The Eleventh Circuit has issued a decision in Glasser v. Hilton Grand Vacations Company that rejects an expansive interpretation of a key definitional term in the Telephone Consumer Protection Act (TCPA)—an interpretation that has been embraced by the Ninth Circuit.  The decision therefore creates a circuit split that could increase the possibility the Supreme Court will review the issue, which has spawned numerous TCPA lawsuits in recent years.

The TCPA imposes consent requirements on phone calls and text messages that are sent using an automatic telephone dialing system (ATDS).  Over a partial dissent, the Eleventh Circuit held that dialing equipment falls within this definition only if it uses randomly or sequentially generated numbers and does not require human intervention.  This holding differs from the Ninth Circuit’s holding in Marks v. Crunch San Diego, LLC, 904 F.3d 1041 (9th Cir. 2018), which embraced a more expansive view of the ATDS definition.

The TCPA 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.”  47 U.S.C. § 227(a)(1).  The statute (with a few exceptions not relevant here) prohibits using an ATDS to place calls or text messages to mobile numbers without the recipient’s prior express consent.

In Glasser, two plaintiffs alleged that they each received more than a dozen unsolicited phone calls to their cell phones over the course of a year from a timeshare marketer and a loan servicer, respectively.  The defendants admitted to placing the calls but argued that they did not violate the TCPA because they had not used an ATDS.  The district court agreed with the timeshare marketer that its dialing equipment was not an ATDS because it required human intervention.  But the lower court found that the loan servicer’s dialing equipment did qualify as an ATDS because it could automatically dial numbers from a stored list.  An appeal to the Eleventh Circuit followed.

The Eleventh Circuit noted that the dispute boiled down to the following question:  does the ATDS definition include dialing equipment that can store telephone numbers and dial them even if a random or sequential number generator is not used (e.g., because the numbers come from a targeted list)?

In a 2-1 decision, the court held that an ATDS must use a random or sequential number generator to store or dial numbers.  It determined this interpretation was more faithful to the statutory text and Congress’s purpose in enacting the TCPA.  In reaching this conclusion, the court provided a cogent recounting of the FCC’s progressive expansion of the scope of the ATDS definition, which the court stated was rejected in ACA International v. FCC, 885 F.3d 687 (D.C. Cir. 2018).  The court noted that the ACA International decision (in which Covington was involved) had “wiped the slate clean.”  The opinion describes how, at the time Congress enacted the TCPA, the law’s aim appeared to be to limit the activities of marketers who used random or sequential dialers, a practice that was viewed as a particular nuisance.  Over time, marketers shifted their practices to use autodialers that dial lists of targeted—rather than random—numbers.  The FCC responded by expanding its interpretation of the ATDS definition.  But the Eleventh Circuit found that this expansive interpretation exceeds both the text and legislative history of the TCPA.

The court acknowledged the conflict between its decision and the Ninth Circuit’s expansive interpretation in Marks, which the majority stated “looks more like ‘surgery.’”  One judge on the Glasser panel dissented from this portion of the opinion, agreeing with the Ninth Circuit’s view.  This disagreement among the Courts of Appeal over the proper interpretation of a federal statute increases the odds that the Supreme Court will be asked in the foreseeable future to resolve what constitutes an ATDS.

Separately, the Eleventh Circuit also held that dialing equipment that requires human intervention does not fall within the ATDS definition.  Specifically, the court found that the defendant’s dialing equipment did not “automatically” dial numbers because human employees developed the parameters regarding whom to contact and had to click a “make call” button in order to place a call.  The court found that these facts distinguished this case from Marks.  Notably, this part of the decision was unanimous, perhaps suggesting a growing judicial acceptance of this view, which multiple district courts also have adopted.