In a much anticipated decision, the U.S. Supreme Court yesterday provided clarity on the definition of an automatic telephone dialing system (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”) of 1991, 47 U.S.C. § 227. Those in the Financial Services industry have been eagerly awaiting the guidance that the Court’s ruling would provide. And provide guidance it did.

In a rare unanimous opinion, the Court rejected a broad definition of an ATDS previously applied by the Second, Sixth and Ninth Circuits in favor of a much more narrow one. Indeed, the Court found that, in order to qualify as an ATDS under the TCPA, a device must “have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.” Facebook, Inc. v. Duguid, No. 19-511, April 1, 2021, slip op. at 1.

In Facebook, the plaintiff Noah Duguid received text messages from Facebook alerting him that his social media account had been accessed from an unknown browser. The issue: Duguid had never given Facebook his phone number and did not even have an account. Duguid brought suit in the United States District Court for the Northern District of California, alleging that Facebook had violated the TCPA when it utilized a database that stored phone numbers and sent automated messages to those phone numbers. The court dismissed Duguid’s amended complaint, finding that Facebook’s system did not qualify as an ATDS. On appeal, the United States Court of Appeals for the Ninth Circuit reversed, holding that an ATDS included any device that had even the capacity to store and dial telephone numbers automatically.

When the Supreme Court chose to hear this case, it faced an issue only a grammarian could love: whether the clause “using a random or sequential number generator” modified both verbs that preceded it (“store” and “produce”), or simply modified the closest verb (“produce”). Ultimately, the Supreme Court found that both verbs were modified, and tossed aside an interpretation that could have classified every modern cell phone as an ATDS. In doing so, the Court reversed the Ninth Circuit and finally provided clarity to an issue that had deeply divided circuit courts.

Justice Sotomayor delivered the opinion of the Court, and utilized grammatical canons of interpretation to find that the TCPA’s definition of an ATDS did not include equipment that merely stores and dials telephone numbers. Justice Alito filed a concurring opinion. While he agreed with the Court’s ultimate conclusion, he wrote separately to address his belief that the majority placed too much emphasis on statutory canons of construction. To Justice Alito, canons of interpretations are not strict rules to be followed, but are instead tools that merely create presumptions as to how the English language normally operates.

With the Court’s opinion finally released, it seems as though we may nearing the end of rampant ATDS claims. But skeptics in the industry are already arguing that this opinion isn’t a fatal blow to TCPA claims. To some, the holding does not entirely foreclose an argument that a predictive dialer that randomly selects numbers to call from a list will constitute an ATDS for purposes of the TCPA. Only time, and future litigation, will tell whether this interpretation is viable.