Eleventh Circuit Joins Majority of Courts in Striking Down Expansive Interpretation of the Telephone Consumer Protection Act

On January 27, the Eleventh Circuit held that the Telephone Consumer Protection Act’s (TPCA) definition of “Automatic Telephone Dialing Systems” (ATDS) captures only those devices that use a random or sequential number generator.  In effect, this reading of the TCPA narrows the scope of ATDS, such that—unlike a minority of courts have held—it does not cover every smartphone in America.  While nowhere near a perfect fix, the Eleventh Circuit’s holding marks a step in the right direction for legitimate businesses seeking to comply with the TCPA.

As background, the TCPA declares it unlawful to make any call using an ATDS without the consent of the party being called.  It, in turn, 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.”  Callers in violation of this provision are subject to a private right of action, under which they may be liable for $500 per call.[1] 

In Glasser v. Hilton, the Eleventh Circuit considered a case in which plaintiffs alleged that two companies called them with ATDS without their consent, in violation of the TCPA.  The companies admitted to making the calls but denied using ATDS.  The court was thus presented with two competing interpretations of ATDS.

The plaintiffs argued that the modifier “using a random or sequential number generator” modified only the word “produce” in “to store or produce telephone numbers to be called, using a random or sequential number generator[.]”  Practically speaking, this reading would render devices ATDS if either they (1) stored and dialed telephone numbers, or (2) produced telephone numbers using a random or sequential number generator and dialed them.  Under this theory, the plaintiffs argued that defendants qualified as the first type of ATDS because they used technology that stored and dialed telephone numbers.

The defendants argued that the modifier “using a random or sequential number generator” modified both “store” and “produce” in the phrase “to store or produce telephone numbers to be called, using a random or sequential number generator[.]”  Thus, under the defendants’ reading of the TCPA, a device must involve the use of the a random or sequential number generator to qualify as an ATDS.

The Eleventh Circuit agreed with the defendants’ interpretation for three primary reasons.[2]  First, the court relied upon the plain reading of the statute, explaining that “[w]hen two conjoined verbs (‘to store or produce’) share a direct object (‘telephone numbers to be called’), a modifier following that object (‘using a random or sequential number generator’) customarily modifies both verbs.”  Second, the court noted that the Federal Communications Commission and the courts interpreted the definition of ATDS consistent with the defendants’ interpretation at the time of the TCPA’s passage in 1991 all the way through 2003.  Third, the court agreed with the D.C. Circuit that accepting the plaintiff’s interpretation—that any device that stores and dials telephone numbers qualifies as an ATDS—would give the statute an “eye-popping” sweep, covering every smartphone in America.  The Court declined to “find this exponential expansion of coverage in a law targeting auto-dialers and randomly generated numbers[.]

This reading of the TCPA puts the Eleventh Circuit in a sizeable majority of courts that have examined the definition of ATDS.  In a petition for certiorari currently pending before the Supreme Court, Facebook has asked the high court to strike down a Ninth Circuit interpretation of the TCPA that first appeared in Marks v. Crunch San Diego, LLC.  In pointing out that Marks is an outlier—by holding that ATDS included all “devices with the capacity to dial stored numbers automatically”—the petition notes that the Third Circuit, D.C. Circuit, and scores of district courts have held that a device may meet the definition of ATDS only if it uses “a random or sequential number generator.”  Accordingly, the Eleventh Circuit was on solid ground in rejecting the broad interpretation of ATDS advocated by the plaintiffs.

The Eleventh Circuit’s decision is a positive development for legitimate businesses.  As organizations like the U.S. Chamber Institute for Legal Reform have shown, the TCPA has resulted in “abusive and costly class action lawsuits,” typically brought against “legitimate businesses,” rather than true bad actors.  FCC Chairman Ajit Pai has referred to the TCPA as “the poster child for lawsuit abuse,” decrying that “the TCPA has strayed far from its original purpose.”[3]  The Eleventh Circuit’s decision to limit the definition of ATDS to its statutory text is thus a step in the right direction.

However, the Eleventh Circuit’s decision is by no means a perfect fix.  For one, there are still jurisdictions—including the Ninth Circuit—that interpret the TCPA to reach nearly every smartphone in America.  And even the Eleventh Circuit’s “narrow” reading of ATDS leaves in place the TCPA’s other prohibitions—such as its prohibition on using “an artificial or prerecorded voice,” which some have interpreted to outlaw innocuous messages like appointment reminders.  In short, the TCPA is still insufficiently-tailored to go after true bad actors, and legitimate companies will continue to face a substantial risk of liability until Congress takes action.

[1] This penalty can jump to $1,500 per call if the caller “willfully or knowingly violates[s]” this provision.

[2] In addition to those reasons listed in this paragraph, the court also grappled with the superfluity canon, which cut against both parties’ interpretations.  The court ultimately adopting the defendants’ reading after finding it “the least superfluous approach[.]” 

[3] This dissent was issued in 2015 by then-Commissioner Ajit Pai.

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