Facebook, Inc. v. Duguid – SCOTUS Limits TCPA Lawsuits (for now)

By Brian S. Inamine^[1]

In its litigation-ending opinion in Facebook, Inc. v. Duguid (April 1, 2021) No. 19-511, the U.S. Supreme Court reminded litigators that even in the new world of emojis, automation and digitalization, grammar still matters. The High Court’s Facebook decision, according to some, almost immediately rendered dismissal-worthy a multitude of pending autodialer class actions filed under the Telephone Consumer Protection Act of 1991 (“TCPA”).

The initial Facebook legal issue is relatively straightforward in scope: Did Facebook’s extra security measure – text message alerting account holder that a new device or browser is trying to log in that person’s account – qualify as a TCPA autodialer and potentially trigger substantial monetary penalties. Specifically, did Facebook’s system have the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator” and to dial those numbers. The factual claim is likewise pretty simple: Plaintiff Noah Duguid was tired of receiving text messages from Facebook alerting him to log in attempts to a Facebook account he never created (and he never provided his phone number to Facebook) and he wasn’t able to stop the alert messages. Facebook, at 3. The frustrated Mr. Duguid alleged that Facebook had a database of his and other class members’ phone numbers and its system was programmed to automatically send the text messages, all in violation of the TCPA. In response, Facebook contended that its system didn’t qualify as a prohibited autodialer because it didn’t use a “random or sequential number generator” (i.e., “Facebook sent targeted, individualized texts to numbers linked to specific accounts,” Facebook, at 4.). As the Supreme Court stated, “[t]his case turns on whether the clause ‘using a random or sequential number generator’ in [TCPA] § 227(a)(1)(A) modifies both of the two verbs that precede it (‘store’ and ‘produce’), as Facebook contends, or only the closest one (‘produce’), as maintained by Duguid.” Facebook, Syllabus, at 2.

The Court’s opinion did a deep dive into the role of modifiers, phrases, and commas.  The Court concluded that the clause “store or produce telephone numbers to be called” was a “concise, integrated clause” because it “‘hangs together as a unified whole . . . using the word ‘or’ to connect two verbs that share a common direct object, ‘telephone numbers to be called.’” Therefore, “[i]t would be odd to apply the modifier (‘using a random or sequential number generator’) to only a portion of this cohesive preceding clause.” Facebook, at 6. Given this interpretation, the Supreme Court held that “[b]ecause Facebook’s notification system neither stores nor produces numbers ‘using a random or sequential number generator,’ it is not an autodialer.” Facebook, at 5.

What does this mean for autodialer TCPA class actions? While autodialer claims had become the big driver of TCPA class actions the last few years, a significant drop-off was noted in 2020, perhaps due to jitters over the High Court’s acceptance of Facebook’s petition for certiorari. (https://www.natlawreview.com/article/pretty-sleepy-tcpa-filings-way-down-so-far-august-2020-dog-days-summer-or-facebook). Now that the Facebook decision has come out in favor of Facebook, it may lead to large scale dismissals (voluntary or not) of similar autodialer cases. Or perhaps quick settlements in anticipation of expected Congressional action to redo the TCPA’s autodialer definition. The Supreme Court’s majority opinion in Facebook essentially invited Congressional corrective action – “Duguid’s quarrel is with Congress, which did not define autodialer as malleably as he would have liked.” Facebook, at 12. And, shortly after the Facebook opinion was issued, two Democratic legislators, Sen. Edward J. Markey (D-Mass.) and Rep. Dana G. Eschoo (CA-18), accepted that invitation: “By narrowing the scope of the TCPA, the Court is allowing companies the ability to assault the public with a non-stop wave of unwanted calls and texts, around the clock. Fortunately, we can and will act to make right what the Supreme Court got wrong. We plan to introduce soon legislation to amend the TCPA . . . .”  (https://www.markey.senate.gov/news/press-releases/senator-markey-and-rep-eshoo-blast-supreme-court-decision-on-robocalls-as-disastrous).

So, businesses should enjoy the Facebook victory while it lasts, which might not be long.

[1] Brian Inamine is a partner in the Woodland Hills office of O’Hagan Meyer. He specializes in management-side employment consultation, employment litigation, and business litigation.