TCPA: The Supreme Court narrows definition of ATDS, but pitfalls remain

The Telephone Consumer Protection Act (TCPA) has long been one of the most litigated statutes in the United States. A key question in much of that litigation revolved around what technology constitutes an “automatic telephone dialing system” (ATDS). The TCPA defines an ATDS to mean “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.” At issue has been whether the phrase “using a random or sequential number generator” modifies only “produce” or both “store or produce.”

On April 1, 2021, the Supreme Court unanimously answered the question by holding that to be an ATDS, the device must have the “capacity to use a random or sequential number generator to either store or produce phone numbers to be called.” As Justice Sonia Sotomayor wrote, to expand the definition of an ATDS to include “equipment that merely stores and dials telephone numbers … would capture virtually all modern cell phones.”

Under the TCPA, callers need to receive “prior express written consent” for telemarketing calls or texts and “prior express consent” for informational calls and texts made using an ATDS to cell phones. The immediate result of this decision is that typical calling platforms that store and dial from lists of telephone numbers no longer qualify as an ATDS because they generally do not have the “capacity” to produce or store telephone numbers using a random or sequential number generator.

Despite this ruling, open questions still remain regarding the ATDS definition. Further, this decision solely addressed the definition of an ATDS; it did not alter other existing requirements, which may become the new focus for plaintiffs’ attorneys.

• First, as Justice Sotomayor noted, the TCPA still prohibits calls made using “an artificial or prerecorded voice,” which is separate from the prohibition on calls made using an ATDS. Therefore, such calls may begin to receive greater scrutiny (and existing case law on what constitutes a “prerecorded voice” is significantly sparser than the case law on what constituted an ATDS).
• Second, the TCPA contains detailed requirements for both the national Do-Not-Call list and for a company’s internal do-not-call list
• Third, states have their own “mini-TCPAs,” and requirements with such laws may become a new focus for plaintiffs’ attorneys.

Overall, while the decision narrows the scope of an ATDS considerably, other TCPA pitfalls remain when entities place calls. Therefore, ensuring that all elements of an entity’s operations are in compliance with the TCPA – and the state “mini-TCPAs” – remains a priority, even with this decision.