In Allan v. Pa. Higher Educ. Assistance Agency, the U.S. Court of Appeals for the Sixth Circuit held that the Telephone Consumer Protection Act’s (TCPA) statutory definition of an automatic telephone dialing system (“ATDS”) includes telephone equipment that can automatically dial phone numbers stored in a list, rather than just phone numbers that the equipment randomly or sequentially generates.

The decision widens a circuit split, with the Sixth Circuit agreeing with the Ninth and Second Circuits’ broad reading of the ATDS definition and rejecting the narrower reading adopted by the Third, Seventh, and Eleventh Circuits.  Fortunately, the Supreme Court is poised to resolve this circuit split as it recently agreed to decide what constitutes an ATDS by granting Facebook’s petition for certiorari in Duguid v. Facebook, Inc.

In Allan, the plaintiffs sued the Pennsylvania Higher Education Assistance Agency (PHEAA) claiming that PHEAA violated the TCPA by placing debt collection calls to plaintiffs’ cell phones after they revoked consent. PHEAA placed calls to plaintiffs using an Avaya Proactive Contact system, which creates a calling list based on a stored list of numbers – the numbers are not “randomly generated.” The district court granted summary judgment to the plaintiffs adopting the Ninth Circuit’s analysis that calls made by a system that stores telephone numbers to be called and automatically dials those numbers, qualifies as an ATDS.

The question on appeal was whether, as a matter of statutory interpretation, the Avaya autodialer system that PHEAA used to make the calls qualifies as an ATDS.

The TCPA defines ATDS 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.”

47 U.S.C. § 227(a)(1). The Sixth Circuit reviewed each potential interpretation of the statutory definition. First, the Court recognized that the phrase “using a random or sequential number generator” could apply both to “store” and “produce,” and acknowledged that this reading follows proper grammar. However, the Court ultimately held that this definition “is too labored and problematic to carry the day,” because it is “hard to see how a number generator could be used to “store” telephone numbers, even if it can as a technical matter.” As a second option, the Court of Appeals recognized that the phrase “using a random or sequential number generator” could apply only to “produce.” However, it admitted that this alternative interpretation is problematic because the transitive verb “to store” lacks a direct object and would require adding the phrase “telephone numbers to be called” after “store” to make grammatical sense.

Adopting the reasoning of the Ninth Circuit, the Court held that the statutory definition itself is ambiguous and looked to the other provisions of the statute as guide for its interpretation. Specifically, the Sixth Circuit looked to two exceptions carved out in the statute: (1) prior express consent and (2) calls made pursuant to the collection of a debt owed to or guaranteed to the United States. The Sixth Circuit reasoned that consented-to calls and calls made to collect on a debt are calls made to known recipients and these calls are dialed from a stored list of numbers because they were made to known numbers, not random numbers. While the Supreme Court recently declared the second exception unconstitutional and severed that exception, the Sixth Circuit reasoned that the now-defunct exception implies that the autodialer ban covers stored-number systems.

In reaching its holding, the Court also looked at the legislative history of the TCPA and concluded that Congress “intended to crack down on automated calls themselves—not just the technology making them possible at the time.” It also addressed the potential concern that smart phones could be considered an ATDS under its broad interpretation, the Court cited ACA Int’l and noted that simply because a device has a theoretical capacity to store and dial numbers from a list is not enough to make it an ATDS. Instead, a smartphone must actually be used in that manner and the standard, non-automatic message or call would not create TCPA liability.

Allan now joins the Second and Ninth Circuit as magnets for TCPA litigation. It further demonstrates the need for uniformity as to the statutory definition of an ATDS. The Avaya telephone system that Allan held constitutes an ATDS is the same Avaya telephone system that the Eleventh Circuit held does not qualify as an ATDS. In Glasser v. Hilton Grand Vacations Co., LLC, the Eleventh Circuit addressed a consolidated appeal of two district court cases concerning the statutory definition of an ATDS. PHEAA was a defendant in one of those district court cases on appeal and PHEAA employed the same Avaya telephone system that was used in Allan. PHEAA is now faced with inconsistent opinions from two Circuit Courts. This means that a call that PHEAA places to a debtor in Michigan, Ohio, West Virginia, Kentucky, or Tennessee may have different legal ramifications than a call PHEAA places to a debtor in Alabama, Florida or Georgia.