Does the Telephone Consumer Protection Act of 1991 prohibit the use of a system that stores phone numbers and dials them automatically?
This case asks the Supreme Court to interpret the definition of an automated telephone dialing system (“ATDS”) as set forth under the Telephone Consumer Protection Act of 1991 (“TCPA”). The statute defines an ATDS as equipment that “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.” Employing a grammatical analysis, Respondent Facebook contends that a system is an ATDS only when it can automatically call phone numbers that were produced or stored using a random number generator. Also using a grammatical analysis, Petitioner Noah Duguid counters that an ATDS encompasses a system that can store and automatically call phone numbers, irrespective of whether the system uses a random number generator. The outcome of this case has significant implications in determining the type of devices and systems that could qualify as an ATDS and what callers could be subject to the $1,500-per-call statutory liability under the TCPA.
Questions as Framed for the Court by the Parties
Whether the definition of an "automatic telephone dialing system" in the Telephone Consumer Protection Act of 1991 encompasses any device that can “store” and “automatically dial” telephone numbers, even if the device does not “us[e] a random or sequential number generator.”
Responding to the rise of unsolicited and intrusive robocalls, Congress passed the Telephone Consumer Protection Act of 1991 (“TCPA”). Duguid v. Facebook, Inc., (9th Cir. 2019) at 1149. The TCPA forbids calls from an automated telephone dialing system (“ATDS”). Id. 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.” Id. Congress enumerated three exceptions to this prohibition: calls for emergency purposes; calls made with express consent by the called party; and calls to collect a debt owed to the United States. Id.
Beginning in January 2014, Petitioner Facebook began sending Respondent Noah Duguid sporadic text messages stating that an unknown browser was attempting to access his (nonexistent) Facebook account. Id. However, Duguid neither used Facebook nor consented to Facebook contacting his cell phone. Id. Despite Duguid’s requests via text and email that Facebook stop sending him messages, Facebook continued sending him unwanted messages until at least October 2014. Id.
Duguid filed suit against Facebook on behalf of classes of people who received similar unsolicited messages from Facebook, alleging that Facebook sent the messages using an ATDS in violation of the TCPA. Id. Duguid alleged that Facebook’s messaging process was an ATDS because Facebook maintained a database of phone numbers and created a program in which an automated message would be sent to a phone number in the database each time a new device accessed the account associated with the phone number. Id.
The United States District Court for the Northern District of California dismissed Duguid’s claim under Federal Rule of Civil Procedure 12(b)(6), finding that Duguid failed to adequately allege that Facebook’s system was an ATDS as defined by the TCPA. Duguid v. Facebook Inc., (N.D. Cal. 2017) at 15. Specifically, the District Court found that Duguid failed to provide facts suggesting that Facebook’s system either produced or dialed random numbers, emphasizing Facebook’s system of targeting its security notification messages to specific phone numbers as inconsistent with the existence of an ATDS. Id. at 12.
On appeal, the United States Court of Appeals for the Ninth Circuit reversed, holding that Duguid alleged facts sufficient to establish that Facebook’s system was an ATDS. Duguid (9th Cir. 2019) at 1149. The Ninth Circuit reasoned that the TCPA prohibits a system that can store numbers to be called and can dial such numbers automatically. Id. at 1150. In reaching this decision, the Ninth Circuit employed a grammatical analysis, stating that the phrase “using a random or sequential number generator” only modifies the verb “produce,” and not the verb “store.” Id. at 1151. Moreover, the Ninth Circuit asserted that the legislature intended the statute to be read broadly and emphasized the “TCPA’s animating purpose [of] protecting privacy by restricting unsolicited, automated telephone calls.” Id.
