Seventh Circuit Reaffirms Gadelhak, Rejects Challenge to Narrow ATDS Definition

The Seventh Circuit last week affirmed its holding in Gadelhak v. AT&T Services, Inc., 950 F.3d 458 (7th Cir. 2020) that, to qualify as an “automatic telephone dialing system” (ATDS) under the TCPA, a device or calling system must have the ability to randomly or sequentially generate the phone numbers that it calls. As we reported here and here, this interpretation of the statute’s ATDS definition excludes systems and devices that place calls from a premade list of numbers, such as a list of customers’ mobile numbers. Courts remain divided on how to interpret the ATDS definition and the Supreme Court is expected to address the issue in a case that is currently before it, Facebook, Inc. v. Duguid.

In Jackson v. Regions Bank, the U.S. District Court for the Southern District of Indiana, citing Gadelhak, entered judgment in favor of defendant Regions Bank (Regions) after discovery made clear that Regions’ dialing system placed calls from a premade list of customer numbers and didn’t utilize random or sequential number generation. No. 20-2624, 2021 WL 754836, at *1 (7th Cir. Feb. 26, 2021).

On appeal, Jackson argued that a lack of human intervention is the defining feature of an ATDS and that the Seventh Circuit’s holding in Gadelhak improperly focused on how the device or system identifies numbers for dialing. Id. at *2. In support of his position, Jackson cited a 2018 decision from the Northern District of Alabama wherein that court adopted a 2003 FCC order opining, “The defining characteristic of an ATDS” is “the capacity to dial numbers without human intervention.” Id. (citing Swaney v. Regions Bank, No. 2:13-cv-00544, 2018 WL 2316452, at *2 (N.D. Ala. May 22, 2018)).

The Seventh Circuit rejected Jackson’s invitation to overrule Gadelhak and clarified that it would not follow the FCC’s interpretation of the ATDS definition. First, the court explained, the FCC’s guidance didn’t bind the court because the D.C. Circuit had struck down all orders constructing the TCPA in ACA International v. FCC, 885 F.3d 687, 695 (D.C. Cir. 2018)). And not only was the 2003 order nonbinding, but the court already explained in Gadelhak that it wouldn’t follow the FCC’s “human intervention” rule because doing so would require a “significant judicial rewrite” of the TCPA’s text. Jackson, supra, at *2 (citing 950 F.3d at 466-67).

The court thus affirmed, “As explained in Gadelhak, the defining feature of an [ATDS] is not how the numbers are dialed; it is how the numbers are stored and produced. Id. (quoting Gadelhak, 950 F.3d at 460) (emphasis in original). Since the undisputed evidence left no genuine question that Regions’ dialing system only made calls from a preset list of numbers, the district court properly entered judgment for Regions. Id.

Although the Supreme Court is expected to soon address the circuit-splitting issue of what constitutes an ATDS, the Seventh Circuit expressly declined to hold its decision in Jackson pending resolution thereof, saying that Jackson could petition the Supreme Court for relief if he so desired. Id. at *2 n.1. The Seventh Circuit’s readiness to reaffirm Gadelhak might say something about how this circuit expects the Supreme Court to resolve the issue at play.