A new landmark Supreme Court decision involving Facebook’s practice of sending unsolicited text message security notifications to cell phone numbers affiliated with potentially compromised accounts provides much-needed clarity on whether the act of sending unwanted telemarketing calls and text messages violates federal anti-robocall law under the Telephone Consumer Protection Act of 1991 (“TCPA”)
The last decade has experienced a surge in lawsuits under the Telephone Consumer Protection Act of 1991, (“TCPA”), which is codified in 47 U.S.C. § 227. The TCPA is a federal law that restricts the business practice of making and sending unsolicited telemarketing calls and marketing text messages. The TCPA prohibits the use of an “automatic telephone dialing system” (“ATDS”) to make or send telemarketing/advertising calls or text messages, without a consumer’s prior, express written consent. As defined in the TCPA, an ATDS is any equipment that has the capacity (1) “to store or produce telephone numbers to be called, using a random or sequential number generator” and (2) “to dial such numbers.” A random or sequential number generator has been generally thought to be something that chooses numbers randomly, and then dials the numbers sequentially at random without any human intervention. Stated alternatively, equipment does not constitute an ATDS if it is not capable of originating a call or sending a text without a person actively and affirmatively manually dialing each call or text. As discussed below, there has been uncertainty even over the definition of an ATDS. According to some courts, an ATDS must have the present capacity to autodial and must store or dial numbers using a random or sequential number generator; while other courts broadly interpret the meaning of an ATDS to include equipment that has the future capacity to dial numbers based on a random or sequential number generator.
Despite the foregoing definition, the determination of what is an ATDS has caused much more ambiguity than clarity, resulting in a barrage of inconsistent and irreconcilable federal court decisions throughout the country. For example, as a common fact pattern alleged in TCPA lawsuits occurs where a consumer visits a website, adds a product to the “online shopping cart”, and provides a cell phone number (among other contact information) to complete the purchase transaction online, without having actually “opted-in” or otherwise expressly agreeing to receive further text marketing messages. As part of a marketing campaign, the business then later sends promotional or marketing text messages to the consumer and other numerous similarly situated consumers based upon the information supplied by the consumer (e.g., geographical region, preferences, etc.). The outcome of such cases most commonly hinge on whether (1) the consumer provided prior, express written consent to receive the text messages, and (2) whether an ATDS was used to send the text message (e.g., whether the equipment stored or produced numbers through the use of a random or sequential number generator). Any text message that was sent using an ATDS without the consumer’s prior, express written consent constitutes a violation of the TCPA, and would subject the defendant to statutory damages of at least $500 per each unauthorized text message (as well as the potential for treble damages for willful violations).
Within the context of this general fact pattern, TCPA liability would ultimately depend on whether the federal court adopts a broad or narrow interpretation of what is an ATDS. Under a narrow interpretation, adopted by the Third, Seventh, and Eleventh Circuits, no liability would attach because the equipment would not qualify as an ATDS since the text messages were not stored or produced using a random or sequential number generator; rather, the text messages were sent to a list of targeted, individualized numbers. In contrast, under a broad interpretation, adopted by the Second, Sixth, and Ninth Circuits — even though the equipment in question did not utilize a random or sequential number generator to store or produce the text messages — the equipment used to send the text messages would qualify as an ATDS because it has the future capacity to store or produce random or sequentially-generated numbers (even if the capacity was contingent upon the installation of hardware or software in the future) and because it can dial a stored number automatically.
Fortunately, the Supreme Court brought clarity to this issue in its April 1, 2021 decision in the case of Facebook Inc. v. Duguid et al., No. 19-511 (U.S. April 1, 2021). There, Noah Duguid (“Duguid”) received a series of text messages from Facebook that alerted him of an attempt by someone to login to what Facebook believed was his Facebook account from an unknown device/browser, notwithstanding that Duguid neither had a Facebook account nor provided Facebook with his telephone number. Facebook’s notification system did not store or produce numbers using a random or sequential number generator. Rather, Facebook sent the targeted, individualized text messages to Duguid because his number was linked to a potentially compromised account. Nonetheless, Duguid advanced a broad definition of what an ATDS is and contended that Facebook’s notification system constituted an ATDS because it had the future, abstract capacity to generate random or sequential phone numbers (even though his telephone number was not stored or produced by way of a random or sequential number generator). In a well-reasoned opinion that focused on the TCPA’s plain language and legislative intent, the Supreme Court ruled in favor of Facebook. As the Supreme Court held, making calls, or sending text messages to telephone numbers without the use of a random or sequential number generator does not trigger liability under the TCPA. Rather, to qualify as an ATDS, the call or text message at issue must have been sent using a random or sequential number generator.
