Any company that uses telephony systems for outreach to consumers got important and potentially good news on January 27, 2020, when the Eleventh Circuit released its much-anticipated opinion in Glasser v. Hilton Grand Vacations Company, LLC, No. 18-14499.  The court held that a phone system must use randomly or sequentially generated numbers to qualify as an automatic telephone dialing system (ATDS) under the Telephone Consumer Protection Act (TCPA).  The court took a close, “Scalia-esque” look at the language of the statute and concluded that the phrase “using a random or sequential number generator” modifies both “to store” and “[to] produce.”  The court further found that the telephony at issue in Glasser required human intervention and, as a result, “was not an ‘automatic’ dialing system in the first place.”  In doing so, the Eleventh Circuit joined the Second and Third Circuits’ interpretation of an ATDS, making the Ninth Circuit the only federal Court of Appeals to find that an ATDS is defined by the ability to store numbers and dial them automatically.

This decision is of significance because of the thousands of individual and class actions that are brought annually under the TCPA, depending on the theory that a phone system that lacks a “random or sequential number generator” nevertheless qualifies as an ATDS, triggering the TCPA.  Hence, companies of all types can take comfort that the theory has suffered another, potentially telling blow.

Background

The Glasser decision resolved two separate district court cases, one from the Middle District of Florida and another from the Northern District of Georgia.  Each underlying case analyzed a different variation of telephony: one that included a clicker agent to place calls and another that dials from a stored list of phone numbers.  The Middle District of Florida held that a telephone system does not qualify as an ATDS if it requires human intervention to place calls.  Specifically, if a call is required to click on a “Make Call” button to initiate a call, the telephone system is not an ATDS.  The Northern District of Georgia separately held that the telephone system at issue qualified as an ATDS because it did not require human intervention to place a call and because it had the capacity to dial automatically from a stored list of telephone numbers.

Analysis

After briefly addressing standing, the Eleventh Circuit engaged in a comprehensive analysis of the statutory definition of an ATDS, beginning with a textualist’s primer in statutory interpretation. The court further analyzed the history of the TCPA and the implications of the D.C. Circuit’s previous decision in ACA International.  Finally, it concluded the opinion by acknowledging the Ninth Circuit’s approach to the definition of an ATDS in Marks v. Crunch San Diego, LLC, but then rejecting that interpretation.

Specifically, the decision was authored by Judge Sutton, who was sitting by designation from the Sixth Circuit.  Judge Sutton is a former clerk for the late Justice Scalia.  In the opinion, Judge Sutton echoed the same textualist approach as Justice Scalia and began by examining whether the phrase “using a random or sequential number generator” modifies both verbs – “to store” and “[to] produce” – or only “[to] produce.”  Plaintiffs argued in favor of the more expansive reading, claiming that “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 and dial them.”  For their part, Defendants argued the clause modifies both verbs. Hence, “to be an auto-dialer, the equipment must (1) store telephone numbers using a random or sequential number generator and dial them or (2) produce such number using random or sequential number generator and dial them.”  Defendants further argued that Plaintiffs’ proposed interpretation would expand the statute to cover “phone calls that target a pre-existing list of prospects or debtors, even though they were not randomly or sequentially identified.”

The court began where most do: noting the lack of clarity in the TCPA.  Looking to the “conventional rules of grammar and punctuation,” however, the court found that the phrase “using a random or sequential number generator” modifies both “to store” and “to produce.”  Judge Sutton acknowledged “the oddity of ‘stor[ing]’ telephone numbers using a number generator,” but noted that in reality, “[s]omewhere between identification and production, storage occurs.” The court also noted that “[i]f all you need to show is storing and calling, that would apply to the ‘capacity’ of nearly every” telephone, whether that telephone was “designed to produce randomly generated numbers or not.”

The decision also recognized the legislative history of the TCPA, as well as the technological history of automatic dialing devices. The court explained that for the first dozen years following the passage of the TCPA, the Federal Communications Commission (FCC) required random and sequential number generation. Only in 2003 did the FCC change its tune and issued a new order interpreting the ATDS provision of the TCPA to extend to telephones that “merely stored numbers and called them” (i.e., predictive dialers).  In the eyes of the Eleventh Circuit, a shift in dialer technology, but not the statute, prompted this change.

In applying a textual interpretation of the TCPA, the court rejected Plaintiffs’ reliance on the now-beleaguered Marks decision.  The court expressly rebuffed the Ninth Circuit’s holding that an ATDS encompasses “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.”  The court further noted that to adopt such a reading of the statute – which requires separation of the statute’s two verbs (“to store or produce”) – looks like surgery rather than interpretation.

Finally, the court addressed Plaintiffs’ argument that requiring random and sequential number generation “makes hash of several exemptions in the statute.”  For example, if calls were placed only to numbers generated randomly or sequentially, why does the statute have an exemption for consenting recipients.  And why is there an exemption for calls regarding government backed debt?  Debt collection calls are targeted, not placed to randomly generated numbers.  In response, the court noted that the TCPA provides an alternate theory for liability – calls made using and artificial or prerecorded voice – and this “alternative basis for liability covers every exemption the [P]laintiffs worry about.”

Practical Implications

When the D.C. Circuit decided ACA International in 2018, few would have thought that the legal world would still be waiting on guidance from the FCC nearly two years later.  The ensuing two years, however, have seen a number of defendant-friendly decisions from the appellate courts, with Glasser continuing the trend.

Glasser also serves as another reminder of the importance of human intervention.  The opinion follows the same pattern as many recent opinions from the district court level, first by finding that an ATDS requires a random or sequential number generator and, second, that the telephony at issue could not qualify as an ATDS because it is not automatic, i.e., the telephony requires human intervention.  In the words of the Eleventh Circuit: “An employee’s choice initiates every call.  Yes, the system dials the numbers itself.  But no one would think that telling a smartphone to dial the phone number of a stored contact (or several contacts) means the smartphone has automatically dialed the number.”

And Glasser pushes the Ninth Circuit’s decision in Marks even further to the fringe.  The Eleventh Circuit’s decision analyzes many of the same arguments – statutory language, legislative history, practical considerations – and politely rejects them all.  No doubt that defendants urging courts to find in their favor will caution against reading the TCPA in a way that looks “more like surgery” than statutory interpretation.

The decision may not be the last word from the Eleventh Circuit on the issue, however.  It is likely that the Plaintiffs will petition the court for rehearing en banc.  They will likely have at least one vote in their favor, as Judge Martin dissented in part to the opinion, reflecting an inclination to follow the Ninth Circuit’s interpretation of ATDS.

The debate among the Circuits could also be rendered largely academic, however, if the Supreme Court grants certiorari and reaches the merits of the issues in Duguid v. Facebook.  The social media giant petitioned the Supreme Court for review of both the TCPA’s debt collection exemption and the Ninth Circuit’s definition of an ATDS espoused in Marks.  The justices reviewed Facebook’s petition in their recent January 24 private conference but have not issued an order or relisted the petition for the next conference.

Either way, judicial review of the TCPA’s hot-button issues continues, with or without the involvement of the FCC.