Burr & Forman

01.28.2020   |   ATDS, Blog Articles, Consumer Finance Litigation, Eleventh Circuit, TCPA

Glasser v. Hilton: Citing Principles of Statutory Interpretation, the Eleventh Circuit Drastically Reduces the Scope of TCPA

A .pdf copy of the Glasser opinion can be found here.

The Telephone Consumer Protection Act (“TCPA” or the “Act”) has limited telephone calls that can be placed using certain automated equipment since 1991.  However, since passage of the Act there has been considerable debate about the type of automated equipment subject to the Act’s restrictions.  The TCPA specifically restricts the use of any “automated telephone dialing system” (“ATDS”).  The statute 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.”  47 U.S.C. § 227(a)(1).

In 1991, the use of “random or sequential” number generating equipment was a big problem.  The TCPA specifically took aim at telemarketers, who had no care for who received their calls, only that the recipient was a potential buyer for their good or service. Automated equipment gave these telemarketers the ability to place random or sequential calls very quickly, increasing the number of contacts they could make in a short period of time.

After passage of the TCPA, and with the introduction of newer and smarter lead generation technology and telephony equipment, telemarketers soon realized it was more efficient and cost-effective to target specific customers and use technology that dialed from a list of numbers.  Thus, telemarketers began using the same types of equipment used by creditors to contact their delinquent customers: predictive dialers.

Predictive dialers utilize technology that quickly dials from a list of numbers, identifies when a call recipient picks up a call and routes that call to a live agent.  For unanswered calls, which constitute the large majority of calls placed, the predictive dialer never sends that call to a human being, thus saving considerable resources for the calling party.

The Federal Communications Commission (“FCC”) is tasked with rulemaking and enforcement of the TCPA.  In 2003, the FCC realized it had a problem.  With telemarketers abandoning equipment that dialed in a “random or sequential” fashion, it needed a fix to ensure that the TCPA still provided protection to those seeking to avoid unwanted telemarketing calls.  Thus, in 2003 the FCC issued a Band-Aid in the form of a new Report and Recommendation.  See In re TCPA Rules & Regulations, 18 FCC Rcd. 14014, 14091 (2003) (2003 Order).  The 2003 Order interpreted the term ATDS to include equipment that merely dialed numbers “from a database of numbers,” like a predictive dialer.  Id.

Since 2003, federal courts and the FCC have grappled with how predictive dialers could constitute an ATDS when they seem to fall outside language of the statutory definition.  In 2008, and again in 2015, the FCC reiterated that predictive dialers are, in fact, an ATDS.  In 2018, the D.C. Circuit issued an opinion in ACA Int’l v. FCC, 885 F.3d 687, 702-703 (D.C. Circ. 2018), finding that the FCC’s prior broad interpretations of ATDS included more equipment than Congress intended (including smartphones) and would create unjust results.  However, the D.C. Circuit did not specifically state that it invalidated all prior FCC rulings on the status of predictive dialers.

Later in 2018, the Ninth Circuit Court of Appeals issued a decision ignoring the FCC’s prior proclamations, but endorsing perhaps one of the broadest interpretations of the Act ever advanced by litigants.  See Marks v. Crunch San Diego, LLC, 904 F.3d 1041, 1049 (9th Cir. 2018).  The Marks court construed Section 227 to cover devices with the capacity to automatically dial telephone numbers from a stored list or to dial telephone numbers produced from a random or sequential number generator.

As of Monday, January 27, 2020, this is where we stood.  The Ninth Circuit, which has jurisdiction over territory that contains 20% of the U.S. population, had determined that TCPA lawsuits against callers using predictive dialers were permissible.  The rest of the country faced the impossible task of interpreting a hodgepodge of different federal court decisions trying to harmonize the FCC’s prior guidance and the D.C. Circuit’s decision in ACA Int’l.  Commentators wondered whether other federal circuit courts would now side with the Ninth Circuit in Marks, eliminating the need to review prior FCC orders and cleanly interpreting the statute favorably for consumers.  However, the Eleventh Circuit had plans of its own.

