The United States Court of Appeals for the Second Circuit recently issued a decision with far reaching Telephone Consumer Protection Act ("TCPA") implications. Specifically, the Second Circuit's decision interpreting what constitutes an automatic telephone dialing system ("ATDS") for TCPA law purposes bucks a recent trend that had narrowed the scope of equipment that courts deem to be an ATDS.
For what reason did the Second Circuit broaden the definition of ATDS for TCPA law purposes?
The Second Circuit became the latest appellate court to weigh in with an interpretation of how an ATDS should be interpreted for TCPA law purposes. Following the decision in ACA International in 2017, in which Federal Communications Commission's ("FCC") overly-broad interpretation was vacated, the prevailing trend among appellate courts had been to interpret the term ATDS to exclude equipment that dialed from lists of numbers that are either uploaded or manually inputted to dialing application software. The reasoning behind these rulings was easy enough to understand: if equipment does not produce numbers using a random or sequential number generator, then it is, by definition, not an ATDS. The Second Circuit ultimately disagreed with this logic, however. Instead, the Court focused its analysis on whether equipment has the capacity to store and dial numbers, regardless of how the list of called numbers had been obtained or produced. Specifically, the Second Circuit summed up its interpretation as follows: "it does not matter that the lists [of numbers] are produced by human-generators rather than mechanical number-generators. What matters is that the system can store those numbers and make calls using them." Remarkably, the Court did not stop there. It also went a step further by rejecting another prevailing interpretation of ATDS in which courts exclude from the definition of ATDS equipment that requires human intervention to initiate the dialing. Specifically, it held that "[c]licking does not require enough human intervention to turn an automatic dialing system into a non-automatic one."
The Second Circuit's opinion makes it virtually inevitable that the United States Supreme Court will be called upon to definitively decide how to properly define an ATDS within the meaning of the TCPA. The Second Circuit seemingly adopted the vacated FCC 2015 interpretation by: (i) focusing exclusively on equipment's ability to store numbers; and (ii) requiring significantly more human intervention to exclude equipment from the ATDS definition than has been deemed necessary by nearly every other circuit that has ruled on this issue to date. Readers of this blog will recall how the FCC 2015 Order had been vacated by the D.C. Circuit in ACA International because of that Court's fear that the interpretation was so broad as to encompass ordinary cellphones. The Second Circuit's embrace of an interpretation that would also likely encompass cellphones seems probable to hasten the Supreme Court's willingness to take up the issue to settle the growing circuit split.
Taking Steps to Avoid a TCPA Law Claim
In the post-ACA International regulatory environment, it is critical for businesses to understand the scope of the TCPA's restrictions before commencing any telemarketing campaign. The hodgepodge of rules governing compliance with the TCPA, and the staggering exposure to liability that companies face for violating the statute, makes it imperative to have telemarketing practices and procedures examined by experienced counsel in order to mitigate risk.
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