Many welcomed the U.S. Supreme Court’s 2021 Duguid decision because it appeared to call a halt to at least some of the abuses of the Telephone Consumer Protection Act, 47 U.S.C. Section 227. See Facebook v. Duguid, 141 S. Ct. 1163. In Duguid, the court held that Facebook was not liable because the equipment it used to send the text messages at issue did not qualify as an “automatic telephone dialing system,” or ATDS, under the TCPA.
Alas, Duguid left just enough wriggle room for ATDS-based TCPA claims to persist. TCPA plaintiffs have argued that Duguid’s implications are not as broad as they first appeared, asserting that Duguid merely held that the statutory requirement of “random or sequential” number generation was to be considered only in assessing the “capacity” of the dialing equipment at issue, and that actual use of random or sequential number generation in making the specific calls at issue was not required. See, e.g., Jance v. Homerun Offer, No. CV-20-00482, (D. Ariz. July 30, 2021). In other words, they argue, calls made specifically and intentionally to a number pulled from a stored list (and thus not dialed randomly or sequentially) could still give rise to TCPA liability so long as the equipment used had the capacity—albeit untapped—to store or produce numbers using a random or sequential number generator.
In a recent decision, the U.S. Court of Appeals for the Third Circuit took a bit of a meandering path but reached the salutary conclusion that there can be no ATDS liability under the TCPA unless the calls at issue are made (or the texts sent) using random or sequential number generation. See Panzarella v. Navient Solutions, No. 20-2371 (June 14, 2022). The Panzarellas claimed that Navient made 19 unauthorized calls to mobile phones in an effort to collect on a delinquent loan and that those calls violated the TCPA because Navient allegedly made them using an ATDS. The district court granted Navient’s motion for summary judgment on the narrow ground that only one component (the ININ dialing system) of the technical package that Navient used to make the calls was the “equipment” to be evaluated under the TCPA, and that the Panzarellas had not presented any evidence that the ININ dialing system—on its own— had any capacity to store or produce numbers using random or sequential number generation. The district court held therefore that the pertinent equipment was not an ATDS and thus that Navient had not made the calls to the Panzarellas using an ATDS.
On appeal to the Third Circuit, the Panzarella majority decided three issues. Navient lost two out of three—but emerged the winner. First, the Third Circuit held that the district court had taken an overly narrow view of the “equipment” at issue, wrongly looking only to ININ dialing system. All three judges on the Panzarella appeal panel agreed that it was necessary instead to take into account the entire technical package used to make the calls at issue.
Second, in a bit of a surprise, the majority held that “equipment” could qualify as an ATDS under the TCPA even if a defendant does not actually use the equipment’s random or sequential number generating capacity to make the particular calls in question. All that is necessary for the equipment to qualify as an ATDS is for the equipment to have the present capacity to either store or produce numbers using a random or sequential number generator. The Panzarella concurring opinion disagreed with the majority on this point.
From there though, the majority held that, while use of random or sequential number generation was not necessary for equipment to qualify as an ATDS, use of an ATDS’s random or sequential number generator capability is a prerequisite to liability under the TCPA. A TCPA plaintiff pursuing an ATDS-based claim could go to great technical lengths to prove that the equipment at issue has the capacity to store or produce numbers using random or sequential number generation, but, without proof that the defendant made the particular calls at issue using that random or sequential number generating capability, there would be no TCPA liability.
According to the court: for a call to violate [the ATDS portion of the TCPA], that call must employ either an ATDS’s capacity to use a random or sequential number generator to produce telephone numbers to be dialed or its capacity to use a random or sequential number generator to store telephone numbers to be dialed.
The majority concluded that to impose liability without requiring the calls to have been made randomly or sequentially would be the equivalent of using a chainsaw when Congress intended the TCPA to be used as a scalpel to address particular telemarketing abuses.
Bottom line: Businesses engaged in telemarketing or otherwise engaged in calling campaigns essentially never make calls at random, or to sequential numbers (xxx-xxx-xxx1; xxx-xxx-xxx2; etc.). Why? Because that would be foolhardy and ineffective. The Panzarella court itself asked rhetorically: “What reason would Navient have to call phone numbers unrelated to borrowers’ accounts when following up on delinquent loans?” Businesses make telemarketing and customer service calls purposefully and intentionally, not randomly and sequentially.
Businesses target specific current or former customers or phone numbers included on curated lists of potential customers. Under Panzarella, those targeted calls will not give rise to ATDS-based TCPA liability in the Third Circuit.
