What High Court Ruling Means For TCPA's Future

Cozen O'Connor

Cozen O'Connor

On July 6, the U.S. Supreme Court issued its ruling in Barr v. American Association of Political Consultants Inc.[1] The court declined to invalidate the Telephone Consumer Protection Act's automated calls to cellphones provision and limited its decision to striking down the government-debt exception to the statute.

In affirming the U.S. Court of Appeals for the Fourth Circuit, Justice Brett Kavanaugh, writing for a plurality, found that the "entire 1991 robocall restriction should not be invalidated, but rather that the 2015 government-debt exception must be invalidated and severed from the remainder of the statute" as an impermissible content-based restriction on speech that violated the First Amendment.[2]

He noted that seven justices determined that severing this "relatively narrow exception to the broad robocall restriction" addresses the constitutional issue in full and enables the TCPA to be fully operative as a law.[3]

The Supreme Court's ruling in this constitutional challenge expands the reach of the TCPA to encompass government-debt-related calls. The statute reverts back to the version that was in place before the specific exception was added by amendment in 2015. While Barr does not offer businesses relief from abusive TCPA litigation, there is hope on the horizon.

Next term, the court may consider the definitional issue of an automatic telephone dialing system that is the subject of a circuit split and the basis of a compelling cert petition.[4] The Federal Communications Commission may finally address the ATDS issue, among others, in a proceeding that made its way back to the FCC from the U.S. Court of Appeals for the D.C. Circuit more than two years ago.[5]

On July 2, the FCC announced that it is moving forward with the creation of a reassigned number database, perhaps signaling its renewed interest in addressing TCPA issues.[6]

Background on the Barr Case

Enacted in 1991, the TCPA, prohibits, among other things, certain calls placed to (1) cellphones using an ATDS or a prerecorded or artificial voice and (2) residential lines using a prerecorded or artificial voice.[7] The automated call ban initially contained two exceptions, both of which remain in place today. Calls made with the prior express consent of the called party are excepted, as well as calls placed for emergency purposes.[8]

In 2015, Congress amended the TCPA in connection with the Bipartisan Budget Act, and added a third statutory exception for calls made solely to collect a debt owed to or guaranteed by the U.S.[9] This exception is commonly referred to as the government-debt exception.

In April 2016, the American Association of Political Consultants and three other political organizations challenged the constitutionality of the automated call ban based on the government-debt exception. They alleged that the exception was a content-based restriction on speech that should be subject to strict scrutiny.[10]

The district court granted summary judgment in favor of the government and held that while the exception was content-based, it was narrowly tailored to further the government's compelling government interest in collecting on its debts and survived strict scrutiny review.[11] The court also held that the government-debt exception did not undermine the important privacy interests that the TCPA was enacted to protect.[12]

The Fourth Circuit reversed the district court, holding that the government-debt exception violated the First Amendment.[13] But the Fourth Circuit did not strike down the automated call ban in its entirety. Instead, it held that the proper remedy was to sever the specific exception, allowing the remainder of the TCPA's automated call ban, as it had existed from 1991-2015, to stand.[14] The Fourth Circuit subsequently denied a petition for rehearing en banc.[15]

Supreme Court Review

The solicitor general filed a petition for a writ of certiorari in the Supreme Court on Nov. 14, 2019, which was granted on Jan. 10. In an interesting posture — given that the remedy afforded by the Fourth Circuit did not actually benefit their interests and that a successful First Amendment challenge resulted in a more expansive speech restriction — respondents urged the court to review the Fourth Circuit's severability holding.[16]

Oral argument took place on May 6, with the justices principally focused on the severability aspect of the Fourth Circuit's decision. Several justices referenced the TCPA's popularity, which was notable given FCC Chairman Ajit Pai's observation that the statute has become the poster child for lawsuit abuse.[17]

Analysis of the Supreme Court's Ruling

A majority of the court held that the government-debt exception was an impermissible content-based restriction on free speech that did not survive strict scrutiny review. In his opinion, Justice Kavanaugh noted the government-debt exception demonstrates favoritism toward speech made for collecting government debt over other types of speech:

