Another big win for call centers hoping to leverage efficient modern technology to contact lists of phone numbers, even as those hoping to use the Telephone Consumer Protection Act (TCPA)to prevent high-volume calling practices just suffered a major setback.

At issue is the TCPA’s definition of “automatic telephone dialing system” (ATDS). An ATDS was defined in the statute as a system that has the ability to store or dial telephone numbers using a “random or sequential number generator” (ROSNG.)

In April of 2021 the U.S. Supreme Court confirmed that ROSNG usage was a critical part of what makes a ATDS an ATDS, however the ruling seemingly left open the use of an ROSNG to “store”–as opposed to “produce”–telephone numbers. That opening might convert standard autodialers–that commonly use number generators to determine dialing campaign sets or sequences–into an ATDS for TCPA purposes.

Whether a system is an ATDS is a big deal because the use of such systems is governed by federal law. Misuse of an ATDS can lead to private fines of up to $1,500.00 per call and even steeper penalties at the hands of federal regulators.

In Soliman v. Subway Franchisee Advertising Fund, 2024 WL 2097361 (2nd Cir. 2024) the Second Circuit Court of Appeals held the TCPA’s ATDS definition only applies to systems that randomly generate telephone numbers–effectively foreclosing the use of the TCPA as a weapon to battle large-scale telemarketing calls and texts that are made to purchased lists.

In Soliman the Plaintiff complained Subway had sent text messages promoting its products without his consent. He sued seeking damages for the unwanted texts he received and those received by other individuals similarly situated to him.

The lower court had thrown the case out reasoning the texts had been directed to Plaintiff’s phone number and had not been sent to random numbers.

On appeal Plaintiff argued that although his telephone number was not randomly generated the platform used to send the message– Mobivity–had the ability to use an ROSNG to store and sequence the text messages ass they were being sent.

The Second Circuit Court of Appeals concluded the use of an ROSNG for any purpose other than to create telephone numbers was irrelevant– only systems that randomly or sequentially generate telephone numbers trigger the statute.

To reach this conclusion the Appellate Court reasoned that the word “number” in the statutory definition of ATDS always means “telephone number” and that limiting the ATDS definition in such a manner was consistent with basic rules of statutory construction.

The Court also considered the context and purpose of the TCPA and concluded limiting the TCPA to random-fire dialers was most consistent with the intent of Congress in enacting the statute.

One judge on the panel dissented, however, pointing out that the majority’s interpretation would render certain phrases within the TCPA’s ATDS definition superfluous and also flies in the face of the Supreme Court’s apparent holding in Duguid.

On the latter piece, the Soliman panel reasoned the Supreme Court’s holding as limited to the requirement an ROSNG must be used but the Supremes did not hold a system can be an ATDS merely because it uses an ROSNG merely to “store” telephone numbers. This interpretation seems at odds with FN7 of Duguid but the Soliman panel reasoned the footnote did not hold much weight in context:

 This footnote, however, merely notes that one could employ an autodialer to both “store” and “produce” telephone numbers, as two separate functions. It says nothing about whether the numbers on the preproduced list were randomly generated in the first place. And it does not mean that if the telephone numbers were not originally created by a random number generator, then the use of a random number generator to pick the pre existing number is sufficient to meet the definition of an ATDS. When read in the context of the entire opinion, footnote 7 does not support Soliman’s position. Thus, this argument is unavailing.

In the end the Second Circuit Court of Appeals joined with the Ninth Circuit’s ruling in Borden and concluded an ATDS is a system that randomly or sequentially generates telephone numbers to be dialed.

While this ruling is a big win for TCPA defendants facing ATDS suits, to my eye the ruling conflicts with the Supreme Court’s decision in Duguid and seemingly redoubles the urgency in Congress to expand the scope of the TCPA’s ATDS definition.

As the current legislation expanding the statute is a MASSIVE overreach, this Soliman ruling may actually make things much worse for callers in short order is the legislature responds with a new law.