September 28, 2020

Volume X, Number 272

September 28, 2020

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California Federal Court Rules Collection Calls for Federally Backed Loans Are Retroactively Exempt from TCPA

On November 2, 2015, Congress enacted the Bipartisan Budget Act, which amended the Telephone Consumer Protection Act (TCPA), to create an exemption to federally-backed debt collection calls, such as federally backed mortgage loans and federally funded student loans. The amended TCPA now permits the use of an automatic telephone dialing system or an artificial or pre-recorded voice to make calls to cellular phones “solely to collect a debt owed to or guaranteed by the United States.” 47 U.S.C. § 227(b)(1)(A)(iii).

On March 31, 2016, the Northern District of California was the first court to address the retroactivity of the TCPA’s new exemption. In Silver v. Pennsylvania Higher Education Assistance Agency, the court found that the TCPA’s exemption retroactively applied to federal debt collection calls. In the complaint (filed prior to the Bipartisan Budget Act), the plaintiff sought to represent a class of people who received calls from the defendant trying to collect on federally funded student loans during the preceding four years.

The defendant moved for summary judgment in December 2015, arguing that the amended TCPA retroactively applied—barring the plaintiff's (and the putative class members’) TCPA claims. The Silver court examined the U.S. Supreme Court decision, Landgraf v. USI Film Products, 511 U.S. 244 (1994), in addressing whether a federal statute silent on its retroactivity applied retroactively. The Silver court determined that the relevant test is whether retroactivity would (i) increase a party's liability for past conduct; (ii) impose new duties on completed transactions; or (iii) “impair rights a party possessed when he acted.”

In granting summary judgment to the defendant, the Silver court found that none of the test’s conditions were met. Rather, the court found that retroactivity actually decreased a party’s liability for past conduct by creating an exception for telephone calls “made solely to collect a debt owed to or guaranteed by the United States.” Similarly, rather than imposing new duties on completed transactions, the amendment “eliminates certain duties with respect to completed transactions.” Finally, whether the retroactivity would impair rights a party possessed, the court found that “merely impairing the ability to bring a lawsuit” would not provide a sufficient basis to bar retroactive application.

Although presently significant, the Silver court’s decision may be rendered hollow once the Federal Communications Communication (FCC) issues proposed regulations, which the Bipartisan Budget Act mandated the FCC to do within nine months of its enactment. As such, how the FCC will determine the effect of the amendment on calls made prior to November 2, 2015, is still up in the air. Nevertheless, for the time being, courts will need to tackle the amendment’s effect on current litigation and the Silver court’s decision is a glimmer of hope in the otherwise gloomy reality of defendants in TCPA litigation.

©2020 MICHAEL BEST & FRIEDRICH LLPNational Law Review, Volume VI, Number 117


About this Author

Michelle L. Dama, Attorney, Litigation, Michael Best Law Firm

Corporate clients turn to Michelle for her experience litigating commercial and intellectual property disputes, among other matters. Michelle also serves as a member of the firm’s Class Action/Multidistrict Litigation team. She tries cases in both federal and state courts at  the trial and appellate levels.

Michelle assists a diverse group of clients, many of them long-standing, in the following areas:

  • Complex commercial disputes
  • Intellectual property and trademark litigation
  • Product liability actions
  • Consumer law,...
Tanya Salman, Michael Best Law Firm, Commercial Litigation Attorney

Tanya defends companies in state and federal litigation involving commercial breach of contract, business tort disputes, real estate matters, and trademarks. She also has experience in public contracts and bid protests.

Tanya has significant experience in cases involving the Consumer Telephone Protection Act (TCPA), and often advises clients on TCPA compliance issues.

While in law school, Tanya served as a student attorney for the Walworth County District Attorney’s Office and for the Wisconsin Innocence Project. During college, Tanya was a student intern and investigator for the Washtenaw County Public Defender’s Office.