July 12, 2020

Volume X, Number 194

July 10, 2020

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July 09, 2020

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BREAKING TCPA NEWS: CFPB Is Unconstitutional–But Severance Saves the Day! Here’s Why that Won’t Happen with TCPA

So no TCPA ruling today from SCOTUS, but check this out:

In 2017, the CFPB issued a civil investigative demand to Seila Law LLC, a California-based law firm that provides debt-related legal services to clients. The civil investigative demand (essentially a subpoena) sought information and documents related to the firm’s business practices. Seila Law asked the CFPB to set aside the demand on the ground that the agency’s leadership by a single Director removable only for cause violated the separation of powers. When the CFPB declined, Seila Law refused to comply with the demand, and the CFPB filed a petition to enforce the demand in District Court. Seila Law renewed its claim that the CFPB’s structure violated the separation of powers, but the District Court disagreed and ordered Seila Law to comply with the demand. The Ninth Circuit affirmed, concluding that Seila Law’s challenge was foreclosed by Humphrey’s Executor v. United States, 295 U. S. 602, and Morrison v. Olson, 487 U. S. 654.
Held: The judgment is vacated and remanded.

Read all about it: 19-7 Seila Law LLC v. Consumer Financial Protection Bureau (06_29_2020)

And here is the key for TCPA–the Supremes sever the unlawful for-cause removal provision to save the statute: “The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will.” So the agency survives with the for-cause removal provision declared unconstitutional.

In AAPC v. Barr, of course, the Petitioner argued that the TCPA’s government-backed debt exemption should be severed to save the statute. Severing the exemption, the argument goes, converts the statute into a content-neutral restriction on speech alleviating the constitutional problem. But notice the difference– in Seila Law the exemption itself is unconstitutional because it violates the separation of powers doctrine. In AAPC the exemption is just fine (the First Amendment prevents restrictions on speech not exemptions permitting speech) but makes a different provision–the challenged restriction on speech–unconstitutional.

As I wrote just the other day, however, there is little chance SCOTUS severs a lawful exemption to restrict more speech. So AAPC is going to come out different than Seila Law. 

Don’t believe me?

REMEMBER Chief Justice Roberts’ question at oral argument in AAPC— “When we sever provisions its because they are illegal. here there is nothing illegal about the government-debt exception… I wonder why in that situation the whole statute shouldn’t fall.”

Guess who wrote Seila Law? You got it. Chief Justice Roberts. No way that was a coincidence.

Plus, READ the dissents of Justices Thomas and Gorsuch– ZERO chance those two Justices will sever the exemption to save the TCPA.

The TCPA is going down folks. But we’ll have to wait for the ruling still–maybe tomorrow?

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 181

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About this Author

Eric Troutman Class Action Attorney
Of Counsel

Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance. He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems.

Eric has built a national litigation practice based upon deep experience, rigorous...

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