Legal Articles

Seventh Circuit Court of Appeals Adopts Narrow ATDS Definition

On February 19, 2020, the Seventh Circuit Court of Appeals unanimously confirmed that the capacity to

On February 19, 2020, the Seventh Circuit Court of Appeals unanimously confirmed that the capacity to generate random or sequential numbers is necessary to the statutory definition of an Automated Telephone Dialing System (ATDS) under the TCPA.  In reaching its decision in Gadelhak v. AT&T Services, Inc., the Seventh Circuit followed the lead of the Third Circuit in Dominguez v. Yahoo, Inc. and the Eleventh Circuit in Glasser v. Hilton Grand Vacations in adopting a narrow definition of what constitutes an ATDS.

The Court's Analysis

In reaching its decision, the Court's three judge panel first looked to the era in which the TCPA was passed:

At the time that the Telephone Consumer Protection Act was passed, telemarketers primarily used systems that randomly generated numbers and dialed them, and everyone agrees that such systems meet the statutory definition. But that’s not how AT&T’s customer feedback tool works. The system, like others commonly used today, pulls and dials numbers from an existing database of customers rather than randomly generating them . . . . Determining whether such systems meet the statutory definition has forced courts to confront an awkwardness in the statutory language that apparently didn’t matter much when the statute was enacted: it’s not obvious what the phrase “using a random or sequential number generator” modifies. The answer to that question dictates whether the definition captures only the technology that predominated in 1991 or is broad enough to encompass some of the modern, database‐focused systems.

The Court then interpreted the language of the TCPA as if it were passed in the modern era and concluded that the best interpretation is that “the phrase ‘using a random or sequential number generator’ modifies both store and produce, which would mean that a device is capable of performing at least one of those functions using a random or sequential number generator to qualify as an ‘automatic telephone dialing system.’

The Court also took up the question of how a “number generator” could be used to “store” telephone numbers, and concluded that at the time of the statute’s enactment in 1991, devices existed with the capacity to generate random numbers and then store them in a file for a significant time before selecting them for dialing, which shed light on the intended meaning of the ATDS definition adopted by Congress.

An Express Rejection of Marks

The Plaintiff naturally argued that the Seventh Circuit should adopt the expansive definition reached by the Ninth Circuit in Marks v. Crunch San Diego, LLC.  Fortunately, the Seventh Circuit, viewed the Ninth Circuit's analysis of the TCPA as an “ungrammatical interpretation,” that would result in a “significant judicial rewrite” with “far-reaching consequences”.   According to the Court, adopting that expansive definition  “would create liability for every text message sent from an iPhone” and expose everyday Americans to potential liability.

The Seventh Circuit encompasses the states of Wisconsin, Illinois, and Indiana.   Together with the states comprising the Third Circuit (New Jersey, Delaware, Pennsylvania and Maryland) and the Eleventh Circuit (Alabama, Georgia, and Florida), that makes ten states in which Plaintiffs must now pass a difficult ATDS hurdle to bring a TCPA claim.