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Seventh Circuit Joins Third and Eleventh Circuits in “Autodialer” Circuit Split

Slowly but surely, the U.S. Courts of Appeal increasingly agree on how to interpret the definition of “automatic telephone dialing system” (“ATDS” or “autodialer”) in the Telephone Consumer Protection Act (“TCPA”). On February 19, 2020, a unanimous Seventh Circuit panel refused to revise a putative class action in Gadelhak v. AT&T Services, Inc. after concluding that the dialing system used by AT&T did not qualify as an autodialer. Like the Eleventh Circuit in Glasser v. Hilton Grand Vacations Company, LLC and Third Circuit in Dominguez v. Yahoo, Inc., the Seventh Circuit held that an “autodialer” must use “a random or sequential number generator” to either store or produce numbers. Because the system used by AT&T simply pulled numbers from a database, the court found that the system was not an autodialer and the texts did not violate the TCPA.

The TCPA defines an “automatic telephone dialing system” 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.” Because of the definition’s awkward structure, the key to interpreting the statute lies in determining which word(s) Congress intended the phrase “using a random or sequential number generator” to modify.

The Seventh Circuit identified four possible ways to read the statute. Though it acknowledged the interpretation it settled on was imperfect, the court emphasized that such an approach was the most natural “based on sentence construction and grammar” and therefore offered the best result. The four possible interpretations are:

  1. The phrase “using a random and sequential number generator” can be read to modify both the verbs store and produce in the preceding clause. According to the court, this means that in order to be an autodialer a “device must be capable of performing at least one of those functions using a random or sequential number generator.”
  2. Next, the court considered whether the phrase “using a random or sequential number generator” should be read to modify the telephone numbers to be dialed. The district court below had dismissed the case based on this interpretation. In a deft grammar lesson, the Seventh Circuit noted that “using a random or sequential number generator” is an adverbial phrase describing how something is to be done and thus cannot modify a noun. As a result, the court concluded that the text did not permit that reading.
  3. Plaintiff-appellant Gadelhak argued for a third interpretation, which was advanced by the Ninth Circuit in Marks v. Crunch San Diego LLC. Under this approach, “using a random or sequential number generator” only modifies the verb “produce” in the preceding clause. The Seventh Circuit rejected this interpretation, finding that such an approach would require the court “to contort the statutory text almost beyond recognition.” The court said that it would be “unnatural” to have the adverbial clause modifying only one of the verbs, given that the verbs were not set off from one another in any way. The court also articulated a practical reason for rejecting this interpretation: Given current technology, this reading would mean that any iPhone sending automatic texts could be found to violate the TCPA.
  4. Finally, the Seventh Circuit considered whether the phrase could be read to clarify how the numbers are to be called. Again relying on grammar rules and principles of statutory interpretation, the court concluded that the presence of a comma between “to store or produce telephone numbers to be called” and “using a random or sequential number general” indicates that Congress intended for the second phrase to modify the entire preceding phrase not just the words immediately adjacent to it. As a result, the court rejected this approach as well.

Next Steps

The Gadelhak opinion may signal a growing consensus in the courts of appeal. Within 24 hours of the Seventh Circuit’s decision, a defendant with a similar case pending before the Ninth Circuit asked the court to reevaluate its precedent in light of the new ruling. If the Ninth Circuit doubles down on Marks, it may increase the likelihood that the Supreme Court will weigh in to resolve the question.

This post was originally published on Hogan Lovells’ Global Media and Communications Watch blog.