April 15, 2020
TCPA and Class Action Alert
The Second Circuit joined the circuit split on the scope of the TCPA’s definition of an autodialer, adopting an expansive interpretation with its decision in Duran v. La Boom Disco, Inc.
The question of what constitutes an autodialer under the TCPA continues to cause confusion and uncertainty as courts struggle to apply the definition—enacted in 1991—to modern calling technologies.
The TCPA defines an autodialer to be equipment with the capacity (a) to store or produce phone numbers to be called, (b) using a random or sequential number generator, and (c) to dial such numbers. 47 U.S.C. § 227(a)(1). In a 2015 Declaratory Ruling, the FCC held that “capacity” includes present capability and also potential future capability. In other words, capacity exists if software or other modifications could allow the equipment to function as an autodialer. This broad interpretation arguably included all calling technology, including mobile phones, which with the addition of software or application could possibly function as an autodialer.
The FCC’s broad interpretation was challenged and the DC Circuit rejected the idea that Congress intended such an expansive interpretation where any smartphone could be an autodialer.  The court found the FCC’s Declaratory Ruling “lacked reasoned decisionmaking” and held the lack of clarity from the FCC was “arbitrary and capricious.” Among other concerns, the DC Circuit was troubled by the FCC’s suggestion that an autodialer must be able to create random or sequential numbers to be dialed while also suggesting an autodialer need not generate its own numbers but may simply dial from a pre-existing list randomly or sequentially. The court noted either interpretation could be permissible, but the FCC couldn’t have it both ways, struck the autodialer ruling, and remanded the issue to the FCC for revised guidance.
However, the FCC has not yet provided revised guidance and in that vacuum courts have been left to offer their own interpretation of the TCPA’s definition of an autodialer. Predictably, a circuit split has emerged.
On the other side, the Third, Seventh, and Eleventh Circuits have held very narrow definitions of what constitutes an autodialer under the TCPA. In Dominguez v. Yahoo, Inc., the Third Circuit ruled that only equipment with present capacity to function as an autodialer can be deemed an autodialer. In Hadelhak v. AT&T Services, Inc., the Seventh Circuit adopted the more “restrictive approach” and held that an autodialer includes only equipment that dials randomly or sequentially generated numbers. Similarly, in Glasser v. Hilton Grand Vacations Company, LLC, the Eleventh Circuit held that calls placed without the use of a system that dialed randomly or sequentially generated phone numbers or that required human intervention to place the calls do not meet the definition of an autodialer. Therefore, predictive dialers (calling a list of predetermined numbers from a database of existing numbers) or human intervention fall outside the TCPA.
Earlier this month the Second Circuit joined the fray and largely sided with the Ninth Circuit, deepening the circuit divide. The Second Circuit held that a texting system—where an employee uploaded a text message to be sent, determined the time at which the message was sent, and manually initiated the sending (e.g., clicking “submit”)—was an autodialer under the TCPA.
The court acknowledged the circuit split and recognized the statutory language “leaves much to interpretation” before issuing its own interpretation. First, the court determined that the online texting program could qualify as an autodialer merely by storing the numbers, even though the list of numbers was human-generated and manually uploaded. Second, while noting the significant human action required to operate the texting program, the court held that such intervention was insufficient to make the system “non-automatic” and had the required dialing capacity to constitute an autodialer. Importantly, the court found “[w]hen a person clicks ‘send’ in such a program, he may be instructing the system to dial the numbers, but he is not actually dialing the numbers himself. His activity is one step removed.” In other words, because the employee did not select an individual number to be texted, there was not human intervention in the dialing process.
However, a footnote in the Second Circuit’s decision, potentially narrowing the scope of equipment that may qualify as an autodialer and differentiating from the Ninth Circuit’s expansive interpretation, provides some cause for optimism.
Clicking on a name in a digital phonebook to initiate a call or text is a form of speed-dialing or constructive dialing that is the functional equivalent of dialing by inputting numbers. When we save a contact in a smartphone, we are merely instructing the phone to replace the 10-digit phone number with a single button (i.e., one can click on the name “John” to accomplish the same task as inputting all 10 digits of John’s number). The contact card in a smartphone is a proxy or a shortcut for a number (just like the single digit “0” was traditionally a proxy for dialing the operator). When one clicks on the card, one is constructively dialing the attached number. Therefore, when one sends a text message using a smartphone—which involves clicking on the card and then clicking a “send” button—one has already accomplished the dialing. However, when one clicks on the “send” button in the programs at issue here, one is not dialing a particular attached number beforehand or afterwards. Simply put, the “send” button, unlike a contact card, is not a short-cut for dialing a particular person. Rather, clicking “send” is accomplishing a different task altogether: it is telling the ATDS to go ahead and dial a separate list of contacts, often numbering in the hundreds or thousands.
This emphasis on the act of “dialing” an individual number appears to take a traditional smartphone outside the scope of the definition of an autodialer. Though left unstated, it also seems to take a “point-and-click” system—where a user clicks on a specific number in a company’s database to call—outside the Second Circuit’s threshold of an autodialer, because of the individual nature of the selection.
The Second Circuit’s recent decision deepens the current circuit split and increases the likelihood that the Supreme Court will weigh in on the issue. However, for the time being uncertainty remains. Businesses that communicate with consumers nationwide should assume their equipment constitutes an autodialer under the Ninth Circuit’s interpretation and obtain the necessary consent on that basis. The Second Circuit’s decision does not change this analysis, though its potential narrower interpretation may give TCPA defendants an additional defense depending on their particular equipment.
Business calling numbers in specific jurisdictions may be afforded more options under the Third, Seventh, and Eleventh Circuit’s decisions and possibly under the Second Circuit’s decision, based on the particular equipment being used. Regardless, businesses should discuss their calling equipment, as well as the other factors relevant to the TCPA analysis, with sophisticated counsel to craft compliant solutions.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
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