Addressing a question that has divided courts in a decision that will substantially affect the scope of liability under the Telephone Consumer Protection Act (“TCPA”), the Eleventh Circuit has held that equipment is not an “automatic telephone dialing system” under the TCPA unless the equipment employs random or sequential number generation and requires no human intervention. Glasser v. Hilton Grand Vacation Co., 2020 WL 415811 (11th Cir. Jan. 27, 2020).
The TCPA was enacted in 1991 and prohibits, among other things, unconsented-to calls to cellular telephones made using an “automatic telephone dialing system.” The statute defines “automatic telephone dialing system,” often called an “auto-dialer” or an “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.” The statute imposes a $500 penalty for each illegal call.
In 2003, the FCC issued an order interpreting “automatic telephone dialing system” to include equipment that merely stored numbers and dialed them, without the use of random or sequential number generation—on the theory that the statutory phrase “using a random or sequential number generator” modified only “produce,” but not “store.” Under that interpretation, storing and dialing numbers was sufficient to constitute use of an auto-dialer, even if the list of numbers stored and called was not randomly or sequentially generated. Thus calls made to pre-selected lists of numbers (those of customers owing money to a creditor, for example), if completed using dialing equipment, were subject to claims that they had been made using an ATDS. In 2018, however, the Court of Appeals for the D.C. Circuit held that the FCC’s interpretation of “auto-dialer” was arbitrary and capricious. ACA Int’l v. FCC, 885 F.3d 687, 705 (D.C. Cir. 2018). That left a vacuum for further regulatory action and/or litigation over the question what, exactly, constitutes an ATDS.
In Glasser, the Eleventh Circuit joined the Third Circuit, Dominguez v. Yahoo, Inc., 894 F.3d 116 (3d Cir. 2018), and disagreed with the Ninth, Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018), in holding that equipment must produce or store numbers using a random or sequential number generator to constitute an ATDS within the meaning of the TCPA. The opinion was written by Judge Sutton visiting from the Sixth Circuit, joined by Judge William Pryor, and joined in part (but not the definition-of-ATDS-part) by Judge Martin.
After confirming its subject-matter jurisdiction—the court had in a prior case determined that the receipt of more than one unwanted telemarketing call was sufficient to confer Article III standing—the court turned to the merits of the two plaintiffs’ claims. Each plaintiff had received unsolicited calls on her cell phone. One received calls about a student loan debt; the other received calls marketing timeshare opportunities. Both argued that the calls were made using an ATDS because, though called from a list of targeted (not randomly or sequentially generated) numbers, both were “stored” and “dialed” by a telephone system. The statute’s requirement that numbers be generated randomly or sequentially, the plaintiffs argued, applied only to the word “produce”—if the claim was based on the storage and subsequent dialing of numbers, they argued, the requirement did not apply.
The court disagreed, observing, first, that “conventional rules of grammar and punctuation” support the conclusion that the modifier “using a random or sequential number generator” modifies both of the conjoined verbs (“to store or produce”) sharing the direct object “telephone numbers.” At the time the TCPA was enacted, moreover, there existed equipment that could randomly or sequentially create lists of numbers, and until the FCC’s 2003 order, there was a “common understanding” that an ATDS was equipment that employed random or sequential number generation. What changed, the court said, was not the statute, but technology. As companies moved away from random and sequential number generation and towards the use of “predictive dialers” and lists of pre-selected telephone numbers, the FCC attempted “to fill a legislative gap in coverage created by new communication technology.” But this was an impermissible regulatory expansion of the TCPA, the court found, and one potentially raising Constitutional concerns. (“Would the First Amendment really allow Congress to punish every unsolicited call to a cell phone?” the court asked.)
The court also held that the calls to one of the two plaintiffs were not made using an ATDS for a second, independent reason: the equipment required human intervention. Specifically, the equipment placed a call only after an employee pressed a “make call” button. “Far from automatically dialing phone numbers,” the court noted, “this system requires a human’s involvement to do everything except press the numbers on a phone.”
Judge Martin concurred with the portion of the majority’s opinion determining that the calls made with human intervention were not made with an ATDS, but dissented from its conclusion that equipment must employ random or sequential number generation to constitute an ATDS.