Burr & Forman

07.29.2020   |   ATDS, Blog Articles, Consumer Finance Litigation, TCPA

TCPA Breaking News: The Sixth Circuit Sides With Marks, as the Supreme Court Readies to Step In

A copy of the Allan opinion discussed herein can be found here.

This summer has been jam-packed with Telephone Consumer Protection Act (TCPA) developments.  The Federal Communications Commission (FCC) issued a decision finding that peer-to-peer text messaging systems were exempt from the statue’s reach, using certain language that may be helpful in arguing to exclude other types of technology.[1]  The U.S. Supreme Court declared the statute unconstitutional in Barr v. American Association of Political Consultants, Inc.,[2] only to determine that the unconstitutional provision was severable, thus saving the statute and, in fact, broadening its reach even further.  The Supreme Court then determined it was appropriate to grant certiorari in the case Facebook, Inc. v. Noah Duguid, et al., No. 19-511, where it will finally decide: “whether the definition of [automatic telephone dialing system] in the TCPA encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.”

The question to be addressed in the Duguid case is one that has hung over TCPA litigation for over a decade.  Does the statute only restrict companies who dial numbers randomly or sequentially, i.e., telemarketers who do not care who they are calling?  Or, can the statute be read to have morphed with the technology it regulates and restrict all sorts of additional automatic dialing equipment?  The circuits are split on this issue.  And on Wednesday, July 29, the split deepened.

In Allan v. Pennsylvania Higher Education Assistance Agency, No. 19-2043 (6th Cir. July 29, 2020), the Sixth Circuit was faced with the same question posed in the Duguid case:  What constitutes an automatic telephone dialing system (ATDS)?  Prior to Wednesday, the Ninth Circuit and Second Circuit fashioned broad interpretations of the term ATDS, holding that any equipment that can “store” numbers and then call those numbers from a list can be considered an ATDS subject to the TCPA’s restrictions.[3]  This interpretation was roundly rejected by the Seventh and Eleventh Circuits, which have held that a device must be capable of storing or producing numbers to be called using a random or sequential number generator in order to qualify as an ATDS.[4]

In Allan, the two plaintiffs had taken out a student loan serviced by the defendant.  It was undisputed that on October 4, 2013, the plaintiff had asked the defendant to stop calling her.  The defendant continued calling and argued to the court that its dialing system was not subject to the TCPA.  The defendant used an Avaya Proactive Contact dialer, which had no “random or sequential” number generation or dialing component, but did create calling lists and place automated calls from that list.  The system would place the calls and connect the call recipient to an operator when a voice was detected.  This type of equipment is called a “predictive dialer.”

In deciding whether the TCPA restricted predictive dialers, the Sixth Circuit first pointed out that it could not look to Federal Communications Commission (FCC) orders for guidance because the D.C. Circuit had invalidated the FCC’s interpretation of ATDS in ACA Int’l v. Fed. Commc’ns Comm’n, 885 F. 3d 687, 700 (D.C. Cir. 2018).  Thus, the court noted, it would have to look solely to the statutory language.

As we’ve noted on this website before, the TCPA 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).  The Sixth Circuit noted that each potential interpretation of the statute has its own problems.  Eventually, however, the court determined that the best way to read the statute was that the phrase “using a random or sequential number generator” modified only “produce,” and not “store.” So:

An ATDS is “equipment which has the capacity –

(A)  to store [telephone numbers to be called];

        or produce telephone numbers to be called, using a random or sequential number generator; and

(B)  to dial such numbers.”

Because the Avaya system could both store numbers and dial those numbers, the court held that the system functioned as an ATDS.  For the remainder of the opinion, the Sixth Circuit defended its interpretation by contrasting its decision against that of the Eleventh Circuit in Glasser v. Hilton Grand Vacations Co., 948 F. 3d 1301, 1304-05 (11th Cir. 2020).  Anticipating perhaps the biggest criticism of its ruling, the court held that interpreting the TCPA in such a broad way would not operate to sweep every day smartphones within its reach.  The court cited the ACA Int’l decision and held that simply because a device has theoretical capacity to store and dial numbers from a list is not enough to make it an ATDS.  Instead, a device must actually be used in that fashion, which most smartphones are not.

Thus, for now, the circuit split deepens.  Calls that are completely legal in Alabama, Florida, Illinois and other states, are illegal in California, Michigan, Tennessee and more.  And until the Supreme Court issues its decision in Duguid, the circuits will remain hopelessly divided.

[1] In re: P2P Petition for Clarification, CG Docket No. 02-278 (June 25, 2020), available at: https://docs.fcc.gov/public/attachments/DA-20-670A1.pdf

[2] 140 S.Ct. 2335 (2020), available at: https://www.supremecourt.gov/opinions/19pdf/19-631_2d93.pdf

[3] https://www.burr.com/blogs/consumer-finance-litigation/2020/04/08/duran-v-la-boom-disco-it-is-time-for-scotus-to-decide-the-atds-issue/

[4] https://www.burr.com/blogs/consumer-finance-litigation/2020/02/19/gadelhak-v-att-the-seventh-circuit-joins-the-eleventh-circuit-in-taking-a-big-bite-out-of-the-tcpa/

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