Under § 227(b)(1)(A)(iii), the legality of a robocall turns on whether it is "made solely to collect a debt owed to or guaranteed by the United States." A robocall that says, "Please pay your government debt" is legal. A robocall that says, "Please donate to our political campaign" is illegal. That is about as content-based as it gets.[18]

As a result of this determination, a majority found that strict scrutiny applied, which the government had conceded it could not satisfy with respect to the government-debt exception:

Although collecting government debt is no doubt a worthy goal, the Government concedes that it has not sufficiently justified 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.[19]

A majority of the justices therefore determined that the government-debt exception is unconstitutional.[20] In his opinion, Justice Kavanaugh then turned to the key question of whether to sever that provision from the TCPA, and allow the remainder of the statute to be in effect, or to invalidate the automated call ban in its entirety.[21] That was the focus of much of oral argument and is the primary focus of the court's analysis.

In the plurality opinion, Justice Kavanaugh engaged in a discussion of general severability principles dating back to Marbury v. Madison, and noted that under Supreme Court precedent there is a "decisive preference for surgical severance rather than wholesale destruction."[22] He explained that:

From Marbury v. Madison to the present, apart from some isolated detours mostly in the late 1800s and early 1900s, the Court's remedial preference after finding a provision of a federal law unconstitutional has been to salvage rather than destroy the rest of the law passed by Congress and signed by the President.[23]

He stated that "[c]onstitutional litigation is not a game of gotcha against Congress, where litigants can ride a discrete constitutional flaw in a statute to take down the whole, otherwise constitutional statute."[24] He set forth a presumption of severability that applies in this context.

In analyzing the severability of the government-debt exception, Justice Kavanaugh found that the remainder of the TCPA is capable of functioning independently and would therefore be fully operative without that exception in place.[25] Like the Fourth Circuit, he pointed to the fact that the TCPA was in effect from 1991 to 2015 in that very form.[26]

Finally, Justice Kavanaugh acknowledged the counterintuitive aspect of resolving a First Amendment challenge by restricting more speech — an issue that the justices wrestled with during oral argument.[27] Seven justices concluded that severance of the government-debt exception is the appropriate remedy and that — while it was not the specific relief sought by the plaintiffs — there is no constitutional issue created by it.[28]

What Comes Next?

The court's decision is grounded in traditional severability principles that presume that a statute that is fully operative without the offending provision should remain in effect. The government-debt exception's demise will now put the government on similar footing as other callers under the statute, and an uptick in TCPA claims challenging those collections calls is expected.

The takeaway for businesses is that the statute remains largely unaffected for their purposes. There will need to be some other vehicle to disrupt the continuing, unprecedented wave of exploitative, lawyer-driven litigation.

Following oral argument in Barr, many TCPA plaintiffs lawyers had pivoted to file and threaten claims under the Fair Credit Reporting Act, Illinois Biometric Information Privacy Act and California Invasion of Privacy Act, among other federal and state laws. Now the TCPA litigation window remains open, at least for the time being.

Justice Kavanaugh's opinion cited that the TCPA effectively deters millions of robocalls and is invoked, consistent with the legislative intent, to address spam "robocalls ... [that] wake us up in the morning ... interrupt our dinner at night ... force the sick and elderly out of bed ... hound us until we want to rip the telephone right out of the wall."[29]

Protecting consumers from bad actors who blanket them with true spam robocalls is an important objective. But that is not how the TCPA has, for the most part, been applied.

There is a robust consumer protection framework designed to protect consumers from true robocalls, including the Federal Trade Commission's Telemarketing Sales Rule, the Fair Debt Collection Practices Act, and state telemarketing and collections laws. While the TCPA's statutory damages provision, which permits the recovery of $500 up to $1,500 per call, was designed to incentivize consumers to vindicate their rights in small claims court, the TCPA has been, and continues to be, exploited in the class action context.

The modern TCPA litigation landscape reflects that the statute has departed considerably from its purpose to become the darling of the plaintiffs class action bar, particularly in the Ninth Circuit. TCPA cases by and large do not challenge the robocalls at the heart of its legislative history and discussed in Justice Kavanaugh's opinion; instead, they often target valued and important communications between legitimate businesses and their customers.