The impact of this decision cannot be overstated. It will, for example, (1) likely result in the dismissal of many pending TCPA lawsuits, (2) limit the opportunity for plaintiffs to forum-shop by filing a TCPA lawsuit in jurisdictions with a broad interpretation of the TCPA, and (3) provide businesses with clarity to ensure compliance with the TCPA and allow them to better determine whether they are in fact utilizing an ATDS in violation of the TCPA.
While the decision is a victory for Facebook, it will also favor consumers — on the heels of the decision, businesses will be able to alert users/consumers/customers of potentially unauthorized or fraudulent account activity, without fear of TCPA liability. Businesses should also be relieved to know that they can send advertising text messages and make advertising calls, as long as the telephone numbers are not stored or produced through the use of a random or sequential number generator. However, even after this ruling, there is still some uncertainty regarding what it means to be an ATDS — for example, as raised in a footnote in the decision , “an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list. It would then store those numbers to be dialed at a later time.” What happens in that situation? Perhaps that will be the subject of a future Supreme Court decision. Until then, it is reassuring that we are at least one step closer to clarity of what it means to be an ATDS.
About Jeffrey Gersh
Jeffrey Gersh is a Partner of the Firm in the Business Litigation Practice. Before joining Stubbs Alderton & Markiles, LLP, Jeffrey was Managing Partner of The Gersh Law Firm for over 10 years and a partner for 25 years with a prominent litigation law firm. Jeffrey has been named a Thomson Reuters “Super Lawyer” for more than 9 years by his peers; an honor only achieved by less than 2.5% of attorneys in California.
Jeffrey successfully litigates, arbitrates, or mediates for both plaintiffs and defendants complex business and commercial matters, whether for individuals, public or private corporations, partnerships, limited liability companies and/or its members, shareholders and partners. Jeffrey Gersh successfully handles disputes regarding contract matters, trade secrets, intellectual property (trademarks, copyrights and trade dress) negligence and fraud, employment, real estate, license agreements, the apparel and garment industry, and general business matters.
About Neil Elan
Neil Elan is an Associate in the Business Litigation Practice group. Neil Elan’s civil litigation practice focuses on all areas of business and commercial litigation, with a particular emphasis on business dissolution, buy-sell agreements, prosecution and defense of breach of contract and promissory note actions, business torts, unfair business practices, fraud, and Anti-SLAPP. In his civil litigation practice, Neil represents real estate developers, limited liability companies, closely-held corporations, financial institutions, entertainment producers, commercial landlords and business owners.
For more information about our Business Litigation Practice contact Jeffrey Gersh at
Stubbs Alderton & Markiles is pleased to announce that Daniel Rozansky has been ranked in the 2019 edition of Chambers and Partners for Litigation: Media & Entertainment. He has received this honor for the past 8 years consecutively. Chambers and Partners rank individual lawyers in their practice area(s) on the basis of their legal knowledge and experience, their ability, their effectiveness, and their client-service. The rankings are determined by 150 editors and researchers who talk to lawyers and clients year-round, conducting in-depth phone interviews.
Daniel Rozansky is a Partner of the firm in the Business Litigation Practice. Clients engage Dan before disputes ever arise to advise on strategies to minimize litigation risk and to put clients in a position for a successful outcome if litigation does arise. For example, he regularly reviews television pilots, screenplays and other material in development to assist those clients in identifying and avoiding potential liabilities; he advises clients, including Fortune 100 companies, on best practices for recording communications; he counsels clients on best practices to protect trade secrets and other confidential information; and he guides clients contemplating exiting unfavorable business relationships. When disputes arise, Dan brings his decades of experience at AmLaw 100 and 200 firms and his relentless approach help achieve the best possible outcome for his clients. This approach has led Dan to be recognized as an industry leader, including being listed as a top entertainment and media litigator in Chambers USA (2011-2018). In 2013, 2014, and 2016, he was featured in Variety’s “Legal Impact Report,” which names the top attorneys who are making a significant impact in the entertainment industry.
