September 28, 2020

Volume X, Number 272

September 28, 2020

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As Courts Continue To Grapple With The Severability of The Federal Debt-Collection Exemption, SCOTUS Is Asked to Resolve The Issue

The 2016 amendments to the TCPA—which created an exemption for calls that are made “solely to collect a debt owed to or guaranteed by the United States”—have inadvertently reshaped the way that TCPA claims are litigated. While early decisions in IndianaAlabama, and Florida rejected claims under the FCC’s proposed implementing rules because they never became effective, more recent decisions have focused on whether the exemption, and by extension the entire statute, violates the First Amendment.  The first of those was the Fourth Circuit’s decision in American Association of Political Consultants v. FCC, which was soon followed by the Ninth Circuit and the Southern District of Florida.

The most recent example comes from the District of Delaware, which likewise found that the federal debt-collection exemption is a content-based restriction that is not narrowly tailored to serve a compelling government interest. Specifically, it found that “the TCPA is fatally underinclusive” because automated or prerecorded calls can be intrusive “regardless of the content or the initiator of the message,” and because “[t]here is no serious doubt that the debt-collection exemption would allow a substantial number of those intrusive calls.”  Perrong v. Liberty Power Corp., LLC, No. 18-0712, at 11 (D. Del. Sept. 30, 2019) (citations omitted).

Interestingly, the plaintiff’s claim in Perrong did not arise from attempts to “collect a debt owed to or guaranteed by the United States.” Rather, the debt-collection exemption became relevant because the defendant argued that the entire TCPA must be stricken—and by extension that the claim under the statute must be dismissed—because it unduly regulates the content of protected speech.  In doing so, the defendant pointed to the federal debt-collection exemption to demonstrate that the TCPA turns “entirely upon the content of the message conveyed by the speaker of the telephone call.”

The United States intervened in order to defend the TCPA’s constitutionality, arguing that the defendant lacked standing to challenge the exemption, that the TCPA satisfies both strict and intermediate scrutiny, that the exemption is narrowly tailored to serve the compelling interest of collecting debts that are owed to or backed by the government, and that the exemption is “indisputably severable” from the rest of the statute.

The District of Delaware agreed with the latter proposition and followed the trend of not only invalidating the debt-collection exemption but also severing it from the statute.  The remainder of the TCPA should remain “fully operative as law,” it reasoned, because “there is no evidence that Congress would not have enacted the TCPA without the exception for government debt.”

But there is good reason to question the wisdom of simply severing the debt-collection exemption from the rest of the statute, which remains riddled with other content-based regulations that have a chilling effect on protected speech. For example, as we discussed previously, the TCPA and implementing rules combine to create a number of exemptions and restrictions that are based on the identity of the caller and/or the content of the call. As the Supreme Court concluded in Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015), “the government’s benign motive, content-neutral justification, or lack of ‘animus toward the ideas contained’ in the regulated speech” do not in itself neutralize a law that is so inseparable with content-based criteria. Simply severing the debt-collection exemption from the TCPA would, as the defendant argued in Perrong, also end up “restricting more than less speech.” Indeed, just yesterday a petition for certiorari—which we will examine at length in a separate post—that asked the Supreme Court to take up this very issue.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume IX, Number 291


About this Author

Michael Daly, Drinker Biddle Law Firm, Philadelphia, Litigation and Retail Attorney

Michael P. Daly defends class actions and other complex litigation matters, handles appeals in state and federal courts across the country, and counsels clients on maximizing the defensibility of their marketing and enforceability of their contracts. A recognized authority on class action and consumer protection litigation, he often speaks, comments, and writes on recent decisions and developments in the class action arena. He is also a founder of the firm’s TCPA Team; the senior editor of the TCPA Blog, which provides important information and insight...


Qiusi Y. Newcom assists clients with navigating emerging issues and regulatory compliance in telecommunications laws and international trade laws. She is an associate with the Telecommunications Team and the Customs and International Trade Team.

Prior to joining Drinker Biddle, Qiusi was an associate with a boutique employment law firm where she handled labor and employment matters before federal courts and federal agencies, including the Equal Employment Opportunity Commission. Qiusi also gained valuable litigation experience through public interest work involving personal injury and criminal matters. During law school, Qiusi was a member of and published an article in the Federal Communications Law Journal. Qiusi is fluent in Mandarin Chinese.