Supreme Court Backs Facebook, Limits Federal Robocall Ban

(Bloomberg) -- The U.S. Supreme Court limited the reach of the decades-old federal ban on robocalls, siding with business groups and throwing out a lawsuit that accused Facebook Inc. of repeatedly sending unwanted text messages.

The unanimous decision, which overturned a lower court ruling, said a key provision in the 1991 Telephone Consumer Protection Act applies only to calling systems that use a random or sequential number generator, an approach that Facebook told the court has become all but obsolete.

The ruling will give telemarketers, companies and political parties freer rein to use computer systems to call or text mobile phones without first getting consent.

“As a practical matter this will eliminate all litigation under the TCPA, except for cases based on pre-recorded voice calls, because very few companies call to random or sequential number lists,” said Stephen Newman, a Los Angeles class-action defense lawyer at Stroock & Stroock & Lavan.

The ruling doesn’t affect a separate provision of the anti-robocall law that protects residential phones from calls that use artificial or recorded voices. It also leaves intact the federal do-not-call registry that individuals can use to try to block telemarketing calls to home phones.

But the decision will have an especially big impact on small businesses that use mobile phones, leaving them vulnerable to unwanted calls and texts, said Margot Saunders, a lawyer with the National Consumer Law Center.

“Texts, including telemarketing texts, to cell phones used by small businesses will not have restrictions on them whatsoever,” Saunders said. She said consumer advocates would turn to Congress to strengthen the law.

Facebook Texts

The ruling is a defeat for Noah Duguid, the man who sued Facebook. Duguid said he received repeated texts in 2014 notifying him of an attempted log-in, even though he didn’t have an account. Facebook said Duguid probably had a recycled phone number that had once been associated with an account. The lawsuit sought class action status.

Writing for the court, Justice Sonia Sotomayor said Duguid was pressing such an expansive interpretation of the robocall law that it would have covered some calls and texts placed by modern mobile phones. She said Congress didn’t intend such a sweeping impact.

Duguid’s interpretation “would take a chainsaw to these nuanced problems when Congress meant to use a scalpel,” Sotomayor wrote.

The TCPA allows penalties as high as $1,500 for every unwanted call or text. The ban applies to dialing systems that can “store or produce telephone numbers to be called, using a random or sequential number generator.”

The key question was whether the limiting phrase at the end applies only to systems that produce numbers, as Duguid contended, or also to those that simply store numbers, as Facebook and its business allies argued.

Sotomayor said Facebook had the better reading of the law. She said legislative documents showed that Congress was especially concerned with autodialers that could simultaneously tie up all the lines of a business or public emergency service that had sequentially numbered phone lines.

Happy Retailers

Home Depot Inc., Quicken Loans LLC, CVS Corp.’s Aetna and United HealthCare Services Inc. all signed briefs backing Facebook, with some saying they had been subject to similar lawsuits. The Trump administration also sided with Facebook when the case was argued in December.

“Today’s decision will curb frivolous suits against retailers and allow legitimate communications to customers, while keeping the core TCPA consumer protections in place,” said Kathleen McGuigan, deputy general counsel with the Retail Litigation Center, which represents the industry.

One privacy group, the Electronic Privacy Information Center, said it wasn’t conceding that the autodialing ban was dead and vowed that litigation will continue. But EPIC, as the group is known, said the ruling nonetheless will produce a surge of unwanted calls.

“Congress must update the autodialer restriction to protect Americans from the coming onslaught of unwanted automated calls,” EPIC lawyer Megan Iorio said.

The case is Facebook v. Duguid, 19-511.

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