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Despite Holding the TCPA’s Government Debt Exemption is Unconstitutional, the District of Massachusetts Permits Class Claims to Move Forward

On September 24, 2019, the District of Massachusetts held in Katz v. Liberty Power Corp., LLC that the government debt collection exemption to the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. §§ 227 et seq., is an unconstitutional violation of the First Amendment. No. 18-cv-10506-ADB, 2019 WL 4645524 (D. Mass. Sept. 24, 2019). Following the U.S. Circuit Courts for the Fourth and Ninth Circuits, Judge Burroughs concluded that the exemption to the statute could not survive constitutional scrutiny, but otherwise permitted the plaintiffs’ TCPA class action claims, which did not implicate the exemption, to go forward.

Defendants Sought Dismissal of the TCPA Class Claims by Challenging the Constitutionality of the Government Debt Exemption

In their class action complaint, the plaintiffs alleged that Liberty Power Corp., LLC and its holding company (“Liberty Power”) placed prohibited pre-recorded calls to cell phones in disregard of the national Do Not Call Registry and specific do-not-call requests. In defense of those class claims, on a motion to dismiss, Liberty Power challenged the constitutionality of a TCPA provision that did not apply to the plaintiffs’ claims but that nonetheless, it argued, rendered the statute unenforceable. Specifically, Liberty Power focused on an exemption in the TCPA that permits calls with autodialers for the purpose of collecting government debt, calls that would otherwise violate the statute. The government debt exemption was added to the 1991 statute by amendment in 2015 to permit calls made solely to collect a debt owed to or guaranteed by the United States. Liberty Power argued that the exemption runs afoul of the Free Speech Clause of the First Amendment because it unconstitutionally favors a certain type of communication over others. Liberty Power argued that the TCPA’s exemption created content-based restrictions on speech, and therefore should be reviewed under the standard of strict scrutiny, which requires the government to prove that its restriction furthers a compelling government interest and is narrowly tailored to achieve that interest. On these constitutional arguments, Liberty Power asked the Court to dismiss the plaintiffs’ TCPA class claims in their entirety.

The Court Agrees the Exemption is Unconstitutional, but Severs the Statute and Declines to Dismiss the TCPA Class Claims

The District of Massachusetts agreed that the TCPA’s debt-collection exemption warranted strict scrutiny because an exemption that turns on the “purpose(s) of the call and its subject matter” is by definition content-based. Because the court was not persuaded that the content-based restriction was crafted to address a compelling government interest, and in fact “undercut” the purpose of the TCPA, it concluded that the provision is unconstitutional. However, in light of the TCPA’s language providing that the invalidity of any one provision shall not affect the applicability of the remainder, the court joined the Fourth and Ninth Circuits in holding that the debt-collection exemption of the TCPA is severable. For that reason, the class claims in the case–which did not relate to the exemption–were held to be unaffected by the court’s ruling that the exemption is unconstitutional. Therefore, Liberty Power’s motion to dismiss the plaintiffs’ TCPA class claims was denied. With its September 24th ruling, the District of Massachusetts has joined a growing number of courts that have held the government debt exemption to be unconstitutional but have nonetheless permitted unrelated TCPA class claims to move forward by severing the statute.

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About this Author

Melanie A. Conroy Commercial Litigation Pierce Atwood Law Firm
Counsel

Melanie Conroy focuses her practice on class action defense and complex commercial litigation. She has represented clients in connection with internal, government, and regulatory investigations, and has counseled boards of directors, board committees, and senior management on a broad range of matters, including securities, corporate governance, disclosure, and regulatory issues.

Melanie represents businesses and organizations across a wide range of industries, including life sciences, financial services, insurance, private equity, real estate, energy, media, consumer electronics,...

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