Last week, the Eleventh Circuit held that an invasion-of-privacy exclusion in an insured’s policy barred coverage and that Liberty Insurance Underwriters Inc.  did not have to cover the $60.4 million settlement of  a class action against the insured, iCan Benefit Group LLC (iCan), for sending robotexts in alleged violation of the Telephone Consumer Protection Act. The exclusion for claims “arising out of” an invasion of privacy applies because the class claim has a connection with the invasion of privacy. The complaint doesn’t have to allege the common law tort of invasion of privacy to trigger the coverage exclusion.

The class action against iCan alleged that class members suffered “actual harm in the form of annoyance, nuisance, invasion of privacy.” After Liberty denied the request for coverage by iCan, iCan and class plaintiffs settled for $60.4 million and payment of that settlement was “not [to] be satisfied from or executed on any assets or property of iCan, [but] shall only be satisfied from Liberty.”

At the beginning of April 2021, the U.S. Supreme Court unanimously ruled in favor of Facebook in Facebook, Inc. v. Duguid, reversing the decision of the Ninth Circuit Court of Appeals , holding: “To qualify as an ‘automatic telephone dialing system’ under the Telephone Consumer Protection Act (TCPA), a device must have the capacity either to store a telephone number using a random or sequential number generator, or to produce a telephone number using a random or sequential number generator.” This is big news. This precedent will likely be relied on by other defendants in TCPA class action litigation to argue that the technology used to send text messages does not constitute an autodialer and,therefore, the TCPA does not apply.

The TCPA prohibits certain telemarketing tactics by restricting a business’ ability to make certain communications using an automatic telephone dialing system. The TCPA defines “autodialers” as equipment with the capacity both “to store or produce telephone numbers to be called, using a random or sequential number generator,” and to dial those numbers. Facebook has a security feature in its platform that allows users to elect to receive text messages when someone attempts to log in to the user’s account from a new device or browser. Plaintiff, Noah Duguid, received these type of text messages from Facebook alerting him to login activity on a Facebook account linked to his telephone number. However, Duguid never created an account on Facebook. Facebook explained in its argument that Duguid may have been assigned a recycled cell phone number that was used by a Facebook user who previously opted into receiving these login notifications. Duguid claimed that he tried to stop the text messages, but he was unsuccessful. Duguid claimed that Facebook violated the TCPA by maintaining a database that stored telephone numbers, and then programming its equipment to send automated text messages. Facebook argued that the TCPA does not apply as the technology used to send those texts to Duguid did not use a “random or sequential number generator.” The Ninth Circuit court held that the TCPA did apply to a notification system that has the capacity to dial automatically-stored numbers.

The Supreme Court’s decision cited the intent of the TCPA when first introduced by Congress, saying that autodialers “threatened public safety by ‘seizing the telephone lines of public emergency services, dangerously preventing those lines from being utilized to receive calls from those needing emergency services.’ Indeed, due to the sequential manner in which they could generate numbers, autodialers could simultaneously tie up all the lines of any business with sequentially numbered phone lines. Nor were individual consumers spared: Auto-dialers could reach cell phones, pagers, and unlisted numbers, inconveniencing consumers and imposing unwanted fees.” [citation omitted.] However, the Supreme Court noted that technology has since changed (including cell phone services and the way we pay for those services), and the nuisance and threat of these autodialers has been lessened.

Neither party disputed the fact that the TCPA prohibits unsolicited text messages without prior express consent, and, therefore, the Supreme Court did not consider or resolve that issue.

The Supreme Court’s decision relies heavily on the literal interpretation of the language and grammar of the TCPA:

This case turns on whether the clause “using a random or sequential number generator” in §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. The most natural reading of the text and other aspects of §227(a)(1)(A) confirm Facebook’s view. First, in an ordinary case, the “series-qualifier canon” instructs that a modifier at the end of a series of nouns or verbs applies to the entire series. Here, that canon indicates that the modifying phrase “using a random or sequential number generator” qualifies both antecedent verbs, “store” and “produce.” Second, the modifying phrase immediately follows a concise, integrated clause (“store or produce telephone numbers to be called”), which uses the word “or” to connect two verbs that share a common direct object (“telephone numbers to be called”). Given this structure, it would be odd to apply the modifier to just one part of the cohesive clause. Third, the comma in §227(a)(1)(A) separating the modifying phrase from the antecedents suggests that the qualifier applies to all of the antecedents, instead of just the nearest one.

In the end, the takeaway is that an autodialer (whose use is prohibited by the TCPA) must have the ability to use a random or sequential number generator to either store or produce phone numbers to be called.

Recently, the Federal Communications Commission (FCC) clarified that a call made using artificial or pre-recorded voice to a residential telephone line for the SOLE purpose of identifying individuals to participate in a clinical trial is exempt from the Telephone Consumer Protection Act (TCPA) “prior express written consent” requirement, provided that:

  • The call does not include any advertisement or telemarketing.
  • The caller does not make more than three of these clinical trial calls to one individual in any consecutive 30-day period.
  • The caller allows the individual to opt-out of receiving future calls about the clinical trial.

This clarification came in response to a petition from Acurian, Inc. (Acurian), a provider of clinical trial patient recruitment and retention solutions for life sciences. Acurian’s calls are made using a pre-recorded voice message offering introductory information about the clinical trial opportunity and about receiving a live follow-up call with a physician overseeing the trial. Acurian’s petition stated that it should be exempt from TCPA requirements because the calls it makes, even though they are pre-recorded:

  • Are not made for a commercial purpose.
  • Do not, and are not intended to, encourage the called party to engage in a commercial transaction.
  • Are analogous to the purely research calls that the FCC has already deemed exempt.

The FCC granted Acurian’s petition, saying that it did not need to research the question of whether the calls were commercial because the communications lacked advertising, and the calls did not offer a free service part of an overall marketing campaign (which would potentially need to meet the TCPA’s “prior express written consent” requirement).

This decision suggests that the FCC is open to the use of pre-recorded calls to residential lines without first obtaining written consent, provided they offer free opportunities and do not market or sell products or services.