The TCPA’s Chocolate Factory Post Facebook v. Duguid

The TCPA’s Chocolate Factory Post Facebook v. Duguid

“Oh, you should never, never doubt what nobody is sure about.”

By now you have probably read dozens of articles from the usual pundits about the landmark U.S. Supreme Court TCPA decision, Facebook v. Duguid. The Opinion was fundamentally good for both businesses and consumers because it finally put to rest a debate that has echoed in the halls of the Federal Communications Commission (FCC) and courts across the United States: what is an “automatic telephone dialing system” (ATDS)? Or has it?  As I spent the last week meeting with clients, strategizing on pending litigation, and circling the speaker circuit, I can’t help but think about quotes from my favorite childhood movie, Willy Wonka and the Chocolate Factory. So, what would Willy Wonka have to say about Facebook?  “Welcome my friends, welcome to my chocolate factory.”

Grandpa Joe: Mr. Wonka?
Willy Wonka: I’m extraordinarily busy, sir.
Grandpa Joe: Uh, I just want to ask about the chocolate. Uh, the lifetime supply of chocolate for Charlie. When does he get it?
Willy Wonka: He doesn’t.
Grandpa Joe: Why not?
Willy Wonka: Because he broke the rules.
Grandpa Joe: What rules? We didn’t see any rules, did we Charlie?

Calls to our office from newly-sued TCPA defendants frequently began with, “We didn’t break the law! We do not robodial!” A discussion ensues about the definition of ATDS, the varying opinions of courts across the nation, and the federal rulings that have addressed the issue.  The opinions and regulations were contradictory and difficult to put into practice with confidence that the mandates of the TCPA were being followed.  This made it almost impossible for businesses, charities, politicians, and others to call with confidence that they would not end up spending hundreds of thousands – if not millions – of dollars defending against a TCPA lawsuit.  It is the type of lawsuit that puts a small business or charity out of business.  Facebook has added much-needed clarity to the issue.

“Oh, you have questions? Let me drop everything.”

 The text of the TCPA reads:

(1) The term “automatic telephone dialing system” means 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.

Facebook answered the question “must a dialing system use a random or sequential number generator to store or produce numbers (Narrow Definition), or just to produce numbers (Broad Definition).”  The distinction is important because if a dialer need only store numbers and then dial them, any modern dialing equipment or cellular phone could be an ATDS.  Circuit Courts were divided about the answer to that question, allowing vexatious litigators and opportunistic class action attorneys to capitalize on a game of semantics.  In the cloud of this confusion, the 9th Circuit Court of Appeals ruled against Facebook holding that the Broad Definition applied.  Facebook appealed the decision to the U.S. Supreme Court.

Willy Wonka: Strike that! Reverse it!

 The Supreme Court disagreed with a Broad Definition and decided the question once and for all. “To qualify as an ‘automatic telephone dialing system’ under the TCPA, a device must have the capacity either to store a telephone number using a ransom or sequential number generator, or to produce a telephone number using a random or sequential number generator” – Narrow Definition!

Since the Facebook ruling, two predictive outcomes have emerged.  One, pundits have analyzed every word of every sentence in Facebook and prognosticated about the future of the TCPA. Two, politicians have vowed to use their law-making powers to rewrite the TCPA to plug a hole in the TCPA perceived to have been created by Facebook. On this point, even the Court noted in its ruling that it does not disturb the current prohibition on making unconsented robocalls. I recommend reading Noble Systems’ Karl Koster’s blog on this topic (and the several others that he has written). I urge taking a deep breath and to consider the fact that regulation of the calling ecosystem has fundamentally changed the need for more regulation.

Mrs. Gloop: Don’t just stand there, do something!
Willy Wonka: Help. Police. Murder.

