Hunton Retail Law Resource

Since previous FCC interpretations of the Telephone Consumer Protection Act (“TCPA”) were invalidated by the DC Circuit in 2018, the definition of an “automatic telephone dialing system” (“ATDS”), has been hotly contested. The Ninth Circuit has held that merely calling numbers from a stored list is sufficient to meet the definition of an ATDS, while the Second and Third Circuits have at least indicated that the ability to generate numbers randomly or sequentially is the defining characteristic. Compare Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1043 (9th Cir. 2018), with Dominguez v. Yahoo, Inc., 894 F.3d 116, 121 (3d Cir. 2018) and King v. Time Warner Cable, Inc., 894 F. 3d 473, 479 (2d Cir. 2018).

On January 27, 2020, the Eleventh Circuit entered the fray and further escalated the circuit split by declining to follow the Ninth Circuit’s ruling in Marks, instead holding that, to qualify as an ATDS, a device must be capable of generating numbers randomly or sequentially. See Glasser v. Hilton Grand Vacations Company, No. 18-14489, and Evans v. Pennsylvania Higher Education Authority Agency, No. 18-14586 (collectively “Glasser”), ---- F.3d ----, 2020 WL 415811 (11th Cir. Jan. 27, 2020). This is an important distinction because most telemarketers have moved away from using equipment that can generate numbers randomly and sequentially. Today, marketing is typically more targeted, often using predictive dialers to call consumers based on pre-existing lists contained within a company’s database. If the Eleventh Circuit’s interpretation becomes the majority view, retailers may soon find some relief from the harsh penalties of the TCPA.

The key question in Glasser was which capabilities a device must have to be considered an ATDS. The TCPA defines an ATDS as “equipment 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.”  The Eleventh Circuit acknowledged that “[c]larity, we lament, does not leap off this page of the U.S. Code.” Glasser, 2020 WL 415811, at *2. The Eleventh Circuit, nonetheless, concluded that “conventional rules of grammar and punctuation” require that the phrase, “using a random and sequential number generator,” modifies both the verbs “store” and “produce.” Id. Importantly, the Eleventh Circuit held that “[i]f all you need to show is storing and calling, that would apply to the ‘capacity’ of nearly every piece of equipment, whether designed to produce randomly generated numbers or not.” Id. at *3. Thus, under Glasser, for a device to be an ATDS, random and sequential number generation is required; a device, such as a predictive dialer that may simply dial from a stored list of phone numbers, does not satisfy the definition.

Because Glasser creates a clear circuit split between the Eleventh and Ninth Circuits, it is likely to impact the Supreme Court’s decision of whether to grant certiorari in Facebook, Inc. v. Duguid, No. 19-511 (Oct. 21, 2019). In that appeal, the Supreme Court has been asked to opine on the definition of an ATDS. See Petition for Writ of Certiorari, available at https://www.supremecourt.gov/docket/docket.aspx. Similarly, the Glasser decision will likely be an important factor in the Seventh Circuit’s forthcoming ruling in Gadelhak v. AT&T Services, Inc., No. 19-1738 (7th Cir. filed Apr. 18, 2019), where a nearly identical issue is pending. A decision in Gadelhak is anticipated in the coming weeks, as oral argument was held on September 27, 2019.

While Glasser was generally a favorable decision for defendants in many ways, the Eleventh Circuit affirmed the lower court’s decision awarding treble damages based on calls placed to non-consenting consumers using a prerecorded or artificial voice. This means, regardless of the equipment used to place the calls, prerecorded or artificial-voice calls placed without consent remain actionable. We expect to see a rise in the number of TCPA complaints filed based on allegations of receiving such calls.

Further, until either the Supreme Court or the FCC has settled the circuit split regarding the definition of an ATDS, whether a device qualifies as an ATDS may continue to differ from jurisdiction to jurisdiction. Because damages awards resulting from a TCPA violation can be expensive, at best, and potentially bankrupting, at worst, it is essential that callers take necessary steps to protect themselves by: (1) reviewing and updating policies and procedures regarding TCPA compliance; (2) carefully selecting dialing equipment that cannot randomly or sequentially generate telephone numbers; (3) refraining from using technology that plays prerecorded or artificial messages without a consumer’s consent; and (4) continuing to meticulously document, and honor, all instances of consent or revocation from consumers to place calls using such equipment.