Advertising Law Blog

Supreme Court to Determine What Constitutes an Automated Telephone Dialing System

The United States Supreme Court has granted Facebook’s petition for certiorari for a case involving the Telephone Consumer Protection Act of 1991 (“TCPA”). The issue, which will be heard during in the October 2020 term, concerns the definition of the term “automated telephone dialing system” or ATDS. Because there is a split between the holdings of the Third and Ninth Circuits, the Supreme Court accepted Facebook’s appeal of the Ninth Circuit’s 2019 decision in Duguid v. Facebook, Inc.

In Duguid, the Ninth Circuit determined that Facebook’s automated security message system fell within the definition of an ATDS. The TCPA defines an 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.” This definition was written nearly thirty years ago, and quite simply is very difficult to apply in light of all the technological changes that have occurred since then.

In 2014, plaintiff Noah Duguid, who never owned a Facebook account and never consented to receive communications, began receiving automated text messages from Facebook’s server warning of a possible hack to his nonexistent Facebook page. After several attempts to stop Facebook from sending these messages, Duguid commenced a lawsuit claiming that the automated text messages fell under the definition of an ATDS and that the use of Facebook’s security system violated the TCPA.

Facebook moved to dismiss, claiming that its automated security messages were not sent by an ATDS as defined by the TCPA. Facebook argued its security system did not send the messages automatically like other prohibited autodialers do, but rather sent them reflexively when there is an indication of a security breach.

The district court granted Facebook’s motion to dismiss, but Duguid prevailed on appeal to the Ninth Circuit. According to the Ninth Circuit, Duguid had sufficiently alleged a claim that the TCPA’s prohibition on calls from an ATDS would encompass Facebook’s security messages.

Facebook then appealed to the Supreme Court, noting that the Ninth Circuit’s ruling is at odds with a Third Circuit holding in Dominquez v. Yahoo! in which the Federal Communications Commission attempted to define an ATDS in 2015, but the D.C. Circuit invalidated that definition in ACA International v. FCC in 2018. As a result of the grant of Facebook’s petition, the Supreme Court will now decide the scope of the decades-old definition of an ATDS.

Unless there is prior express written consent (which Facebook unquestionably did not possess from Duguid), the TCPA generally prohibits phone calls and text messages sent by an ATDS. Violators are subject to penalties of $500 per call or text message, a dollar figure that has generated copious litigation over the life of the TCPA.

Since its enactment, the TCPA has been amended more than once, for example, to allow an ATDS to be used for emergency purposes and to permit calls made for the purpose of collecting debts owed to the United States government, which amendmentwas later revoked. In Barr v. American Association of Political Consultants, decided July 2020, the Supreme Court struck down the government’s debt collecting exception, finding it to be in violation of the First Amendment because it impermissibly favored one type of speech (government debt collecting) over others. Specifically, the Supreme Court found the exception to be a content-based speech restriction that gave preference to automated calls for the purpose of debt collection while restricting calls for other purposes.

TAKEAWAY: Currently, there is no clear definition of what constitutes an ATDS under the TCPA. Businesses that rely on telemarketing or technology to communicate with their customers can look forward to obtaining clarity as to what technology is permissible for reaching large numbers of consumers quickly.