 The TCPA was drafted in 1991 to stop the tide of telemarketing calls that started in the eighties.  Unscrupulous marketers used dialing equipment to randomly and sequentially generate telephone numbers and then shotgun dial those numbers tying up emergency and other phone lines.  Cell phones were becoming popular but minutes for incoming calls were expensive so when cell phone owners received these unwanted calls, they were mad.  After its passage, the TCPA worked.  It stopped the use of indiscriminate dialing that indiscriminately called random or sequential telephone numbers. As the Court pointed out in Facebook, the TCPA was not intended to prevent the use of today’s modern and much more sophisticated dialing systems, it was aimed to stop a specific type of dialer that hasn’t been used in many years by businesses, politicians, or charities.

Mr. Salt: [about the chocolate river] It’s polluted!
Willy Wonka: It’s chocolate!

Since 1991, many other state and federal laws have been passed to inhibit unrestricted and indiscriminate calls to consumers – do not call laws, prerecorded message prohibitions, consent requirements to name a few.  These laws are effective weapons to prosecute robocallers. But the inhibitors do not stop there.  Congress enacted the TRACED Act last year.  On passage, one of its authors, Senator Markey, recognized that “the bipartisan TRACED Act will provide every person with a phone much-needed relief. It’s a simple formula: call authentication, blocking, and enforcement, and this bill achieves all three.”  He was right on and still is!

Willy Wonka: Time is a precious thing. Never waste it.

Regulators have been empowered with better and more efficient tools to stop unlawful calls. But what is proving to be even more effective is the Industry Traceback Group’s (ITG) efforts to identify illegal and unwanted calls and the voice service providers or carriers that are generating what is being called “bad traffic.”  When the ITG gathers information on suspected bad traffic, it traces the traffic back to the originating provider and then requests information regarding the caller, whether proper consent exists for the call, and the nature of the products or services sold. The FCC, FTC, and state Attorneys General receive information about the requests and the responses, which can lead to an inquiry or subpoena to the originating provider. Failure to respond can result in the originating provider’s calls being denied routing by other carriers. The threat is real as the FCC has already issued numerous ‘cease and desist letters’ and as a result, the ITG is proving to be effective with identifying and mitigating the bad traffic.

Willy Wonka: A little nonsense now and then is relished by the wisest men.

Regardless, pundits and plaintiffs are pointing at footnote 7 in Facebook:

7 Duguid argues that such a device would necessarily ‘produce’ numbers using the same generator technology, meaning “store or” in [ATDS definition] is superfluous [unnecessary, especially through being more than enough]. ‘It is no superfluity,’ however, for Congress to include both functions in the autodialer definition so as to clarify the domain of prohibited devices. (citation omitted). For instance, an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list.  It would then store those numbers to be dialed at a later time. [See PACE Brief 19]. In any event, even if the storing and producing functions often merge, Congress may have employed a ‘belt and suspenders approach’ in writing the statute.

It is important to remember that modern dialers dial numbers from a list.  A list that is typically created by a client or a department within an organization.  These dialers do not randomly or sequentially generate telephone numbers that are then stored or dialed.  Facebook’s ruling was limited to determining the interpretation of the TCPA’s ATDS definition, which it did, and it concluded that [i]n sum, Congress’ definition of an autodialer requires in all cases, whether storing or producing numbers to be called, the equipment in question must use a random or sequential number generator. (Slip op. 7.)

Mr. Beauregarde: You’re turning violet, Violet!

We will no doubt see creative Plaintiff’s attorneys try to torture the U.S. Supreme Court’s words to their client’s advantage.  That cannot be stopped. So, I recommend reviewing your and your vendor’s dialing systems again, dusting off your dialer opinions from 2015, and having them updated to address Facebook.  It is always wise to have a defendable position before it is needed.

So shines a good deed in a weary world.


Michele is the Managing Partner at M&S and former Chief of the Ohio Attorney General’s Consumer Protection Section. Bringing more than two decades of experience in the consumer protection arena, she advises highly regulated businesses on a wide range of telemarketing, privacy, and other consumer protection matters.

1200 798 Michele Shuster
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