unwanted text messages. Facebook has a security feature wherein users can elect to receive text messages when there is an attempt to log in to the user’s account from a new device or browser. Facebook sent such texts to Noah Duguid, but Mr. Duguid never had a Facebook account. After trying unsuccessfully to stop the unwanted messages, Mr. Duguid filed a putative class action against Facebook, alleging Facebook violated the TCPA by storing numbers and programming its equipment to send automated text messages. Facebook countered that the TCPA did not apply because its technology does not use a “random or sequential number generator.”

The Northern District of California agreed with Facebook and dismissed Mr. Duguid’s amended complaint with prejudice. The Ninth Circuit Court of Appeals disagreed and held that to be an Autodialer, equipment need only have the capacity to store numbers to be called and to dial such numbers automatically. This ruling was in line with decisions in the Second and Sixth Circuits but in contrast to decisions in the Third, Seventh, and Eleventh Circuits.  The Supreme Court agreed to hear the case to resolve the split amongst the Courts of Appeal.

The Ruling

Unlike so many previous TCPA decisions, the Court did not waste any time dissecting the meaning of the word “automatic” or analyzing how much human intervention was the right amount of human intervention. Instead, the opinion delivered by Justice Sotomayor focused on the statutory language, rules of statutory construction, and the intent of Congress when it enacted the TCPA in 1991. 

Beginning with the text of the statute itself and the rules of statutory construction, Justice Sotomayor reasoned there is no grammatical basis for arbitrarily stretching the phrase “using a random or sequential number generator” to apply to the word “produce” but not to the word “store’. Thus, reasoned Justice Sotomayor, to be an Autodialer, in all cases, whether storing or producing numbers to be called, the equipment in question must use a random or sequential number generator. 

Turning to the Congressional intent, the Court pointed out that in 1991 Congress targeted a unique type of telemarketing equipment that risks dialing emergency lines randomly or tying up all the sequentially numbered lines at a single entity. In light of the precisely carved out intent, Justice Sotomayor explained, “expanding the definition of an autodialer to encompass any equipment that merely stores and dials telephone numbers would take a chainsaw to these nuanced problems when congress only intended to use a scalpel.”  She further noted that under the broad definition proposed by Mr. Duguid, even an ordinary cell phone could be considered an Autodialer in the course of commonplace usage.

Mr. Duguid argued that cellphones are not autodialers under his legal theory because they rely on human intervention.  The Court expressly rejected this proposition, reasoning that all devices need some kind of human intervention, and the TCPA does not require such a difficult line-drawing exercise. Instead, the Court held that “a necessary feature of an autodialer under §227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called.”

No, TCPA Litigation is not dead

While certainly a win for the industry and hopefully a catalyst for a reduction in TCPA litigation, the Facebook decision does not foreclose all avenues for recovery under the TCPA. In footnote 7, the Court provided an example where equipment might still qualify as an Autodialer if it uses a random number generator to determine the order in which to pick phone numbers from a pre-produced list and stores those numbers to be dialed at a later time. Further, the holding still allows for TCPA plaintiffs to make capacity arguments and does not affect the statutes’ separate prohibition on calls that use an artificial or prerecorded voice.  

As stated by Dave Schulz, a partner in the law firm of Hinshaw & Culbertson, “The ruling is completely consistent with the text of the law, and it is consistent with what a number of Circuit Courts had held. It (the ruling) should have a significant impact on TCPA litigation. All of our clients in the accounts receivable industry are not using an [Autodialer] pursuant to the Court’s decision. Calls by those companies to customer’s numbers will not be a violation of the Act. The ruling does not impact whether a pre-recorded message was left on a cellphone without consent. Those are fairly common claims and we still see them.”

Additionally, there is an open question regarding what, if anything, Congress will do in response to the Facebook ruling. As pointed out by TCPAWorld's Eric Troutman, the Facebook ruling might provide a window for the industry to show it can self-regulate on this issue.

insideARM Perspective

Accounts receivable entities should proceed with caution. While the decision is positive, it does not provide a basis to abandon the safety measures which have been so painstakingly put in place. Because TCPA attorneys may dress former TCPA claims up in different legal theories or pursue perceived holes left in the Facebook decision, industry players should continue to rely on their current equipment, processes, and procedures. Further, entities should verify that their equipment does not have the capacity to store numbers using a random or sequential number generator or produce numbers using a random or sequential number generator. Because the ruling does not affect pre-recorded messages, accounts receivable entities should continue to obtain consent before leaving prerecord voice messages.

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