How Recent TCPA “Autodialer” Decisions Impact Your Business

How Recent TCPA “Autodialer” Decisions Impact Your Business

February 20, 2020

If your company’s marketing strategy involves communicating with prospective or existing clients via phone calls and text messages, you are probably familiar with the Telephone Consumer Protection Act (“TCPA”).  

In part, the TCPA makes it unlawful to make a “call” to a cell phone using an automatic telephone dialing system (“ATDS”) unless you have the prior written consent of the called party. And this includes sending text messages to cell phones. While the TCPA, enacted in 1991, makes no mention of text messages, a majority of federal courts that have considered the issue have ignored the plain language of the statute and have interpreted “call” to be the functional equivalent of a text message for purposes of applying the TCPA, arguably usurping the responsibility of Congress. 

Much of the TCPA litigation has centered around another issue, what constitutes an ATDS.  This involves applying a nearly 30 year old definition of an ATDS to today’s quickly evolving technologies and information platforms.  The TCPA defines ATDS 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.”

In recent years, courts across various jurisdictions have taken different positions as to what constitutes an ATDS.  Some courts have taken the broad view that a device that can store numbers and dial them without significant human intervention is an ATDS.  Essentially, using this definition, every cell phone in the United States would be an ATDS, because virtually every cell phone has the capacity to store and dial telephone numbers with little to no human intervention.  Other courts have taken the narrower view, consistent with the plain language of the TCPA, that a device needs to not only store and dial numbers in order to be categorized as an ATDS, but also needs to generate the stored numbers using a “random or sequential number generator.”  The Federal Communications Commission, which is tasked with administering the TCPA, has only further muddied the waters by issuing various conflicting administrative orders on the topic.

This issue has been addressed head on in two recent U.S. Court of Appeals decisions.  In January, the Eleventh Circuit put an end to the ATDS confusion in Glasser v. Hilton Grand Vacations Co., 948 F.3d 1301 (11th Cir. 2020), for litigation in that circuit. It held that the device used by the defendant to make the calls in question was not an ATDS and therefore, the business could not held be liable under the TCPA, because while the device used had the ability to store and dial telephone numbers, it did not randomly or sequentially generate the numbers.   One of the plaintiffs in Glasser is now seeking reconsideration of the Eleventh Circuit’s decision.

The result was the same more recently in Gadelhak v. AT&T Services, Inc., 2020 WL 808270 (7th Cir. Feb. 19, 2020).  The court ruled that the TCPA provision that defines an ATDS requires that the device both store and produce random or sequential numbers.  So, if the device merely dials numbers stored in a database, like your iPhone, it’s not an ATDS and using it doesn’t violate the TCPA.

Caution Ahead!

While the Glasser and Gadelhak courts’ decisions may put an end to the ATDS debate in the Eleventh and Seventh Circuits if they are not reconsidered, your business is not out of the woods just yet – especially if it operates in states outside of those circuits or in the Third Circuit, where the U.S. Court of Appeals reached the same conclusion in Dominguez v. Yahoo, Inc., 894 F.3d 116 (3d Cir. 2018).

For example, those decisions directly conflicts with the Ninth Circuit’s opinion in Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018), decided a year and a half ago. In Marks, the Ninth Circuit adopted the broad view of what constitutes an ATDS and held that the “statutory definition of ATDS is not limited to devices with the capacity to call numbers produced by a random or sequential number generator, but also includes devices with the capacity to dial stored numbers automatically,” i.e., your iPhone.

As a result, companies operating regionally in the Third Circuit (Delaware, New Jersey, Pennsylvania), the Seventh Circuit (Illinois, Indiana, Wisconsin), or the Eleventh Circuit (Alabama, Georgia, Florida) may see a decrease in TCPA litigation.  But companies which have operations outside of those states may see no respite from the ever-increasing number of lawsuits filed in other jurisdictions where the definition of ATDS has been interpreted broadly as in the Ninth Circuit), or the issue has not yet been settled by the local U.S. Court of Appeals.   Because the issue remains unsettled or settled unfavorably in many jurisdictions, businesses should consult their attorneys to be sure that appropriate TCPA compliance policies are in place before executing marketing strategies that involve unsolicited calls and text messages.