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Courts narrowly interpreting an automated telephone dialing system under TCPA

These most recent cases demonstrate a trend to limit the reach of the ATDS definition

The Telephone Consumer Protection Act (TCPA) defines an auto dialer 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.”

Using this definition, just last year one court in Wisconsin ruled in Nelson v. Santander Consumer USA, Inc. that a defendant may be liable for violating the TCPA, even if the call is dialed by a live person, so long as the telephone used is capable of making an autodialed call. Fortunately, the court vacated its opinion three months later. While the Nelson opinion is no more, at the time it provided a frightening lesson in how easily a seemingly compliant telephone system could be still construed as falling within the scope of an automated telephone dialing system (ATDS).

The move away from Nelson reasoning 

Since Nelson, several courts have rejected the reasoning in Nelson in favor of a more focused view:

“Present capacity”: In Hunt v. 21st Mortgage Corp., for example, the plaintiff sought to examine the defendant’s phone system, software, and facilities to determine whether they could potentially auto dial customers. The defendant argued that its phones were part of a manual dialing system not configured to autodial at the time it allegedly called the plaintiff. Conversely, the plaintiff argued that so long as software could be installed on the phones to make them capable of autodialing, the phones should be considered auto dialers under the TCPA’s definition merely requiring “capacity.”

The court held that a system must have had the “present capacity” to generate numbers and place calls when the calls to the plaintiff were made to be considered an ATDS. The court observed that there is a virtually limitless ability to modify electronic devices, and a broader definition could render all of these devices noncompliant under the TCPA. For example, the court noted that a smartphone user could download an application that would allow the phone to function as an ATDS, putting every phone capable of downloading the hypothetical app at risk of violating the law. Thus, the court concluded that the defendant was not liable where substantial modification or alteration of the system were required to achieve auto dialing capabilities.

No Number Generator”: Other courts have since followed suit. In Stockwell v. Credit Management, L.P., the court read the definition of ATDS to require a present ability to generate numbers and dial them, and dismissed the plaintiff’s TCPA claims because the defendant’s system did not have a number generator at the time it allegedly called the plaintiff.

Present, not potential capacity”: Similarly, in Gragg v. Orange Cab Co., Inc., the court noted that it is not enough to simply use a system that can be programmed to autodial; to be liable, a caller’s system must have the “present, not potential, capacity to store, produce, or call randomly or sequentially generated telephone numbers.”

These most recent cases demonstrate a trend to limit the reach of the ATDS definition. Companies do well to stay apprised of the latest developments in this area, as other courts (and ultimately the FCC) weigh in on what constitutes an ATDS.

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Ana Tagvoryan

Ana Tagvoryan handles a wide variety of privacy, social media, and unfair competition matters in federal and state courts of California. She is a member...

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Joshua Briones

Joshua Briones, Managing Member of the firm’s LA office, is a highly experienced trial lawyer with a national practice focused on bet-the-company class actions. He...

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Harrison Brown

Harrison Brown counsels clients regarding privacy and consumer actions, data breach suits, unfair competition and related business torts, and corporate compliance. He is a member...

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