April 2, 2021Client Alert

Victory for Businesses! Supreme Court Holds that the TCPA Requires Use of a Random or Sequential Number Generator

Several industries, including the healthcare, financial services, and technology industries, and businesses in general, won a tremendous victory today. The United States Supreme Court issued its ruling in Facebook v. Duguid regarding the definition of an automatic telephone dialing system (ATDS) in the Telephone Consumer Protection Act (TCPA). In a unanimous opinion, the Supreme Court held that an ATDS requires the use of a random or sequential number generator. This interpretation greatly narrows the scope of the TCPA which should greatly limit the number of TCPA suits and class actions brought in the future.

The TCPA has been a boon to plaintiff’s attorneys for years. Plaintiffs have used the TCPA to generate huge sums in damages for simple phone calls or text messages that were placed using predictive dialers. This came about because the FCC had issued orders that greatly expanded the TCPA’s reach.

The TCPA defines an ATDS as one “which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator; and to dial such numbers.”  There is also a prohibition against using an ATDS to call a cellular phone. When the statute was passed in 1991, telemarketers relied on random or sequential number generators to generate their call lists, and cell phones were still relatively rare and expensive (both in terms of the technology and the cost for service).

However, as time went on, the marketplace advanced. Companies began calling customers from lists they created or purchased from other companies, and the use of random or sequential number generators all but ceased. At the same time, as cellular phone technology became cheaper, cell phone use became ubiquitous to the point where many people only have a cellular phone. This, coupled with FCC orders that expanded the reach of the TCPA to include any predictive dialer, created an environment where companies would be sued for placing simple calls to customer’s cellular phones.

Duguid is one of several similar cases brought across the country. However, the circuit courts split between adopting a narrow definition based on the language of the statute and a broader definition that had been allowed by the FCC’s orders. The Third, Seventh, and Eleventh Circuits adopted the narrow definition, but the Second, Sixth, and Ninth Circuits adopted the broad definition. Thus, the Supreme Court took Duguid to resolve the split.

The Court’s decision relies heavily on the rules of grammar to analyze the statute’s language. The result of the analysis was that the Court adopted the narrow definition which requires an ATDS to use a random or sequential number generator. This is a great win because this should dramatically cut down, if not eliminate, suits based on facts such as accidentally calling wrong number, calling numbers that had been reassigned without the caller’s knowledge, or calls made from a customer list.

This does not mean the TCPA is meaningless, however. Its prohibition on initiating a call using an artificial or prerecorded voice still stands, and so do other restrictions such as restrictions on the type of numbers that can be called and the use of fax machines to send unsolicited advertisements. But at the end of the day, this is a clear victory for businesses who use modern technology to communicate with their customers.

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