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Supreme Court Strikes Down Government-Backed Debt Exception; TCPA Stands

Earlier today the Supreme Court released its decision in Barr v. Political Consultants, a case which attempted to end the TCPA as we know it.  Instead, the Court struck down a narrow exception to the TCPA, known as the government-back debt exception.

The Court upheld the sweeping ban on autodialed calls to cellphones, absent appropriate consent, but found that the exception to that prohibition for calls made to collect federally-backed debts must fail, because it violates the First Amendment by favoring commercial speech over political speech.

In writing for a plurality of the Court, Justice Kavanaugh recognized that “Americans passionately disagree about many things. But they are largely united in their disdain for robocalls.” With this opinion, the Court rejected the effort to eliminate the “popular” autodialer ban, generally maintaining the TCPA’s status quo.

BACKGROUND

The TCPA, enacted in 1991, prohibits making calls or sending text messages using any automatic telephone dialing system or an artificial or prerecorded voice to any cellular telephone number in the absence of prior express written consent.  47 U.S.C. §227(b)(1)(A)(iii).  In 2015, Congress enacted the Bipartisan Budget Act, which included an exception to this TCPA prohibition for calls “made solely to collect a debt owed or guaranteed by the United States.” At the time, the exemption was estimated to save the government $120 million over 10 years.

In 2016, an association of political consultants and various political organizations sued the Attorney General and the FCC in the United States District Court for the Eastern District of North Carolina, claiming that the TCPA autodialer ban was a content-based restriction on speech that violated the First Amendment, warranting the court's highest scrutiny, because the government debt exemption favored commercial speech, i.e. debt collection speech, over core political speech.

The District Court agreed with Plaintiffs that strict scrutiny applied to the exemption because it was a content-based form of speech discrimination. However, the court held that the exemption was narrowly tailored to serve a compelling government interest and therefore survived strict scrutiny.

The plaintiffs appealed and the Court of Appeals for the Fourth Circuit agreed with the district court that the government debt exemption was content-based and applied strict scrutiny. This time, however, the court was persuaded that the government-debt exemption was an unconstitutional violation of the First Amendment. The Fourth Circuit found the exemption was “fatally underinclusive” and, applying traditional severability principles, opted to sever the exemption in lieu of invalidating the entire autodialer ban.

A petition of certiorari was filed before the Supreme Court by the Solicitor General on behalf of the U.S. and the FCC for the Supreme Court to review the Fourth Circuit’s decision. The question presented was:

“Whether the government-debt exception to the TCPA’s automated-call restriction violates the First Amendment, and whether the proper remedy for any constitutional violation is to sever the exception from the remainder of the statute.”

ANALYSIS

First, in determining the scrutiny it would apply for the constitutional analysis, Justice Kavanaugh agreed with the Fourth Circuit that the robocall restriction with the government-debt exception is content-based and that, under the Court’s precedents, it was subject to strict scrutiny. The Opinion held that the exception is content-based because the law “focuses on whether the caller is speaking about a particular topic.”

Under that high standard, the Court found that although the Government’s stated justification for the government-debt exception, which is collecting government debt, is a worthy goal, it “does not sufficiently justif[y] the differentiation between government-debt collection speech and other important categories of robocall speech, such as political speech, charitable fundraising, issue advocacy, commercial advertising, and the like.”

Having concluded that the 2015 government-debt exception created an unconstitutional exception to the autodialer ban, the opinion then analyzed whether the proper remedy was to invalidate the entire 1991 robocall restriction, or instead to invalidate and sever the 2015 government-debt exception.

First, the opinion recognizes that the Supreme Court’s case law has developed a strong presumption of severability. This presumption of severability “supplies a workable solution - one that allows courts to avoid judicial policymaking or de facto judicial legislation in determining just how much of the remainder of a statute should be invalidated.” Applying general severability principles to this case, the Supreme Court recognized that the Communications Act contains an express severability clause, which covers §227 of Title 47, the provision with the robocall restriction and the government-debt exception. Additionally, the government-debt exception was enacted on 2015, adding an unconstitutional discriminatory exception to the robocall restriction. Therefore, the Court concluded that “the text of the severability clause squarely covers the unconstitutional government-debt exception and requires that we sever it.”

Further, in case of severance, the Court must analyze whether the remainder of the law is capable of functioning independently and thus would be fully operative as law. The opinion confirmed that “the remainder of the robocall restriction did function independently and fully operate as a law for 20-plus years before the government-debt exception was added in 2015.”

