U.S. Supreme Court Holds “Autodialer” Definition under the TCPA Is Limited to Equipment Using a Random or Sequential Number Generator

Wayne StreibichDiana M. Eng, and Andrea M. Roberts

Financial institutions, debt collectors, and consumer-facing businesses should take note that the United States Supreme Court has ruled that the definition of an “autodialer” under the Telephone Consumer Protection Act, as written, requires that the device must use a random or sequential number generator. This narrow interpretation should shield companies from liability in current or future actions, where the consumers’ telephone numbers are known and not random or sequentially generated.

In Facebook, Inc. v. Duguid, 592 U.S. ___ (2021), the United States Supreme Court (“SCOTUS”) narrowly interpreted the definition of “autodialer” under the Telephone Consumer Protection Act (“TCPA”), holding the definition excludes equipment that does not use a random or sequential number generator. SCOTUS specifically held that an “automatic telephone dialing system” is limited to equipment that either stores a telephone number using a random or sequential number generator, or produces a telephone number using a random or sequential number generator.

Summary of Facts and Background

Plaintiff Noah Duguid (“Plaintiff”) began receiving several login-notification text messages from defendant Facebook, Inc. (“Facebook”), alerting him that someone had attempted access to the Facebook account associated with his phone number from an unknown browser. Plaintiff never had a Facebook account and had not given Facebook his phone number. As such, Plaintiff commenced a putative class action in the District Court for the Northern District of California (“District Court”) against Facebook, alleging it violated the TCPA by maintaining a database that stored phone numbers and programmed its equipment to send automated text messages to the stored phone numbers each time the person’s account was accessed by an unrecognized device or browser.

Facebook moved to dismiss, arguing that it did not violate the TCPA because Facebook did not use an automatic dialer, as its text messages were not sent to phone numbers that were randomly or sequentially generated. Rather, Facebook sent targeted, individualized texts to phone numbers linked to specific accounts. The District Court agreed with Facebook and dismissed Plaintiff’s complaint with prejudice.

Plaintiff appealed, and the United States Court of Appeals for the Ninth Circuit (“Ninth Circuit”) reversed the District Court’s order. The Ninth Circuit held that an autodialer “need not be able to use a random or sequential generator to store numbers; it need only have the capacity to ‘store numbers to be called’ and ‘to dial such numbers automatically.’” SCOTUS granted certiorari to resolve a circuit split among the Courts of Appeals regarding whether the definition of an “automatic telephone dialing system” includes equipment that can “store” and dial phone numbers, even if such equipment does not “us[e] a random or sequential number generator.”

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U.S. Supreme Court Rules Statute of Limitations for FDCPA Claim Runs One Year from Alleged Violation, Not Discovery

Wayne Streibich, Diana M. Eng, Jonathan M. Robbin, Scott E. Wortman, and William L. Purtell

The Supreme Court of the United States (“Supreme Court”) recently affirmed the Third Circuit’s decision holding Fair Debt Collection Practices Act (“FDCPA”) claims are subject to a one-year statute of limitations from the date of an alleged violation and rejecting the Fourth and Ninth Circuit’s adoption of a broad “discovery rule.” However, debt collectors should take note that equitable tolling principles may still apply in certain circumstances. 

On December 10, 2019, in Rotkiske v. Klemm, — S. Ct. — (2019), the Supreme Court issued an opinion holding that the one-year statute of limitations under the FDCPA accrues when a violation of the FDCPA occurs, not when that violation is discovered by the consumer. The Justices ruled 8-1 in the case, with Justice Thomas writing the opinion and Justice Sotomayor concurring. Justice Ginsburg filed a dissent, which would have remanded the case back to the district court to re-review the consumer’s separate allegations of equitable tolling of the statute of limitations.

Summary of Facts

In 2009, respondent Klemm & Associates (“Klemm”) sued petitioner Kevin Rotkiske (“Rotkiske”) in state court to enforce a credit card debt, which was allegedly beyond Pennsylvania’s statute of limitations for enforcement (“2009 Action”). Klemm issued service of process to an address where Rotkiske did not live, which Klemm allegedly had reason to know was inaccurate. An unknown individual accepted service on behalf of Rotkiske. Ultimately, Klemm obtained a default judgment against Rotkiske based on this return of service. Rotkiske was unaware of the default judgment against him until 2014, when his mortgage loan application was denied based on this default judgment.

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U.S. Supreme Court Excludes Banks Collecting Purchased Delinquent Debt from Definition of “Debt Collector” under the FDCPA

By: Diana M. Eng and Louise Marencik

Banks and other consumer finance firms that purchase delinquent debt and then collect on their own behalf are not “debt collectors” under the Fair Debt Collection Practices Act. However, this limitation still does not apply to those institutions that collect on behalf of another.

In a unanimous decision in Henson et al. v. Santander Consumer USA Inc., the United States Supreme Court held that the Fair Debt Collection Practices Act (“FDCPA”) does not apply to banks and other consumer finance firms that purchase and then collect on defaulted debt that they own. No. 16-349, ____ U.S. ____ (2017).

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