April 7, 2021
Stay in the Know
Last week’s Supreme Court decision in Facebook v. Duguid appears to be a complete victory for the call center industry with the Court adopting a narrow interpretation of the Automatic Telephone Dialing System (“ATDS” or “autodialer”) statutory definition. However, some have questioned whether the Court’s holding has left a lingering question pertaining to the use of the word “capacity”:
We hold 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. (Slip op. 12.)
There may be a concern that the word “capacity” in the holding leaves the door cracked to allow plaintiffs to resurrect the “present capacity” versus “potential capacity” argument. In the past, when defendants argued that their dialer did not use a random/sequential number generator to store/produce numbers to be dialed and therefore cannot be an autodialer, the plaintiff’s side counter-argued that actually using the prohibited technology was not required. Even if that technology was not used in making a call, plaintiffs alleged it was sufficient if dialers merely incorporated code that could have used a random/sequential number generator to store/produce numbers.
This was the gist of the “present capacity” argument – the technology was present in the dialer, even though it was not used, and that was sufficient to make the system an autodialer. In response, dialer manufacturers either removed that code or demonstrated that their dialer never had that functionality (i.e., it never contained such software code) for using a random/sequential number generator to store/generate the numbers to be dialed. After all, for the last 40+ years, indiscriminate dialing by generating random or sequential numbers has given way to more strategic dialing of specific numbers in a list.
To counter this response, the plaintiff’s bar developed a broader interpretation using the word “capacity” – the “potential capacity” argument. Specifically, the word “capacity” meant a future ability to incorporate the prohibited technology. And, because dialers were based on computers executing computer programs, it was theoretically possible to write new code for the dialer that would dial numbers that were stored or generated using a random/sequential number generator. Thus, the plaintiff’s bar argued, it was not necessary to actually have the present capacity in the dialer, but it was sufficient if the dialer could ever be modified to use that technology. Presto! Under this argument, every software dialer would be an autodialer.
Practically speaking, the result of this argument is quite far-reaching. It does not matter what the dialer does now and how it could be used. The argument was that a call center operator could be liable based on a hypothetical analysis of whether the dialer could be theoretically modified at a future time to incorporate the prohibited technology. This led to some interesting questions, such as: How much modification to a dialer is too much for it to have such ‘capacity’? It would be very easy to add software to a smartphone that would allow it to place calls to randomly generated telephone numbers.
But, the text of the Facebook decision effectively eviscerates this “capacity” argument. There are various portions of the decision that focus on the actual “use” of the prohibited technology, as opposed to whether the equipment has the potential to be modified to incorporate the prohibited technology. Consider the following portions of the Ruling (emphasis added):
- We begin with the text. Congress defined an autodialer in terms of what it must do (“store or produce telephone numbers to be called”) and how it must do it (“using a ran¬dom or sequential number generator”). (Slip op. at 5.)
- In sum, Congress’ definition of an autodialer requires that in all cases, whether storing or producing numbers to be called, the equipment in question must use a random or sequential number generator. This definition excludes equipment like Facebook’s login notification system, which does not use such technology. (Slip op. at 7.)
- The statutory context confirms that the autodialer definition excludes equipment that does not “us[e] a random or sequential number generator.” 47 U. S. C. §227(a)(1)(A). (Slip op. at 8.)
A plaintiff arguing that a dialer has a “potential capacity” and is therefore an autodialer must convince a court to ignore the plain reading of the above statements in the Supreme Court’s Ruling that require actually “using” the prohibited technology. Then, the plaintiff has to convince the court that the word “capacity” is properly interpreted as a “potential” or “future” capacity (not a current capacity). That is no small hurdle.
In addition, a plaintiff has another – even higher – hurdle. By arguing that a device is an autodialer based on the potential capacity to implement the prohibited technology, the plaintiff is essentially arguing that every smartphone is in fact, itself an autodialer. This further contradicts the Court’s ruling that rejected the broad autodialer interpretation, specifically because it would encompass smartphones:
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 meant to use a scalpel. Duguid’s interpre¬tation of an autodialer would capture virtually all modern cell phones, which have the capacity to “store . . . telephone numbers to be called” and “dial such numbers.” §227(a)(1). The TCPA’s liability provisions, then, could affect ordinary cell phone owners in the course of commonplace usage, such as speed dialing or sending automated text message responses. (Slip op. at 8.)
Casting a wider definition of an autodialer based on the “potential capacity” argument would lead to the same result of catching all modern cell phones in its net. Therefore, there is every reason to believe the Court would similarly reject this argument upon presentation.
It appears that the word “capacity” implies not only having the prohibited technology present, but as supported by the Court’s language, there is an implicit understanding that the prohibited technology must be actually used in making a call. From a practical perspective, this distinction may be a moot point – since virtually all modern dialers are designed for using pre-defined lists versus the older technology of having the ability to dial telephone numbers based on a random or sequential number generator, let alone actually using that ability. Either way, this appears to pave the way for reducing the TCPA risk for using a dialer.
We have seen a wide range of interpretations of the TCPA definition by the courts over the last decade. Hopefully, the Supreme Court’s siding with Facebook will lay the debate to rest. Finally, some common sense has prevailed as to what an autodialer is – and what is not.
How did the TCPA’s definition of an ATDS get before the Supreme Court? Watch the Compliance Briefing to see the tangled history of the TCPA and the ATDS, find out how the interpretations vary, and learn how the case got to the Supreme Court and how its decision may affect your company’s compliance with TCPA regulations.
Are you ready for the new CFPB Rules? The TCPA definition and restrictions for auto-dialers is only one slice of the compliance pie. Did you know that the CFPB also has new rules taking effect in November 2021? View Part 2 of our CFPB Compliance Series to get an overview of the changes and their operational impacts.
The opinions presented here are those of Karl Koster, and not necessarily those of Noble Systems. The contents should not be construed as legal advice nor as comments reflecting any regulatory position of Noble Systems.