DEFINING AN ATDS: CONDUCTING A GRAMMATICAL ANALYSIS OF THE TCPA
Facebook claims that conducting a rigid syntax analysis of the TCPA’s statutory language is proper to determine the meaning of an ATDS because when, as here, “the statute’s language is plain,” courts’ sole role “is to enforce it according to its terms.” Brief for Petitioner, Facebook at 22. Facebook claims that two grammar rules—the series-modifier rule and the punctuation canon—dictate that the phrase “using a random number generator” modifies both the verbs “store” and “produce.” Id. at 22. Facebook states that the series-modifier rule dictates that a modifier applies to the entire preceding clause, especially when the modifier directly follows the clause. Id. at 23. Facebook illustrates this rule through the phrase “appellate courts reverse or affirm district court decisions using the precedents at hand.” Id. at 24. Facebook argues that according to the series-modifier rule, the example sentence would mean that appellate courts use precedent both when reversing and when affirming district court decisions because “reverse or affirm district court decisions” is one clause and “using precedents at hand” modifies and directly follows that clause. Id. Indeed, Facebook emphasizes that “no one” would read the sentence to mean that appellate courts use precedent only when affirming district court decisions. Id. Facebook states that the series-modifier rule similarly applies here because the verbs “store” and “produce” are part of one clause as they share a common direct object—“telephone numbers to be called”—and the modifying phrase “using a random or sequential number generator” immediately follows. Id. Thus, relying on the series-modifier rule, Facebook concludes that the phrase “using a random number generator” modifies both “store” and “produce.” Id.
Facebook further argues that the punctuation canon supports Facebook’s interpretation of the TCPA. Id. at 25. According to Facebook, the punctuation canon states that when a “qualifying phrase is separated from its antecedents by a comma, the qualifying phrase applies to all antecedents.” Id. Facebook states that the qualifying phrase “using a random or sequential number generator” is separated by a comma from its antecedents “to store or to produce telephone numbers to be called.” Id. Thus, argues Facebook, “using a random or sequential number generator” applies to both “store” and “produce” pursuant to the punctuation canon. Id.
Duguid counters that Facebook errs in its overreliance on rigid syntax rules and argues that proper statutory interpretation “is governed not by the rules of syntax but by the sense of the passage.” Brief for Respondent, Noah Duguid at 11 (internal quotations omitted). Duguid claims that two grammar rules—the distributive-phrasing canon and the last-antecedent canon—dictate that “using a random or sequential number generator” only modifies “produce” and not “store.” Id. at 16. Duguid argues that the distributive-phrasing canon states that when a sentence contains several antecedents and several consequents, courts should “read them distributivity and apply the words to the subjects which, by context, they seem most properly to relate.” Id. at 20. Duguid provides the example “men and women are eligible to become members of fraternities and sororities.” Id. The distributive-phrasing canon, explains Duguid, would match “men” with “fraternities” and “women” with “sororities” because of the definitions of the words. Id. Here, Duguid defines “a random or sequential number generator” as a procedure of scrambling current numbers to produce a new number, emphasizing that this is a method of “producing numbers, not means of storing them.” Id. at 13–14. Thus, argues Duguid, according to the distributive-phrasing canon, the phrase “using a random number generator” only modifies “produce” because the phrase is meant to describe only how the numbers are to be produced. Id. at 14.
Duguid further supports his interpretation of the TCPA by citing the last-antecedent canon. Id. at 20. Duguid explains that the last-antecedent canon states that when a statute lists terms or phrases followed by a limiting clause, the clause is to be read as modifying only the noun or phrase it immediately follows. Id. Duguid emphasizes that this rule is particularly applicable when the statute “does not contain items readers are used to seeing listed together or a concluding modifier that readers are accustomed to applying to each of them.” Id. at 21. Duguid contends that the rule particularly applies to the text of the TCPA because “store” and “produce” have unconnected meanings and “using a random or sequential number generator” customarily applies to “produce” but not “store.” Id. Thus, Duguid concludes that the last-antecedent canon dictates that “using a random or sequential number generator” should only apply to “produce” and not “store.” Id.
