Lopsided Circuit Split Favors Narrow Definition of Autodialer

Update: The Supreme Court on July 9 agreed to take up the issue of what constitutes an “automatic telephone dialing system” under the TCPA. For more details, please see our July 10 alert.

As additional appellate courts grapple with the TCPA’s definition of “automatic telephone dialing system” (ATDS), the split among the U.S. Circuit Courts of Appeals has become increasingly lopsided, with the 7th and 11th Circuits now joining the 2nd, 3rd and 6th Circuits to construe the term narrowly. The 9th Circuit stands alone in adopting a broad definition of ATDS, but was recently asked to reconsider that ruling.

• 7th Circuit Latest Court to Adopt Narrow ATDS Definition: The 7th Circuit in Gadelhak v. AT&T Services, Inc. became the most recent circuit court to narrowly interpret ATDS. The TCPA defines ATDS as equipment with the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator.” At issue in Gadelhak was whether AT&T’s device, which sent surveys to customers who interacted with its customer service department, constituted an ATDS. The device dialed numbers from an existing database of customers, but did not randomly generate them. The court held that the phrase “using a random or sequential number generator” modifies both “store” and “produce.” Because AT&T’s device neither stored nor produced numbers using a random or sequential number generator — rather, it “exclusively dialed numbers stored in a customer database” — the court held that AT&T’s device did not qualify as an ATDS. The plaintiff is seeking en banc review of the decision.
  
  
• 11th Circuit Joins Other Circuits Narrowly Defining ATDS: Just a month prior to Gadelhak, the 11th Circuit in Glasser v. Hilton Grand Vacations Co., LLC likewise concluded that the phrase “using a random or sequential number generator” modified both “store” and “produce.” The phone system at issue required a Hilton marketing team to create a set of parameters defining whom the sales agents should contact. The marketing team then programmed the phone system with the criteria they set, and the system selected the customer records that fit the criteria. The system sent the selected numbers to Hilton employees who reviewed them, and then hit a “make call” button. The court reasoned that such a process was far from the automatic dialing of phone numbers that the TCPA addresses. The court further noted that even if the TCPA covered devices that can automatically dial a stored list of non-randomly generated numbers, Hilton’s device still would not qualify. Based on the statutory interpretation that a device must be capable of performing at least a “storing” or “producing” function using a random or sequential number generator, the Glasser court found that Hilton’s phone system did not qualify as an ATDS.
  
  
• 9th Circuit Stands Alone; Is Asked to Reconsider Broad Interpretation: The 9th Circuit has been urged to re-evaluate its often-criticized opinion in Marks v. Crunch San Diego, LLC, which broadly interpreted the definition of ATDS to include all devices with the capacity to store and dial numbers from a pre-existing list. On the heels of Gadelhak and Glasser, the defendant in Lamkin v. Portfolio Recovery Associates, LLC recently filed notice of supplemental authority in its current appeal to the 9th Circuit. In Lamkin, the defendant lost before the district court under Marks, and is now asking the 9th Circuit to effectively overrule Marks in light of the other circuit court rulings. If the 9th Circuit rolls back its decision, the courts may come closer to nationwide uniformity on the issue of what constitutes an ATDS.