Compliance Blog

Apr 27, 2022
Categories: Privacy

TCPA News: What Isn't An Autodialer?

The saga of the definition of “autodialer” continues; this time, focusing on equipment with the capacity to “produce” telephone numbers to be called via a random or sequential number generator.  Here, we’ll take a look at a case out of the Eighth Circuit Court of Appeals, where various business establishments used a software service to deliver text messages to customers.

In March 2022, a ruling from the Eighth Circuit Court of Appeals considered the question of “whether an automated marketing system that sends promotional text messages to phone numbers randomly selected from a database of customers’ information is an automated telephone dialing system (an “Autodialer” [or ATDS]) under the Telephone Consumer Protection Act (the “TCPA”).  The court of appeals agreed with the district court that it is not.

The appeal solely focused on the TCPA’s definition of “autodialer,” or ATDS.  As we have previously blogged, the TCPA’s statutory definition of an ATDS is:

“. . . 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.”

The appellants in the Eighth Circuit case argued that messages sent via Txt Live, a marketing software product, on behalf of two establishments violated the TCPA, because they were sent using an autodialer without the consent of the appellants.

The court of appeals walked through Txt Live’s functionality in determining whether it meets the definition of an autodialer.  The court found that “Txt Live is used to maintain a database that stores the contact information of the establishments’ former and potential customers.  The establishments’ employees manually enter the contact information, including phone numbers, into the Txt Live database.  Txt Live is not capable of randomly or sequentially generating phone numbers.”

In order to send a message via Txt Live, employees of the establishments had to manually filter the list of former and potential customers, in order to narrow it down to the desired audience.  Employees also had to “select the number of potential customers to whom the text message will be sent.”  Finally, the message content then had to be drafted or selected by the employees, who had to “hit send” as the final step in the process.

After the employees “sent” the message, Txt Live would then perform some tasks, including applying the filters, shuffling the “target contacts using a numerically-based randomizer,” and then sending the message to either the whole list, or, if the filtered list was too large, the message was sent to the recipients at the top of the randomized list.  The appellants were included in the top of certain randomized lists, and alleged that this process violated 47 U.S.C. §227, which makes it unlawful “to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any ATDS. . . to any telephone number assigned to a. . . cellular telephone service.”  The district court granted summary disposition in favor of the defendants (the establishment), and held that the Txt Live software did not meet the statutory definition of “autodialer.”

In this particular appeal, the parties were disputing the meaning of the term “produce” in the definition.  In analyzing and determining the meaning of the word, the appellate court considered the context of its use in the definition, particularly “its subject – that is, the thing doing the producing.”  The court explains that “a random number generator produces by generating a random number.  Because Txt Live does not generate phone numbers to be called, it does not ‘produce telephone numbers to be called’” for the purpose of the definition of an ATDS.  The court used various analogies, such as electrical generators producing by generating electricity, or password generators producing by generating a password.  Responding to the appellants’ argument that “dictionary definitions and common uses of the term ‘produce’ [may] include [to] ‘select’ or ‘bring forth,’” the court states that “just as an electrical generator does not produce by selecting electricity, a random number generator does not produce by selecting a random number.”

This ruling aligns with the Supreme Court’s ruling in the Facebook case (which we blogged about here), in which the Court stated:

“. . . Congress’ definition of an autodialer requires that in all cases, whether storing or producing numbers to be called, the equipment in question must use a random or sequential number generator. . .”  (Emphasis added.)

In this case, the appellate court relied on the Supreme Court’s holding that “the clause [“using a random or sequential number generator”] modifies both ‘store’ and ‘produce,’ meaning the definition of autodialer ‘excludes equipment that does not ‘use a random or sequential number generator.’”  The appellate court also quoted the Court’s reasoning that “expanding the definition of an autodialer to encompass any equipment that merely stores and dials telephone numbers would take a chainsaw to these nuanced problems when Congress meant to use a scalpel.”

Thus, the appellate court agreed that “Txt Live is exactly the kind of equipment Facebook excluded from § 227(a)(1)- ‘equipment that merely stores and dials telephone numbers,’” and found that the appellants’ argument that Txt Live differs from the system in Facebook “because it uses a numerically-based randomizer to shuffle and select phone numbers” was not persuasive, and upheld the district court’s rulings for the defendants.

About the Author

Rebecca Tetreau, NCCO, Senior Regulatory Compliance Counsel, NAFCU

Rebecca-Harris---NAFCU-Regulatory-Compliance-Counsel

Rebecca Tetreau joined NAFCU as regulatory compliance counsel in February 2021 and was promoted to senior regulatory compliance counsel in August 2022. In this role, Rebecca helps credit unions with a variety of federal regulatory compliance issues.

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