DEFINING AN ATDS: ANALYZING THE LEGISLATIVE HISTORY OF THE TCPA
Facebook argues that its interpretation of the TCPA comports with the legislative history of the TCPA. Brief for Petitioner at 30. Facebook emphasizes that during the TCPA’s drafting, Congress had different concerns with ATDS technology compared to robocalls. Id. at 31. Facebook claims that Congress created more prohibitions on robocalls because they were considered a “nuisance” and an “invasion of privacy.” Id. In contrast, Facebook states that Congress was more concerned with how ATDS technology could potentially tie up emergency and business lines or impose significant costs on pay-per-minute lines, like cellular phone lines. Id. at 32–33. Facebook claims that Congress narrowly addressed ATDS problems by prohibiting ATDS calls only to emergency lines, certain hospital lines, cellular phone numbers, and business lines. Id. at 34. Facebook emphasizes Congress’s intention to narrowly address ATDS problems by highlighting Congress’s prohibition of robocalls, but not ATDS calls, to residential lines. Id. at 31, 33–34. Thus, Facebook argues that its definition of an ATDS is faithful to Congress’s concerns by preventing devices that actually use random- or sequential-number generators, which could clog important phone lines or impose charges on pay-per-minute lines. Id. at 34. In contrast, contends Facebook, Duguid’s interpretation is overbroad because it would “sweep in every single device capable of storing numbers to dial later,” such as cell phones with speed dial, and such a prohibition departs from the fears that prompted Congress to act. Id.
Duguid counters that Congress intended the TCPA to be broadly construed to protect the public from “intrusive nuisance calls.” Brief for Respondent at 28. Duguid claims that the enumerated exception for calls made with express consent by the called party resulted from Congress’s balance of individual privacy rights and legitimate telemarketing practices. Id. According to Duguid, this exception protects consumers by enabling them to avoid intrusive automated calls and only allowing callers to use an ATDS for recipients with whom the callers have a valid business relationship. Id. at 28–29. Duguid claims the express consent exception is proof that Congress presumed that “absent consent, automatically dialed calls are a nuisance and an invasion of privacy, regardless of the type of call.” Id. at 29. In addition, Duguid cites a House Committee Report that raised concerns about telemarketing use of automatically dialed numbers from a stored database of current and prospective clients. Id. at 34. Further, Duguid emphasizes that the report was increasingly concerned with the frequency of automated calling because of the creation of telephone number databanks to be sold to telemarketers. Id. at 34–35. Countering Facebook’s assertion, Duguid claims that Congress was not merely worried about a system that could generate random numbers to be called but was worried about “all systems capable of storing numbers and dialing them automatically.” Id. at 37. Thus, Duguid argues that his broad interpretation of the TCPA comports with Congress’s intent to reduce the frequency of unsolicited and intrusive calls. Id.
EFFECTS ON PRIVATE INDIVIDUALS AND FIRST AMENDMENT CLAIMS
In support of Facebook, Midland Credit Management, Inc. ("Midland") argues that adopting the Ninth Circuit’s definition of an ATDS would impose severe speech restrictions. Brief of Amicus Curiae Midland Credit Management, Inc., in Support of Petitioner at 15. Midland contends that under the Ninth Circuit's reading of the TCPA, most cell phones would be considered an ATDS, and thus, most cell phone users could be subject to liability. Id. Also in support of Facebook, Salesforce.com (“Salesforce”) argues that the Ninth Circuit’s definition of an ATDS would lead to impractical results. Brief of Amicus Curiae Salesforce.com, Inc., in Support of Petitioner at 9. Salesforce contends many modern cars can be connected to smartphones to permit automatic phone calls, which reduces the dangers associated with making and receiving calls while driving. Id. According to Salesforce, using such technology to make calls while driving would be prohibited by the TCPA under the Ninth Circuit’s holding. Id. Salesforce also asserts that other safety mechanisms, such as privacy notifications sent by text, could be prohibited by the Ninth Circuit’s holding. Id. at 13. Furthermore, Portfolio Recovery Associates, LCC ("Portfolio") argues that the Ninth Circuit's interpretation of the TCPA would lead to an overbroad application of the legislation and impose excess speech restrictions, which would violate individuals’ First Amendment right to free speech. Brief of Amicus Curiae Portfolio Recovery Associates, LCC., in Support of Petitioner at 8. Portfolio contends that such a reading could even potentially expose the entire TCPA to First Amendment challenges. Id.
