Monitoring the financial services industry to help companies navigate through regulatory compliance, enforcement, and litigation issues
In Soliman v. Subway Franchisee Advertising Fund Trust, Ltd, the plaintiff alleged that the defendant violated the Telephone Consumer Protection Act (TCPA) by sending a text message to her cell phone using an automatic telephone dialing system (ATDS) and which utilized an “artificial or prerecorded voice.” The Second Circuit affirmed the district court’s decision to dismiss the case because the TCPA did not apply.
As alleged in the complaint, in 2016, Subway sent a text message to the plaintiff’s phone, which read “FREE CHIPS RULE! Right now @Subway, get ANY bag of chips FREE with a sub purchase.” While it is undisputed that the plaintiff had earlier opted in for such text messages, the plaintiff responded to this message by texting “STOP.” Subway immediately responded with a computer-generated response advising the plaintiff that she had been “unsubscribed from all programs” and that she would “no longer receive any text alerts.” However, four days later, Subway sent another automated text message to the plaintiff’s cell phone advertising its weekly promotion. The plaintiff filed a putative class action alleging that Subway’s subsequent text violated the TCPA in two ways: (1) by using an ATDS, and (2) by using an “artificial or prerecorded voice.”
The district court granted the defendant’s motion to dismiss, holding the TCPA only prohibits the use of a telephony system that randomly or sequentially generates telephone numbers. Therefore, the definition of an ATDS does not include a telephony system that dials or texts from a stored list of pre-existing telephone numbers. The district court also held that the TCPA’s prohibition on the use of an “artificial or prerecorded voice” did not apply to text messages.
Section 227(b) prohibits making “any call … using any automatic telephone dialing system or an artificial or prerecorded voice … for which the party is charged for the call.” It was undisputed that Subway contracted with a SMS text-messaging service that used an algorithm whereby a random or sequential number generator selected which number to dial from the stored list of numbers and sequenced those numbers in order to automatically dial the numbers and send out text messages en masse. On appeal to the Second Circuit, the plaintiff argued, amongst other things, that a “number generator” is a programming tool used to generate random or sequential series of numbers, not necessarily telephone numbers. As such, the plaintiff asserted that the definition of ATDS includes systems that dial numbers randomly drawn from pre-existing lists of telephone numbers.
In order to determine whether the text-messaging service qualified as an ATDS, the Second Circuit analyzed both the statutory text and the Supreme Court’s decision in Facebook, Inc. v. Duguid, which held that “[t]o qualify as an [ATDS], a device must have the capacity either to store a telephone number using a random or sequential generator or to produce a telephone number using a random or sequential number generator.” The Second Circuit concluded that, as a result of the Facebook decision, a telephony system only qualifies as an ATDS if it randomly or sequentially generates telephone numbers, not simply dials telephone numbers from pre-existing lists and affirmed the district court’s dismissal of this claim.
The Second Circuit also affirmed dismissal of the plaintiff’s claim that the text at issue constituted an “artificial or prerecorded voice,” holding that the ordinary meaning of the word voice and the language of the TCPA itself “makes clear Congress meant ‘voice’ to mean something audible, not a text message.”
Our Take
In reaching this decision, the Second Circuit followed the lead of a number of existing district and circuit court decisions reaching similar outcomes. However, until every circuit court of appeals aligns on the definition of what constitutes an ATDS when dialing from a stored, pre-existing list, there remains room for different outcomes. In particular, the Third Circuit’s decision in the Panzarella case in March 2022, which broadly defined the scope of the term “system” within the ATDS analysis, has left the door open for these types of arguments.
The Second Circuit’s opinion also was a welcome compliment to the Ninth Circuit’s opinion last year in Trim, discussed here, that text messages do not, in and of themselves, constitute prerecorded or artificial voice messages within the meaning of the TCPA. After yet another conclusive and well-reasoned decision from the Second Circuit holding that the plain language of the TCPA does not support that broad of an interpretation of a text message, that hopefully will spell the beginning of the end of this theory moving forward.
David Anthony handles litigation against consumer financial services businesses and other highly regulated companies across the United States. He is a strategic thinker who balances his extensive litigation experience with practical business advice to solve companies’ hardest problems.
Virginia is a partner in the firm’s Consumer Financial Services practice and specifically within the Financial Services Litigation practice. She represents clients in federal and state court, both at the trial and appellate level in the areas of complex litigation and business disputes…
Virginia is a partner in the firm’s Consumer Financial Services practice and specifically within the Financial Services Litigation practice. She represents clients in federal and state court, both at the trial and appellate level in the areas of complex litigation and business disputes, health care litigation, including ERISA and out-of-network issues, and consumer litigation in over 21 states nationwide. As a result of new legal developments, she increasingly counsels clients to ensure they comply with the myriad of growing laws in the consumer law with a particular emphasis on the intersection of TCPA and HIPAA.
Stefanie takes a holistic approach to working with clients both through compliance counseling and assessment relating to consumer products and services, as well as serving as a zealous advocate in government inquiries, investigations, and consumer litigation.
Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their
Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their business cycle.
Troutman Pepper Locke helps clients solve complex legal challenges and achieve their business goals in an ever-changing global economy. With more than 1,600 attorneys in 30+ offices, the firm serves clients in all major industry sectors, with particular depth in energy, financial services, health care and life sciences, insurance and reinsurance, private equity, and real estate. Learn more at troutman.com.
In addition to cookies that are necessary for website operation, this website uses cookies and other tracking tools for various purposes, including to provide enhanced functionality and measure website performance. To learn more about our information practices, please visit our Privacy Notice.
AgreeDecline

source