On April 7, 2020, the Second Circuit added more uncertainty to the Telephone Consumer Protection Act (“TCPA”) with its decision on the meaning of an automatic telephone dialing system (“ATDS”) in Duran v. La Boom Disco, Inc. Breaking from recent Seventh and Eleventh Circuit decisions, which followed the statutory language in requiring random and sequential number generation, the Second Circuit held that the capacity to automatically dial from a stored list qualifies a telephone system as an ATDS (assuming the other statutory requirements are present). In its decision, the Second Circuit sided with the Ninth Circuit’s decision in Marks v. Crunch San Diego, LLC – a case that had begun to look like an outlier. The Second Circuit also found that clicking “send” to initiate a text message campaign is not “enough human intervention to turn an automatic dialing system into a non-automatic one.”
At the district court level, the Eastern District of New York granted summary judgment in favor of La Boom Disco in the putative class action. The district court held that the text message systems La Boom Disco used to text Duran were not ATDSs because they required human intervention to send the messages. Specifically, Duran argued that the text message platforms qualified as ATDSs because a user was not required to “click” before each text messages was sent. Instead, a user could direct the text message platform to send thousands of text messages at a selected time. The district court rejected this argument, finding that “the human intervention test turns not on whether the user must send each individual message, but rather on whether the user (not the software) determines the time at which the numbers are dialed.”
Although it was not central to the district court’s holding, the district court also noted that “equipment can meet the definition of an autodialer if it pulls from a list, so long as the equipment also has the capacity to dial those numbers without human intervention.”
On appeal, the Second Circuit acknowledged that a “simple definitional question” regarding the meaning of ATDS “pervades TCPA litigation,” provided a brief background on the text messages at issue, and dissected the definition of an ATDS. While the Eleventh and Seventh Circuits focused on the phrase “random or sequential number generator” and determined that the phrase modifies both “to store” and “to produce,” the Second Circuit instead focused on the word “capacity” in the statutory language. The Court began by finding that a telephone system must have the “capacity . . . to store or produce telephone numbers to be called, using a random or sequential number generator” and the “capacity . . . to dial such numbers.” It then engaged in an analysis of both types of capacity.
Analysis of Random or Sequential Number Generation
Recognizing there are multiple interpretations of what is means for a telephone to have the “capacity . . . to store or produce telephone numbers to be called, using a random or sequential number generation,” the Court looked at the opposing interpretations from the Seventh and Eleventh Circuits versus the Ninth Circuit. In its analysis, the Second Circuit focused on which interpretation avoided “rendering any word in the statute ‘surplusage,’” the purpose and the structure of the TCPA, and the Federal Communications Commission’s (“FCC”) interpretation of the TCPA.
With regard to the surplusage issue, the Court rejected the Seventh and Eleventh Circuit’s reasoning and determined that the phrase “using a random or sequential number generator” modifies the verb “produce,” but this phrase does not modify the verb “store.” This reading, according the Second Circuit, results in the “creation of a comprehensive statute, one that regulates dialing systems that can store numbers of all kinds or that can produce numbers in a particular way (randomly or sequentially).” It reasoned that reading the statute in a way that required an ATDS to “either ‘store’ or ‘produce’ numbers using a random or sequential number generator” results in redundancy in the statute because both verbs are not needed. Thus, this interpretation renders the word “store” surplusage.
Next, the Court concluded the purpose and structure of the TCPA requires that an ATDS encompass systems that dial from a stored list. It reasoned that the TCPA’s exception allowing for calls from an ATDS “to collect a debt owed or guaranteed by the United States” would not make sense if the TCPA only applied to randomly dialed calls. The Court supported its reasoning by looking to the FCC’s interpretation of the TCPA. Notably, the Second Circuit rejected the idea that the D.C. Circuit’s decision in ACA International invalidated the 2003, 2008, and 2012 FCC Orders or that prior Second Circuit precedent in King v. Time Warner Cable offered any opinion on these FCC Orders. Having decided that the ACA International opinion touched only the 2015 Order, a conclusion that contrasts even with Marks, the Court looked to the prior Orders to inform its interpretation of the TCPA. In doing so, the Court gave large deference to the FCC and found that the FCC “has long suggested that the TCPA be interpreted broadly – in such a way that it covers systems which dial from stored lists – so that the statute’s prohibitions maintain their general deterrent effect on telemarketers.”
Analysis of Human Intervention
The Court then turned to the human intervention question. Acknowledging that all telephones “will always require some human intervention somewhere along the way,” the Court focused on “determining how much human intervention is too much for a system to qualify as an ATDS.” Initially, the Second Circuit rejected the district court’s holding that the human intervention test turns on whether a human determines the time at which the numbers are dialed. Instead, the Court’s opinion focuses its analysis on what it means to “dial” numbers, concluding that clicking “send” in a text messaging program is fundamentally different than dialing a telephone number. The Court reasoned that a user who clicks “send” is not dialing each number him or herself, but instead is instructing the system to dial a list of numbers. Because the text messaging platforms used in the underlying case sent text messages to a list of numbers when the user clicked “send,” the Second Circuit held that the platforms did not require human intervention to dial.
Notably, one of the key reasons that the D.C. Circuit invalidated the FCC’s 2015 Order was its overbreadth – the definition of an ATDS encompassed each and every smartphone in America, turning virtually “every American [into] a TCPA-violator-in-waiting, if not a violator-in fact.” Seemingly recognizing that its decision would do precisely this, the Court included a lengthy footnote in its opinion addressing this issue. According to the Court, when an individual saves a number in his or her contacts, the person is “merely instructing the phone to replace the 10-digit phone number with a single button” and when an individual clicks on the name/number to be called, he or she constructively dials the number.
It is now more likely that the Supreme Court will weigh in on the definition of an ATDS. There is a definite and unquestionable Circuit split on a key provision of the TCPA – a split that features four of the most populous and important circuits in the nation. Due to the COVID-19 pandemic, the Supreme Court has delayed oral argument in Barr v. American Association of Political Consultants, a case that centers on the debt collection exemption for the federal government, which now may not occur until the term that begins in October 2020. However, a petition for certiorari is still pending in Duguid v. Facebook, which challenges not only the debt collection exemption, but the Ninth Circuit’s definition of an ATDS. Certiorari seems more likely in Duguid after the Second Circuit’s decision in Duran.