On December 8, 2020, the Supreme Court heard oral argument in Duguid v. Facebook, a landmark case that will determine whether a consumer can sue a company for using automated technology to text or call that consumer at a phone number saved in the company’s system. At issue is the meaning of the federal Telephone Consumer Protection Act (“TCPA”) and its prohibition on using autodialers to transmit communications to cell phones. Congress enacted the TCPA in 1991 to shield consumers from the intrusion and annoyance of telemarketing calls but courts have applied the law more recently to prohibit companies from using technology to call or text their own customers, whose numbers are saved on company calling lists.
The TCPA bans the use of “any automatic telephone dialing system or an artificial or prerecorded voice” to transmit calls or text messages to cell phones and various other types of telephone lines. The statute defines an automatic telephone dialing system (“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.” TCPA violations, which are enforceable by the Federal Communications Commission, state attorneys general, and private parties, can be costly—each unlawful contact can lead to a penalty of $500 (or $1,500 for a willful violation).
Noah Duguid sued Facebook for allegedly violating the TCPA by sending unwanted login notifications to his cell phone via text message. Duguid argued that Facebook’s messaging system, which stores and dials numbers without human intervention, is an ATDS, even if it does not use a random or sequential number generator. In response, Facebook argued that because the messages it sent to Duguid were targeted login notifications, rather than the product of a random or sequential number generator, Facebook did not use an ATDS and could not be liable under the TCPA. Facebook further argued that two exceptions to the TCPA run afoul of the First Amendment, which prompted the federal government to intervene to defend the constitutionality of the TCPA.
The U.S. District Court for the Northern District of California granted Facebook’s motion to dismiss based on its statutory argument, finding that Duguid had failed to plausibly allege that the messages he received from Facebook were sent using an ATDS because “Facebook’s login notification text messages are targeted to specific phone numbers and are triggered by attempts to log in to Facebook accounts associated with those phone numbers.” The District Court did not reach the constitutional question.
The U.S. Court of Appeals for the Ninth Circuit reversed that decision. The Ninth Circuit, applying one of its 2018 decisions, noted that the phrase “using a random or sequential number generator” modifies “produce” but not “store.” Therefore, the Ninth Circuit concluded that Facebook’s messaging technology, which is capable of storing specific phone numbers (as opposed to randomly or sequentially generated numbers) and dialing those numbers automatically, is an ATDS. On the constitutional question, the Ninth Circuit determined that one of the TCPA’s exceptions violated the First Amendment and, rather than invalidating the entire TCPA, simply severed that exception from the rest of the law.
Facebook filed a cert petition with the Supreme Court, which agreed to review only the Ninth Circuit’s statutory holding. Thus, the question before the Supreme Court is “[w]hether the definition of ATDS 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.”
In the fall of 2020, the parties and numerous amici curiae submitted briefs. Facebook and the federal government urge the Supreme Court to find that the statutory phrase “using a random or sequential number generator” applies to both “store” and “produce.” Facebook insists that while Congress broadly prohibited almost all unsolicited calls using “an artificial or prerecorded voice,” which were considered a categorical nuisance affecting residential lines, it imposed a less restrictive prohibition on ATDS, which could inadvertently—by randomly or sequentially generating and calling numbers—occupy the telephone lines of emergency services, hospital rooms, and unlisted numbers. Facebook also warns that Duguid’s definition of ATDS would cover smart phones, which can store and dial numbers, effectively subjecting everybody to TCPA liability. The federal government submitted a brief in support of Facebook, in which it primarily argues that the rules of statutory construction support Facebook’s interpretation.
Duguid argues that Facebook’s interpretation reads the phrase “to store” out of the ATDS definition because random and sequential number generators produce, and never store, numbers, so any number-generating technology will be captured by the verb “produce.” Duguid asserts his own warning that, “as Facebook has conceded, excluding systems that dial stored numbers and do not employ number generators will limit the prohibition on unwanted ATDS calls to ‘a small universe of rapidly obsolescing robocalling machines.’”
On December 8, 2020, the Supreme Court heard, via telephone, oral argument from counsel for Facebook, the federal government, and Duguid. Amidst much discussion about canons of construction and telephone technology, certain themes pervaded, including skepticism about number generators being used “to store” numbers and observations about the ill fit of the 30-year-old statutory language to current technology. It is interesting to note that the Court’s newest member, Amy Coney Barrett, authored a decision endorsing Facebook’s interpretation of the TCPA earlier this year while she was on the U.S. Court of Appeals for the Seventh Circuit.
While we wait for the Supreme Court’s decision, companies should review their marketing practices to ensure that they comply with the basic TCPA requirements that are not at issue in Duguid. These requirements include allowing customers to opt-out of receiving calls or text messages; maintaining a do-not-contact list of the customers who have opted out of these communications; limiting calls to residences to the hours between 8 am and 9 pm; and refraining from making calls using any artificial or prerecorded voice (unless the recipients have consented to such calls). If Duguid’s broader interpretation of the TCPA prevails, companies that store telephone numbers and use technology to auto-dial those numbers will need to closely review, and perhaps modify, those practices to avoid potential TCPA liability.