A federal court in Missouri recently held that a restaurant’s promotional text messages did not violate the Telephone Consumer Protection Act (TCPA) because the messaging equipment used by the restaurant did not qualify as an automatic telephone dialing system (ATDS) as defined by the statute. The district court noted a split between the circuit courts on this issue, highlighting the uncertainty regarding whether the equipment at issue must have the capacity for sequential or random number generation to fall within the definition of an ATDS, thus requiring prior express written consent.
The TCPA requires that prior express written consent be obtained for all telemarketing calls and text messages made using an ATDS or a prerecorded voice to a wireless number. In Beal v. Outfield Brew House, Case No. 2:18-cv-4028-MDH (W.D. Mo. Feb. 20, 2020), the defendant, Outfield Brew House, LLC (Brew House), collected phone numbers from customers who provided their contact information on paper cards (which contained some TCPA disclosure language). Brew House did not maintain copies of the signed paper cards, but rather entered the customer contact information from the cards into a spreadsheet and shredded the cards. Brew House employees then uploaded that information into its text messaging system. To send text messages, a Brew House employee would log into a text messaging system, select a subset of customers to whom promotional texts would be sent, and manually press a button to send a text message to those customers. The plaintiff, a customer who had received promotional text messages from Brew House, filed a putative class action alleging that Brew House violated the TCPA by sending text messages to customers using an ATDS without their prior express written consent. Brew House moved for summary judgment, which the district court granted.
At issue in the case was whether Brew House’s text messaging equipment could be considered an ATDS when it could not produce numbers to be called using a random or sequential number generator. The district court noted the split between the circuit courts on this issue; both the Third Circuit and the Eleventh Circuit have held that a phone or messaging system that does not randomly or sequentially generate phone numbers and then dial those numbers could not be considered an ATDS under the TCPA. The Ninth Circuit, on the other hand, has held that an ATDS is not limited to devices with the capacity to call numbers produced by a random or sequential number generator, but also includes devices with any capacity to dial stored numbers automatically. The district court in Beal declined to follow the Ninth Circuit’s reasoning and instead adopted the narrower definition of an ATDS embraced by the Third and Eleventh Circuits.
While Beal may be good news for businesses that contact customers using messaging or dialing systems, the case highlights the ongoing uncertainty regarding the definition of an ATDS in the federal courts. The risks associated with violating the TCPA are very high: class actions are prevalent because the TCPA provides for strict liability, a private right of action, and significant statutory damages ($500 per violation, or up to $1,500 per willful violation). Importantly though, obtaining the consumer’s prior express written consent provides a defense to TCPA actions, although circuits are also split regarding who bears the burden of proof on that issue. For this reason, companies should establish procedures to document, store, and track a person’s written consent to receive any calls or texts in order to limit their exposure under the TCPA, regardless of which definition a court may adopt.
To learn more about this topic, please join Reed Smith for a CLE webinar on February 26, 2020 for a discussion on the latest TCPA legal developments and regulatory and compliance risks.