News & Insights

Seventh Circuit Decision Provides Important Grammar Lesson

December 1, 2020

By: Stephen B. Stern

    In Gadelhak v. AT&T Services, Inc., 950 F.3d 458 (7th Cir. 2020), the United States Court of Appeals for the Seventh Circuit interpreted certain provisions of the Telephone Consumer Protection Act (the “Act”) and issued an important grammar lesson while observing that the wording of the provisions at issue was “enough to make a grammarian throw down her pen.” 

    In Gadelhak, the Seventh Circuit was asked to interpret a provision of the Act that prohibits certain uses of an “automatic telephone dialing system,” which is defined as equipment with the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator,” as well as the capacity to dial those numbers.  Specifically, the court was asked to decide what “using a random or sequential number generator” modifies – an issue that has split the federal appellate courts – and held that “using a random or sequential number generator” modifies both “store” and “produce.”  Because the court found that the system at issue neither stored nor produced numbers using a random or sequential number generator, but exclusively dialed numbers stored in a customer database, it did not constitute an “automatic telephone dialing system” as defined by the Act and, therefore, the defendant (AT&T) did not violate the Act when it sent unwanted automated text messages to the plaintiff, Ali Gadelhak.

    The court preliminarily addressed a standing issue and then pivoted to the substance of the case, starting its analysis by quoting the full text of the provision at issue, which is the definition of an “automatic telephone dialing system”:

equipment which has the capacity –

(A)    to store or produce telephone numbers to be called, using a random or sequential number generator; and
(B)    to dial such numbers.

The court explained there are four potential interpretations and addressed them one at a time.

    Under the first interpretation – adopted by the United States Court of Appeals for the Third and Eleventh Circuits – the phrase “using a random or sequential number generator” modifies both “store” and “produce,” which means that the device must be capable of performing at least one of those functions using a random or sequential number generator in order to qualify as an “automatic telephone dialing system.”  The court noted that this interpretation is the “most natural one based on sentence construction and grammar.”  Noting the logic of the Eleventh Circuit, the Seventh Circuit explained “[w]hen two conjoined verbs (‘to store or produce’) share a direct object (‘telephone numbers to be called’), a modifier following that object (‘using a random or sequential number generator’) customarily modifies both verbs.”  The Seventh Circuit further explained that the placement of the comma before “using a random or sequential number generator” “suggests that the modifier meant to apply to the entire preceding clause[,]” meaning it modifies both verbs (“store” and “produce”).  Despite its appeal, the court found some flaws with this interpretation, namely, as one district court noted, “it is hard to see how a number generator could be used to ‘store’ telephone numbers.”  Nevertheless, the court found that some systems “store” randomly generated numbers for more than a few fleeting moments, which makes this interpretation more palatable.  Also somewhat problematic is that, if the intent of the statute was to capture random-generation devices based on their storage capacity, the definition would not need to include the word “store,” as it would be superfluous.  The court noted that this surplusage was problematic, but not fatal to this interpretation because Congress sometimes chooses some level of redundancy.

    Under the second interpretation, adopted by the district court, the phrase “using a random or sequential number generator” describes the telephone numbers themselves.  When applying this interpretation, the “automatic telephone dialing system” is “equipment with the capacity to store or produce telephone numbers generated using a random or sequential number generator as well as the capacity to dial those numbers.”  The court noted that this interpretation has its own problem – the phrase “using a random or sequential number generator” “is an adverbial phrase with an elided preposition” that means “by” using a random or sequential number generator.  The court explained, however, that, as an adverbial phrase, it cannot modify a noun, at least in this context.  In other words, this reading of the phrase requires the court to insert the word “by” into the statute, which is inconsistent with the rules of statutory construction because the court is limited to interpreting the words used by Congress.

    In the third interpretation, applied by the United States Court of Appeals for the Ninth Circuit, the phrase “using a random or sequential number generator” modifies only the word “produce,” which means the definition captures not only equipment that can produce numbers randomly or sequentially, but also equipment that can store and dial numbers.  The court noted that this interpretation, advocated by Gadelhak, eliminates the primary problems of the first and second interpretation, but it has its own fatal flaw in that it separates “store” from “produce” and modifies only the latter, which is not a natural interpretation given the sentence structure.  Another flaw with this interpretation is that it would create liability for every text message sent from an iPhone in that it can store telephone numbers and send text messages automatically (e.g., through the “Do Not Disturb While Driving Function”), and such restrictions on private consumer conduct would be inconsistent with the Act’s narrow focus.

    Under the fourth option, which no courts have adopted, the phrase “using a random or sequential number generator” describes the manner in which the telephone numbers are to be called, regardless of how they are stored, produced, or generated.  The court found this interpretation incorrect based on where the comma was inserted – between “to be called” and “using a random or sequential number generator.”  The court explained that a “qualifying phrase separated from antecedents by a comma is evidence that the qualifier is supposed to apply to all the antecedents instead of only to the immediately preceding one[,]” meaning “using a random or sequential number generator” should modify both “store” and “produce.”

    The Seventh Circuit ultimately held that the first interpretation was correct and found that AT&T did not violate the statute.  On the surface, this decision may seem significant only to those companies that may be subject to the Act, but its lessons on statutory construction and grammar are significant, as this guidance also applies to contract interpretation.  Thus, when writing or negotiating contracts, companies and individuals should keep in mind that the placement of a comma or determining which phrase or word modifies other words/phrases should not be taken lightly, as it could influence the outcome of future litigation and result in (or not result in) millions of dollars in liability.