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The Third Circuit Court of Appeals has delivered a ruling impacting the TCPA’s definition of automatic telephone dialing system (ATDS) — one that may drastically change the game for call centers everywhere. 

In the case of Panzarella v. Navient Solutions Inc., the Third Circuit’s ruling was a little convoluted: There was some good news, and some potentially very bad. Ultimately, it’s a case that may shape the course of future TCPA-related litigation, so get all the details below.

The Facts of the Case in Panzarella v. Navient

At issue in the case were a series of 19 debt collection calls made by Navient to the plaintiffs, the mother and brother of a debtor. The plaintiffs claimed that these calls were made using an ATDS without their consent, in violation of the TCPA. As Contact Center Compliance rightly notes, claims like these now need to contend with the Supreme Court’s narrow definition of ATDS, as laid out in last year’s Facebook v. Duguid ruling. In this case, SCOTUS defined an ATDS as equipment with “the capacity to use a random or sequential number generator to either store or produce numbers to be called.”

Ultimately, the Third Circuit sided with Navient, saying their system was not an ATDS because it did not use its ability to act as an ATDS when making the calls at issue. In the words of the Court, the dialer “must use its defining feature — its ability to produce or store telephone numbers through random or sequential number generation” in order to be found liable for calling without consent under the TCPA. This standard is new: previous rulings on whether a dialer was an ATDS have hinged on a dialer’s capacity to act as an ATDS, not its actual use as one.

This new precedent within the Third Circuit Court is a favorable one for outbound dialing teams. However, as we’ll explain below, it’s not the only precedent set up by the Panzarella ruling—and it’s not all good news for outbound sales and lead generation businesses.


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An Expanded View of “Equipment:” The Other Side of the Panzarella Ruling

In Panzarella, the plaintiffs argued that Navient’s SQL database, which managed information of the debtors they called, should be considered part of their ATDS “equipment,” not just their dialer software. Crucially, the Third Circuit sided with the plaintiff on this issue, expanding the definition of “equipment” to encompass more than just an organization’s dialer software.

While the final outcome of Panzarella was positive news for dialers, this aspect of the Third Circuit’s ruling could spell huge trouble down the road. By breaking from past precedent and taking an expansive view of the TCPA’s definition of “equipment,” the Third Circuit effectively opened the door for virtually any modern dialer to be considered an autodialer. Because even though most dialers can’t randomly or sequentially generate numbers, you’d be hard-pressed to find a database solution that can’t do so.

As Eric Troutman writes at TCPAWorld: “This is Pandora’s box, folks.” 

In his view, for those calling outside the Third Circuit’s jurisdiction (Delaware, New Jersey, and Pennsylvania), the court’s expansive holding on what constitutes equipment is likely to be the most impactful and lasting piece of the ruling, creating more uncertainty around TCPA compliance and a potentially far weaker legal footing for dialers in the future.

So, while folks in the Third Circuit might be able to rest easy, everyone else will need to keep their eyes peeled to the TCPA litigation coming down the pike to see how things shake out.


DISCLAIMER: The information on this page and related links is provided for general education purposes only and is not legal advice. Convoso does not guarantee the accuracy or appropriateness of this information to your situation. You are solely responsible for using Convoso’s services in a legally compliant way and should consult your legal counsel for compliance advice. Any quotes are solely the views of the quoted person and do not necessarily reflect the views or opinions of Convoso.


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