The Court concluded that even if the text of the Communications Act severability clause did not apply here, the presumption of severability would require that the Court sever the 2015 government-debt exception from the remainder of the statute.

Justice Kavanaugh’s plurality opinion was joined in full by Chief Justice Roberts and Justice Alito.  Justice Sotomayor, concurred in the judgment.  Justices Breyer, Ginsburg, and Kagan would have found the government-backed debt exception reviewable under intermediate, rather than strict scrutiny, and, therefore, was not in violation of the First Amendment.  These justice nevertheless agreed that the appropriate remedy in light of the plurality’s contrary conclusion was to sever the exception rather than striking down the TCPA in its entirety.  Thus, seven of the nine justices agreed that the government-backed debt exception did not provide reason to eliminate the entirety of the TCPA’s autodialer restrictions. Justices Gorsuch and Thomas, on the other hand, would have concluded that the TCPA violated the First Amendment, declined to sever the government-backed debt exception, and, thus, would have struck down the TCPA’s restrictions on the use of autodialers.

IMPLICATIONS

There was a great deal of hyped speculation about what this opinion from the Supreme Court could mean for the future of the TCPA, with some predicting its imminent demise. Instead, the Court adopted a narrowly-tailored decision, perhaps ensuring that its decision was not contrary to the great weight of public opinion which continues to favor the restrictions imposed by the TCPA.

Thus, most TCPA litigation will not be directly impacted by the Court’s opinion.  However, businesses making calls or sending text messages to consumers to collect government-backed debt will once again have to ensure that they are obtaining the appropriate level of consent before utilizing an automatic telephone dialing system.

While the Supreme Court’s opinion ultimately preserved the status quo, the petition for certiorari in Duguid v. Facebook—which squarely concerns the interpretation of the statutory ATDS definition—remains pending.  If granted, the Duguid case has the potential for far greater implications, particularly given the outcome of Barr.  In addressing severability clauses, Justice Kavanaugh stated that “courts today zero in on the precise statutory text and, as a result, hew closely to the text of severability or nonseverability clauses.”  If this same approach is applied in the event the Duguid petition is granted, the presence of several reliable textualists on the Court may significantly influence whether the Court “hew[s] closely” to the statutory text in interpreting the ATDS definition, or rewrites it as did the Ninth Circuit.

Copyright © 2020 Womble Bond Dickinson (US) LLP All Rights Reserved.National Law Review, Volume X, Number 188

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About this Author

Partner

Companies rely on David Carter to guide them in Telephone Consumer Protection Act (TCPA) compliance matters and to defend them against allegations of TCPA violations. He has represented both closely held and publicly traded companies facing TCPA claims with potential liability in excess of $500 million. David runs the TCPA Defense Force whose mission is to reduce TCPA risk, allowing companies to communicate with consumers responsibly and without fear of legal consequences.

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Artin Betpera, Class action litigation lawyer, Womble
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Artin is a partner in the firm’s business litigation practice group.  Precise and analytic, Artin brings over a decade of experience to bear on complex litigation problems.

Artin adeptly manages significant volumes of litigation for some of the country’s largest banks and financial institutions, never losing sight of providing an exceptional level of service to his clients.  He has been a dedicated financial services litigator since starting the practice of law at ground-zero of the financial crisis, affording him with an unparalleled depth of experience, versatility, and strategic vision.  With honed skills and clarity of thought, Artin is able to efficiently develop and execute bespoke defense strategies to ensure consistently favorable litigation outcomes for his clients. 

Artin’s innovative approaches are particularly well-suited to Telephone Consumer Protection Act litigation.  He stands with his team at the leading edge of every development in the law and collaboratively draws upon the strengths of his colleagues to provide sound guidance to his clients around every twist and turn of the constant changes in the TCPA landscape at the district court, appellate, and regulatory levels. 

Artin has also written extensively on TCPA developments, as well as developments in other aspects of financial services regulations including state and federal mortgage servicing laws.  He frequently presents on these topics to the industry through speaking engagements and webinars. 

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Ernesto Mendieta Telecom Attorney
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Ernesto Mendieta is an experienced bilingual attorney with a history of helping international clients resolve complex matters.  

Ernesto began his career in Mexico as an associate at one of the world’s largest law firms, before specializing in telecommunications law at Mexico’s preeminent telecommunication boutique firm. In that capacity, Ernesto worked with competitive carriers entering the Mexican telecommunications market on all aspects of regulatory compliance and corporate formation. He helped several U.S. companies start operations in Mexico as ISPs, MVNOs, resellers and e-...

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