July 7, 2020

Volume X, Number 189

July 07, 2020

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July 06, 2020

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TCPA VERTIGO: Defendant’s Argument that the TCPA Does Not Apply to Government Contractors Reminds us All Just How Messed Up the TCPA Really Is

For anyone wondering just how messed up TCPAWorld really is, let’s discuss whether or not government contractors—i.e. folks that place phone calls on behalf of the federal government—are subject to the TCPA.

This is going to be so much fun.

The setting for this analysis is Mairs v. Allsup, Case No. 19-CV-01086-NJR, 2020 U.S. Dist. LEXIS 92077 (S.D. Ill. May 27, 2020) in which the Defendant—a call center that was (allegedly) working for the Social Security Administration in making challenged phone calls—moved to dismiss a TCPA complaint arguing that federal government contractors are not subject to the TCPA. While the Court swiftly denied the motion on unrelated grounds—whether or not the Defendant was actually an agent of the SSA was a question of fact that could not be resolved at the pleadings stage—the underlying issue of whether or not a government contractor is subject to the TCPA was not yet resolved.

And for good reason. This stuff is tricky.

So first principles: the TCPA applies to “person[s]” but does not define what a “person” is. Ok.

The Communications Act of 1934, to which the TCPA was an amendment, does define “person,” however. There a person is defined as an “individual, partnership, association, joint-stock company, trust or corporation.” Notably absent from that definition: the government. So maybe the government really isn’t covered by the TCPA.

But what a minute, back in 2015 Congress amended the TCPA to clarify that it does not apply to folks that are collecting on government-backed debt. That exemption, of course, converted the TCPA into a content-specific restriction on speech that, in turn, lead to the pending SCOTUS TCPA review (we’ll get to that.)  But more to the point– if Congress amended the TCPA to carve out contractors working for the federal government, that must mean that the federal government’s contractors were covered by the TCPA after all, right?

Well, no.

In 2016—after the amendment to the TCPA—the FCC got involved and in something called the Broadnet Ruling, clarified that the federal government actually isn’t a “person” subject to the TCPA after all. And it likewise clarified that contractors working for the government to make calls aren’t persons either.

Ok. Perfect. So after Broadnet folks could feel free to make calls on behalf of the government because—not a “person,” right?

Well, no.

About two months after Broadnet, the FCC then issued an NPRM implementing the old 2015 amendment carving out collectors of government-backed debt. Although such parties were presumably already exempted from the TCPA due to the fact that they are not “persons” the FCC used the opportunity to bring collectors of government-backed debt back into TCPA coverage. In the FCC’s view—at the time—the Congressional authority granted to it to implement the government-backed debt exemption allowed it to apply its regulations implementing the exemption to the TCPA to non-persons. So although collectors of government-backed debt were not “persons” for purposes of the TCPA they were for purposes of the FCC’s proposed regulations implementing the exemption to the TCPA that was supposed to prevent application of the TCPA to them in the first place.

Dizzy yet? We’re just getting started.

With the TCPA amended to exclude calls on government-backed debt the courts then needed to wrestle with whether the exemption would apply retroactively (it doesn’t according to the Ninth Circuit) and whether it would apply at all pending the outcome of the FCC’s NPRM implementing the exemption with new regulations. This lead to a lengthy back-and-forth battle between consumers and collectors of government-backed debt–mostly Navient– with district courts splitting all over the place.

The latter issue was, somewhat, put to bed after the newly-constituted FCC under Chairman Pai did not publish the NPRM in the Federal Register which therefore did not take effect. The Courts seem to have since coalesced around the position that even in the absence of FCC implementing regulations mandated by congress in enacting the amendment, the statutory exemption still took effect at the time of passage. So at least we know that companies calling to collect on government-backed debt are not subject to the TCPA.

Except that they are.

Rather famously the Ninth and Fourth Circuit Courts of Appeal took issue with the government-backed debt exemption last year, concluding that the exemption itself was unconstitutional as a content-based permission of speech and struck the exemption from the statute in order to save the TCPA.

Wait, what? Since when does the Constitution forbid permission to speak? It doesn’t, of course. Which is why the Supreme Court of the United States took up the issue to determine whether scrutiny is properly applied to the exemption or to the restriction and—if the exemption is unconstitutional—what the proper remedy is. And all of this may lead to a TCPAWorld ending paradox in which the addition of an exemption to the TCPA designed to permit speech– that the TCPA probably already permitted– requires the Supreme Court of the United States to strike down the entire statute for restricting speech on a content-specific basis.

Sometimes I feel like I’m the only guy in the world that really gets this. Like the entire history I just related took place solely for my own personal amusement because no one else—it seems—is really paying attention but me.

Regardless, with two Circuit Courts of Appeals striking the amendment as unconstitutional, the government-backed debt exemption is plainly unenforceable pending the SCOTUS review—except in those jurisdictions that continue to enforce the exemption.

All of this leads to the question of whether callers that relied on the exemption while it was enforceable can still use the exemption to defend calls made in reliance on the exemption and whether, of course, the TCPA even applies to government contractors to begin with since—you’ll recall—they aren’t “persons” subject to the TCPA under Broadnet and the FCC’s NPRM designed to regulate their activity never became law.

Then again, the FCC recently issued a Public Notice that it may change its mind and reconsider Broadnet–meaning that the government and its contractors may end up subject to the TCPA again, subject of course to the exemption for calls on government-backed debt. I mean, assuming the exemption is constitutional, which it likely isn’t.

So—to the Court in Mairs I say: good luck sorting this mess out.

Then again perhaps it will not have to. If the Supreme Court strikes down the entire TCPA—which it very well may—there will be nothing left to fight over.

And yes, I am a giant nerd.

Editor’s Note: If you are interested in more information about the government-backed debt exemption, Broadnet and the like check out this article I wrote at my former firm about a ridiculously-amusing exchange between former FCC Chairman Tom Wheeler and a member of Congress. 

© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume X, Number 150

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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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