11th Circuit Limits ATDS to Random or Sequential Number Technology

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Expressly rejecting the 9th Circuit’s decision in Marks v. Crunch San Diego, LLC, the 11th Circuit in Glasser v. Hilton Grand Vacations Co., No. 18-14499 (11th Cir. Jan. 27, 2020), dramatically rolled back the ever-expanding reach of the TCPA by ruling that a device must use randomly or sequentially generated numbers to be an automatic telephone dialing system (ATDS) under the TCPA.

The decision came down to a plain reading of the TCPA, which countless defendants have relentlessly advocated for many years. Enacted in 1991, the TCPA makes it illegal to “make any call . . . using any automatic telephone dialing system or an artificial or prerecorded voice” to cell phones and other specified telephone lines without the “prior express consent of the called party.” 47 U.S.C. § 227(b)(1)(A). It 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.” Because both of the defendants used telephone equipment that dialed numbers from targeted lists of individuals – but that did not use random or sequential number generators – the court was forced to determine whether the clause “using a random or sequential number generator” modified both “to store” and “to produce” or only “to produce” and not “to store.” Although the court noted that each interpretation “runs into hurdles,” it concluded that the “better option” was that the clause modified both verbs.

In support of this interpretation, the court first noted that “[w]hen two conjoined verbs (‘to store or produce’) share a direct object (‘telephone numbers to be called’), a modifier following that object (‘using a random or sequential number generator’) customarily modifies both verbs.” p. 7. The comma separating the phrases “to store or produce telephone numbers to be called” from the phrase “using a random or sequential number generator” further indicated that the phrase modified both “store” and “produce.”

This reading, however, admittedly created some hiccups that the court then addressed. First, there was the “oddity of ‘stor[ing]’ telephone numbers using a number generator.” However, the court concluded that a random number generator could not dial randomly or sequentially generated numbers without the ability to also store those numbers – even if only for a short period between generation and dialing. While this created some superfluity, the court found that it was the “least superfluous approach” because it did not read out the statute’s key clause – “using a random or sequential number generator.”

Further, the court examined the TCPA’s enactment and early litigation history and found that “for the first dozen years of the statute’s existence, everyone seemed to agree that a system was not an ATDS unless it generated the numbers to be called in a random or sequential fashion.” This view changed only after the industry stopped using random or sequential dialers in favor of predictive dialers, which caused the FCC – the agency that administers the TCPA – to retrofit the statute to cover this emerging technological gap. But “Congress in retrospect drafted the 1991 law for the moment but not for the duration,” and the FCC’s fix expanded the TCPA’s reach too greatly. The court echoed the D.C. Circuit’s concerns from ACA Int’l v. FCC, 885 F.3d 687 (D.C. Cir. 2018), that “it’s hard to think of a phone that does not have the capacity to automatically dial telephone numbers stored in a list, giving § 227 an ‘eye-popping’ sweep.”

The Glasser decision will undoubtedly have significant nationwide implications. Within the 11th Circuit (one of the most active regions for TCPA litigation), trial courts will now be forced to narrowly construe ATDS claims. Given that few (if any) companies deploy randomly or sequentially dialed calls, this will all but eliminate viability of most ATDS-centered TCPA claims in the 11th Circuit (of course, artificial and prerecorded message claims remain unscathed). With other circuits presently considering similar cases, this decisive opinion may sway other courts to apply similar reasoning.

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