Businesses that place phone calls or send text messages to consumers may find some relief in a recent United States Supreme Court decision that limits the applicability of the Telephone Consumer Protection Act (“TCPA”). The TCPA prohibits any person from placing phone calls (including text messages) to a wireless number using an automated telephone dialing system (“ATDS” or an “autodialer”) or pre-recorded or artificial voice without the recipient’s prior express consent (or, for marketing calls, prior express written consent), unless the call is made for an emergency purpose.  Courts and businesses have disagreed over what constitutes an “autodialer” for TCPA purposes.

The Supreme Court ruled on April 1, 2021, in Facebook v. Duguid, that the key to whether a device is an “autodialer” under the TCPA is whether it uses a random or sequential number generator.  Under the Court’s ruling, an “autodialer” is a device with the capacity either to store a telephone number using a random or sequential generator, or to produce a telephone number using a random or sequential number generator.  A device that can store and dial telephone numbers—such as a cell phone or a predictive dialer—but that does not use a random or sequential number generator, is not an autodialer.

Prior to the Supreme Court decision, some lower courts interpreted “autodialer” under the TCPA more broadly. The Ninth Circuit Court of Appeals issued a unanimous decision in September 2018 holding that an autodialer includes equipment that (i) either has the capacity to store numbers to be called, or to produce numbers to be called using a random or sequential number generator, and (ii) has the capacity to dial such numbers. Under this broad interpretation, any communications device that can store and dial phone numbers could be considered an autodialer.  For example, even if a customer service agent were to manually dial a consumer’s number using a cell phone, since the cell phone theoretically has the capacity to both store and dial numbers, it arguably would be considered an autodialer. If the business did not obtain sufficient consent from the consumer, such calls would violate the TCPA.

The TCPA has been a common source for class action lawsuits due to the potential for lucrative damage awards. In addition to authorizing enforcement actions by the Federal Communications Commission or state attorneys general, the TCPA provides for a private right of action under which plaintiffs may recover up to $1,500 per call for willful or knowing violations, among other relief, with no cap on damages. The Supreme Court’s decision may slow the wave of TCPA class actions, which would be a welcome relief to businesses.

Read more in Mayer Brown’s Supreme Court Decision Alert and Class Action Defense Blog.