SCOTUS Narrows TCPA Application in Win for Class Action Defendants

On April 1, 2021, the U.S. Supreme Court issued its ruling in Facebook, Inc. v. Duguid, Case No. 19-511, delivering a big win to defendants in class action lawsuits brought under the Telephone Consumer Protection Act (TCPA), the federal statute governing autodialer and robocall practices. The unanimous opinion resolves a circuit split, narrows the scope of the TCPA as advanced by the plaintiffs’ bar, and should significantly curtail the volume of TCPA class action litigation going forward.

The Court, in a unanimous opinion delivered by Justice Sotomayor, held that the definition of Automated Telephone Dialing System (“ATDS”) under the TCPA covers only systems that can store or dial numbers using a random or sequential number generator.  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.”  47 U. S. C. §227(a)(1).  The case turned on whether the phrase “using a random or sequential number generator” in the ATDS definition modifies both verbs that proceed it—“store” and “produce”—or only the closer verb, “produce.”  The Supreme Court held that the phrase modifies both, thus rejecting the Ninth Circuit’s ruling (and Plaintiff Duguid’s position) that the TCPA more broadly covers systems that can store and automatically dial numbers, even if the numbers are not generated randomly or sequentially.  

The case stems from Plaintiff’s alleged receipt of text messages from Facebook alerting him of attempted logins to his account. But Plaintiff alleged that he never had a Facebook account or gave Facebook his number.  Facebook sought dismissal of the case, arguing that Plaintiff failed to allege that Facebook used an autodialer because he did not claim Facebook sent the text messages to numbers that were randomly or sequentially generated.  Instead, Plaintiff alleged Facebook sent “targeted, individualized text messages to numbers linked to specific accounts.”  Slip Op. at 4.  The Court held that, because Facebook’s login notification system does not store or produce numbers “using a random or sequential number generator,” it is not an autodialer under the TCPA. Slip. Op. at 5.

The Court’s decision comes as lower courts have already gradually placed increasing limitations on the ability to bring cases under the TCPA.  Over the past few years, courts have, for example, restricted agency liability under the TCPA and required plaintiffs to properly allege actual damages for TCPA standing.

Practically speaking, this is a win for companies that do not employ systems with a random or sequential number generator as they should be able to avoid TCPA claims from the plaintiff’s class action bar.  Nonetheless, companies should remain cautious about their marketing and communications campaigns. As a best practice, companies should only text or call people that have given permission to do so, and retain written records of when and how they obtained such permission. 

A copy of the opinion is available here.