TCPA footnote 7

Duguid v. Facebook, Footnote 7: TCPA Landscape Significantly Altered by Ninth Circuit Decision

It has been about one year and eight months since the United States Supreme Court released its landmark decision in Facebook v. Duguid. Since then, numerous courts have incorporated Facebook into their opinions, with variations in their interpretations. For many plaintiffs filing suit under the TCPA, Footnote 7 of the Facebook decision has provided them with a fighting chance in many of these courts. On November 16, 2022, the Ninth Circuit Court of Appeals issued its own analysis of the breadth of the Facebook decision, and the application of Footnote 7, in Borden v. eFinancial. In time, as detailed herein, Borden may well prove to be the most definitive pro-defendant circuit court decision to date.

Facebook settled a longstanding circuit split by determining that a necessary feature of an autodialer under the TCPA is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called. As readers of this blog know, the TCPA, or Telephone Consumer Protection Act, was enacted to address telephone marketing calls and certain telemarketing practices. TCPA plaintiffs lost tremendous ground with the Supreme Court’s determination that the use of a “random or sequential number generator” modifies both “store” and “produce” language contained in the statute. However, opportunistic plaintiffs continued filing TCPA lawsuits by capitalizing on a single sentence in Footnote 7 of the Facebook decision. This sentence reads: “For instance, an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list.” The Borden ruling closed the door, at least in the Ninth Circuit, to relying on Facebook Footnote 7, ruling that plaintiffs that do so place undue emphasis on one sentence, while ignoring its context.

What Are the Facts of Borden v. eFinancial?

David Borden was shopping for life insurance online. To acquire an insurance quote from Progressive.com, he provided his personal information on a Progressive Internet registration page. To submit his information, Mr. Borden clicked on a button with TCPA consent language below it. The relevant part of the consent language read: “By pressing the button above you agree to this website’s Privacy Policy, and you consent to receive offers of insurance from Efinancial, LLC at the email address or telephone numbers you provided, including autodialed, prerecorded calls, SMS or MMS messages.” Progressive operates as a referral source of consumers seeking life insurance for eFinancial. Although, Mr. Borden decided not to purchase insurance that day, he did begin to receive marketing text messages from eFinancial. After receiving six of these messages, Mr. Borden sued eFinancial for violating the TCPA, alleging that eFinancial used an autodialer to send him text messages without his consent. After the Supreme Court’s decision in Facebook, Mr. Borden filed a Second Amended Complaint alleging that eFinancial used a sequential number generator to assemble LeadID numbers, which were then assigned to telephone numbers and used by the sequential number generator to pick a dialing order.

eFinancial filed a Motion to Dismiss, arguing that telephone dialing equipment must generate random or sequential telephone numbers in order to meet the TCPA’s autodialer requirements. The District Court for the Western District of Washington agreed with eFinancial and dismissed the matter. Mr. Borden then appealed to the Ninth Circuit.

How Did the Ninth Circuit Close the Facebook Footnote 7 Loophole?

In Borden, the Ninth Circuit held that equipment must have the capacity to randomly or sequentially generate telephone numbers in order to be deemed an autodialer. It arrived at this conclusion by examining the TCPA’s statutory text and the Supreme Court’s decision in Facebook.

The Circuit Court began its textual analysis by looking at the sentence structure of the TCPA’s autodialer definition. The TCPA defines an “automatic telephone dialing system” 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.

The clause “using a random or sequential number generator” modifies the phrase “to store or produce telephone numbers to be called.” The Ninth Circuit determined that it “makes the most sense” that the “number” mentioned in the modifier is the same as the “number” mentioned in the preceding clause. Accordingly, both must refer to telephone numbers. The Circuit Court then cited the definition’s repeated use of the word “number.” The first “number” mentioned refers to telephone numbers. The Circuit Court found that the legislature would not intend a different meaning for subsequent uses of the word “number” without clarification. Finally, the Circuit Court concluded that “number” and “telephone number” were used interchangeably in the autodialer definition because the TCPA uses them interchangeably in other parts of the statute, including the Do-Not-Call Database section.

Next, the Circuit Court examined Facebook to reinforce its notion that an autodialer must randomly or sequentially generate and dial a telephone number. This portion of Borden contains its most salient point. The Ninth Circuit explains that the Supreme Court granted certiorari to “resolve a conflict among the Courts of Appeals regarding whether an autodialer must have the capacity to generate random or sequential phone numbers.” The Circuit Court then examines Facebook’s public policy discussion. In Facebook, the Supreme Court focuses on one of the TCPA’s policy aims: to remove the threat of autodialers seizing emergency service telephone lines. If an autodialer tied up an emergency service’s phone lines, the Supreme Court reasoned, individuals in need risked severe detriment. Continuing its analysis with Facebook’s policy aim in mind, the Ninth Circuit in Borden reasoned that emergency services would never provide their dedicated lines to a telemarketer. Thus, emergency dialers only faced the risk of autodialers tying up their phone lines if dialing equipment generated actual telephone numbers.

The Ninth Circuit relied on a textual analysis and the Supreme Court’s decision in Facebook to determine that an autodialer must have the capacity to randomly or sequentially generate telephone numbers. The Circuit Court rejected Mr. Borden’s Facebook Footnote 7 argument, stating that it was an attempt to “divorce” a single sentence from the rest of the footnote and opinion. Accordingly, because the technology at issue dialed from a pre-determined list of telephone numbers, and did not have the capacity to randomly or sequentially generate them, the Ninth Circuit affirmed the District Court’s decision to dismiss Mr. Borden’s complaint.  

Why is the Ninth Circuit’s Decision in Borden v. eFinancial Important?

For starters, the Ninth Circuit abides. It is important to remember that Facebook was appealed to the Supreme Court after the Ninth Circuit issued its pro-plaintiff opinion. The Supreme Court then reversed the Ninth Circuit and issued its landmark pro-defendant decision. With Borden, the Ninth Circuit made clear that it respects precedent.

More significantly, Borden has closed a major loophole for TCPA plaintiffs. Facebook was unequivocal in defining an autodialer as dialing equipment that has the capacity to use a random or sequential number generator to either store or produce phone numbers to be called. Unfortunately, the Supreme Court’s inclusion of Footnote 7, albeit unintended, provided somewhat of a backdoor for TCPA plaintiffs to continue filing claims, while ignoring the rest of the opinion. A majority of federal courts have declined to give credence to a claim based on a single sentence “divorced” from the rest of Facebook. However, Facebook Footnote 7 still provided ground upon which TCPA plaintiffs could “plausibly” state a claim. The Ninth Circuit has now slammed that door shut with its decision in Borden.

Borden is a major decision for companies engaged in telemarketing. However, leveraging the nuances of the Borden ruling is as important as knowledge of the opinion itself. The attorneys at Klein Moynihan Turco have decades of experience in meticulously building a TCPA defense based upon the most up to date jurisprudence. As such, if you require assistance with telemarketing law compliance or related TCPA litigation defense, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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Photo by Sasun Bughdaryan on Unsplash

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