In areas of entertainment and media litigation, Dan represents clients across multiple platforms including film, television, music, concerts and touring, and digital media. As a result of his well-recognized skills, Dan has prevailed in a number of high-stakes entertainment cases, including some of Hollywood’s most significant cases in the areas of copyright, trademark, First amendment, profit participation, reality television, right of publicity, rights of privacy and breach of implied contract.
Dan’s achievements are not limited to the entertainment industry. He has successfully represented clients in the real estate, toy, banking, insurance, restaurant, clothing, luxury goods, and travel industries, in such areas as trade secrets, partnership, contract, and unfair competition disputes. While Dan is known for his willingness to “take it all the way”, Dan’s goal is to design a strategy to put his clients in the best position for early dismissal including through motions to dismiss, anti-SLAPP motions, summary judgment motions, and favorable settlements. As a result, not only has Dan achieved early dismissal of multiple claims and actions, but he has also prevailed in cases short of trial, resulting in significant recoveries. When cases do go to trial, Dan has achieved great success at the state, federal and appellate levels. In all instances when his clients prevail, Dan looks for opportunities to recover their attorneys’ fees and has, in fact, recovered millions of dollars in fees for his clients.
Los Angeles, CA, January 16, 2018 (Newswire.com) - Stubbs Alderton & Markiles, LLP, Southern California’s leading business law firm, has announced that Dan Rozansky has joined the firm as a partner in its Sherman Oaks office. Mr. Rozansky will join the Business Litigation practice group.
“Dan is a fantastic addition to our firm” commented Scott Alderton, Managing Partner. “Not only does he augment our litigation practice at a very senior level, which is the fastest growing segment of our firm, he also brings a synergy to our entertainment and digital media practices, which are at the core of our technology expertise. Dan would be a great asset to any firm in the country, and we feel very fortunate that Dan chose to join Stubbs Alderton & Markiles.”
Mr. Rozansky concentrates his litigation practice on entertainment, privacy, First Amendment and complex business and real estate disputes. Recognized as an industry leader, Dan has been listed as a top entertainment and media litigator in Chambers USA (2011-2016). In 2013, 2014, and 2016, he as featured in Variety’s “Legal Impact Report,” which names the top attorneys who are making a significant impact in the entertainment industry. Prior to joining Stubbs Alderton & Markiles, he worked at Jenner & Block’s Los Angeles office.
Dan Rozansky stated, “I am thrilled to be joining the firm. It is rare to find a business law firm of this size with such high quality corporate lawyers and litigators under the same roof. I chose Stubbs Alderton because its technology focus and deep bench of talented attorneys will allow me to continue delivering excellence to my clients.”
To read Dan Rozansky’s full bio, click here.
To view the full press release, visit here.
To view the story on the SFV Business Journal, visit here.
About the Stubbs Alderton & Markiles Business Litigation Practice
The Firm’s business litigators have significant depth and breadth of resources and a detailed knowledge of clients’ industries and business concerns. As trusted counselors to middle market businesses, and particularly early stage, growth companies and entrepreneurs, we understand that how a company or entrepreneur handles dispute risk oftentimes is the difference between business success and failure. For more information about the Business Litigation practice at Stubbs Alderton, click here.
About Stubbs Alderton & Markiles, LLP
Stubbs Alderton & Markiles, LLP is a business law firm with robust corporate, public securities, mergers and acquisitions, intellectual property and business litigation practice groups focusing on the representation of venture backed emerging growth companies, middle market public companies, large technology and Internet companies, entertainment, video games and digital media companies, investors, venture capital funds, investment bankers and underwriters. The firm’s clients represent the full spectrum of Southern California business with a concentration in the technology, entertainment, video games, apparel, consumer electronics, and medical device sectors. The firm’s mission is to provide technically excellent legal services in a consistent, highly-responsive and service-oriented manner with an entrepreneurial and practical business perspective. These principles are the hallmarks of the firm. For more information, please visit www.stubbalderton.com.
Contact:
Heidi Hubbeling
Stubbs Alderton & Markiles, LLP
(310) 746-9803