In support of Duguid, Dr. Henning Schulzrinne counters that the Ninth Circuit’s interpretation of the TCPA would not impose excess liability on private individuals. Brief of Amicus Curiae Dr. Henning Schulzrinne, in Support of Respondent at 10–11. According to Schulzrinne, ordinary cell phone usage, including smartphone usage, does not consist of automatic dialing because “[f]actory default smartphone applications require a human to cognitively select numbers to call,” so “[t]hey do not automatically dial stored contacts.” Id. Schulzrinne also counters Salesforce’s argument regarding safety and automatic calling features in cars by arguing that such technology is “neither automatic nor unsolicited” for the same reasons that smartphones are generally not considered automatic dialing technology. Id. at 12. Also arguing in support of Duguid, the National Consumer Law Center, Consumer Federation of America, and Consumer Reports (the “Consumers”) argue that there is no history of cell phones being the subject of TCPA litigation. Brief of National Consumer Law Center et al., at 27. Regardless, the Consumers note that even if litigation involving cell phones arose under the TCPA, the Federal Communications Commission has the authority to clarify the law's scope to avoid any First Amendment violations. Id. at 27–28.
POTENTIAL IMPACT ON BUSINESSES
Midland argues that the Ninth Circuit’s definition of a ATDS would impose “crushing financial penalties” on businesses of all types, including social networking platforms, internet-based services, mobile applications, sports teams, restaurants, pharmacies, labor unions, and banks and financial services, which all use systems that can store the phone numbers of their customers and automatically message those numbers to communicate with their customers. Brief of Midland Credit Management, Inc. at 19–23. For example, liability could extend to mobile applications such as Lyft and Uber that store and automatically message users’ phone numbers when users’ ride share vehicle arrives at the pick-up location, argues Midland. Id. at 21. Thus, Midland states that by adopting the Ninth Circuit's holding, the Court would expose countless businesses to liability under the TCPA. Id. at 18. The Home Depot, Inc. similarly argues that the Ninth Circuit’s reading of the TCPA will make compliance with the law unpredictable and inordinately expensive for businesses. Brief of Amicus Curiae The Home Depot, Inc., in Support of Petitioner at 18. Home Depot notes that many businesses use “Customer Relationship Management” (CRM) software to communicate with customers about orders, deliveries, and security issues. Id. at 19. Home Depot argues that such software would likely fall under the Ninth Circuit’s definition of an ATDS, which would make it virtually impossible for consumer-facing businesses to comply with the TCPA because of the harsh liability provisions of the TCPA and the inevitability of unsolicited calls being made using CRM software due to incorrect or outdated contact information provided by customers. Id. at 21–28.
In support of Duguid, thirty-seven states (“the States”) argue that the “parade of horribles” asserted by Facebook and its supporters, including adverse impacts on business, will not materialize. Brief of Amici Curiae North Carolina, Indiana et al., in Support of Respondent at 20. The States contend that the Ninth Circuit’s interpretation of the law is already applied in various jurisdictions without the damaging impact on business. Id. at 21–22. Furthermore, Main Street Alliance (“Main Street”), in support of Duguid, argues that the Ninth Circuit’s interpretation actually protects businesses. Brief of Amicus Curiae Main Street Alliance, in Support of Respondent at 4. Main Street notes that small businesses represent 99.9% of all U.S. businesses and account for 44% of U.S. economic activity. Id. at 3. However, Main Street argues that small businesses have been “inundated” with robocalls as many small businesses rely on cell phones as their primary means of phone communication. Id. at 4. Unlike individuals, Main Street asserts, small businesses feel “obligated to answer the phone every time it rings . . . for each call could potentially be a supplier, a distributor, a contractor, customer, or potential client—or the call could be a typical sales robocall.” Id. at 5. Consequently, Main Street emphasizes that answering robocalls is expensive for small businesses because of the many hours spent answering useless calls and interrupting work productivity. Id.
- Michelle Pector & Jared Wilkerson, Facebook v. Duguid – US Supreme Court to Decide Crucial Issue Affecting TCPA Liability, JD Supra (Nov. 3, 2020).
- Nikku D. Khalifian, Facebook and the United States Submit Briefs in Facebook, Inc. v. Duguid, The National Law Review (Sept. 23, 2020).