In Melanie Glasser v. Hilton Grand Vacations Company, LLC, No. 18-14499 (11th Cir. Jan. 27, 2020), the Eleventh Circuit directly addressed the definition of ATDS.  The Glasser case involved two plaintiffs.  The first received 13 calls from Hilton, a timeshare marketer, about vacation opportunities. The second received 35 calls from a creditor about unpaid student loans.  Both plaintiffs alleged they received calls from the defendant companies using an ATDS.  In both cases, the companies used equipment that dialed numbers automatically from a list of telephone numbers.

The Glasser court was clear that the outcome of the case was dependent upon the interpretation of ATDS and took a shot at Congress, stating: “Clarity, we lament, does not leap off this page of the U.S. Code.”  Id. at 6-7.  Thus, both plaintiffs and defendants advanced their own interpretations of the statute, as follows:

Statutory Language An ATDS is “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.”
Plaintiffs’ Interpretation To be an ATDS, the equipment must (1) store telephone numbers and dial them or (2) produce such numbers using a random or sequential number generator.
Defendant’s Interpretation To be an ATDS, the equipment must (1) store telephone numbers using a random or sequential number generator and dial them or (2) produce such numbers using a random or sequential number generator and dial them.

 
After a painstakingly thorough review of the statutory language and analysis using a variety of principles of statutory interpretation, as well as conventional rules of grammar and punctuation, the Court held in a 2-1 decision that the correct interpretation was that set forth by the defendants.  The Court advanced the following arguments in support of its conclusion:

  • Conjoined verbs sharing a direct object. When 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.
  • Placement of the comma. The comma separating the phrase “to store or produce telephone numbers to be called” from the phrase “using a random or sequential number generator” also indicated that the clause modifies both “store” and “produce.”
  • Content of the words. Under the plaintiffs’ approach, the key modifier (“using a random or sequential number generator”) would rarely, if ever, make a difference.  An interpretation in which a device is an ATDS merely by storing and dialing numbers, as the plaintiffs advocated, would include almost all dialing technology and make the modifier superfluous.
  • Historical use of autodialing equipment. The regulatory record confirmed that, at the time of enactment, devices existed that could randomly or sequentially create numbers and (1) make them available for immediate dialing or (2) make them available for later dialing.  Sometimes storage would happen; sometimes it would not.
  • Context. The TCPA made it illegal to call “any 911 line” using an ATDS.  The Court stated that “[i]t suspends belief” to think that Congress passed the law to stop telemarketers from intentionally calling 911.  Instead, the Court concluded that Congress passed the law to prevent callers from accidentally reaching 911 lines by dialing randomly or sequentially generated telephone numbers.
  • Contemporaneous understanding. In the first 12 years after enactment, it was generally understood that the TCPA did not apply to predictive dialers.  But in 2003 the FCC determined that predictive dialers were subject to the statute.  The Court stated that the only changes during this time were technology and marketing strategies and that the FCC was trying to “pour new wine” into an “old skin” by making the ATDS definition cover predictive dialers.  The Court stated that Congress drafted the 1991 law for the moment but not for the duration, and that while the TCPA was successful in eliminating one pernicious form of telemarketing, it failed to account for how business needs and technology would evolve.
  • Constitutional avoidance principles. The plaintiffs’ interpretation would mean that the TCPA restricts using cell phones to call other cell phones, which the Court considered “a bridge too far.”
  • The D.C. Circuit invalidated the FCC’s prior rulings. The D.C. Circuit invalidated the FCC’s prior rulings in ACA Int’l when it found that those orders were “inconsistent with reasoned decisionmaking.”

In addition, the Court also addressed Hilton’s “Intelligent Mobile Connect” system which requires significant human intervention in the form of programming from Hilton employees before placing calls.  The Court stated that even if it adopted the plaintiffs’ interpretation of ATDS, Hilton’s system still required enough human intervention to remove it from the definition of ATDS.

It is worth noting that in a lengthy dissent, Judge Martin disagreed with the interpretation set forth by the majority and, instead, sided with the statutory reading advanced by the Ninth Circuit in Marks.  Judge Martin wrote that, in her opinion, “a machine may qualify as an autodialer based solely on its ability to store numbers.”

Following Glasser, it’s clear that the Ninth Circuit and Eleventh Circuit are directly at odds.  Now, with two Circuit Courts advancing diametrically opposed statutory interpretations, the remaining Circuits will likely have to line up and pick sides.

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