Claims are often styled as putative nationwide class actions in order to seek crushing — and disproportionate — liability. The potential aggregate exposure that accompanies TCPA claims has driven numerous companies to settle what are often contrived and lawyer-driven cases.

In his opinion, Justice Kavanaugh wrote that constitutional litigation is not "a game of gotcha against Congress."[30] Omitted from the discussion is that the TCPA itself has become the basis of such a game of gotcha against businesses.

Indeed, inherent in every calling or texting program is meaningful class action risk. That reality has served to chill speech and created an untenable situation for many businesses. The spam robocalling activities that the TCPA should be focused on addressing often originate overseas and callers are difficult to police and have not been held accountable.

With its ruling in Barr, the Supreme Court left the TCPA intact as it pertains to businesses and created a new opportunity for the TCPA plaintiffs class action bar. As a result, all eyes will now turn to two TCPA cert petitions presently before the court, as well as to the pending proceeding before the FCC.[31]

[1] Barr v. Am. Ass'n of Political Consultants, Inc. , --- U.S. ---, 2020 WL 3633780 (July 6, 2020). Justice Kavanaugh announced the judgment of the Court and issued an opinion that was joined by Chief Justice Roberts and Justice Alito in full and Justice Thomas in part. Justice Kavanaugh's opinion set forth that the government-debt exception failed under a strict scrutiny analysis, and that the appropriate remedy was to sever it from the rest of the Telephone Consumer Protection Act (TCPA). Id. at *13–14. Justice Sotomayor issued a short opinion concurring in the judgment and noting that the government-debt exception would also fail to survive intermediate scrutiny. Id. at *14. Justice Breyer, in an opinion joined by Justices Ginsburg and Kagan, would have upheld the government-debt exception, but agreed that because a majority found it unconstitutional, severance was the proper remedy. Id. at *14–19. Justice Gorsuch issued an opinion concurring in the judgment in part and dissenting in part, that was partially joined by Justice Thomas. Id. at *19–23. Justices Gorsuch and Thomas disagreed with the other seven Justices as to severability being the appropriate remedy. Id.

[2] Id. at *2.

[3] Id. at *11–12.

[4] See Facebook, Inc. v. Duguid , No. 19-511 (pet. filed Oct. 17, 2019).

[5] See Consumer and Governmental Affairs Bureau Seeks Comment on Interpretation of the Telephone Consumer Protection Act in Light of D.C. Circuit's ACA International Decision, CG Docket Nos. 18-152, 02-278, DA 18-493, Public Notice, 33 FCC Rcd. 4864 (May 14, 2018).

[6] See Consumer and Governmental Affairs Bureau Announces Compliance Date for Reassigned Numbers Database Rules, CG Docket No. 17-59, DA 20-706, Public Notice (July 2, 2020).

[7] 47 U.S.C. § 227(b)(1).

[8] Id. § 227(b)(1)(A).

[9] Id. § 227(b)(1)(A)(iii).

[10] Am. Ass'n of Political Consultants, Inc. v. Sessions , 323 F. Supp. 3d 737, 741 (E.D.N.C. 2018).

[11] Id. at 746.

[12] Id.

[13] Am. Ass'n of Political Consultants, Inc. v. FCC , 923 F.3d 159, 170 (4th Cir. 2019).

[14] Id. at 171.

[15] Am. Ass'n of Political Consultants, Inc. v. FCC, No. 18-1588 (4th Cir. June 21, 2019).

[16] Brief for Respondents in Support of Certiorari, Barr v. Am. Ass'n of Political Consultants, Inc., No. 19-631 (Dec. 4, 2019).

[17] In re Rules and Regulations Implementing Telephone Consumer Protection Act of 1991, Declaratory Ruling and Order, 30 FCC Rcd. 7961, 8073 (2015) (now-Chairman Pai, dissenting) (emphasis added).

[18] Barr, 2020 WL 3633780, at *5.

[19] Id. at *6 (also noting Justice Breyer's concurring opinion).

[20] Id. at *7.

[21] Id. at *7–14.

[22] Id. at *9.

[23] Id.

[24] Id.

[25] Id. at *10.

[26] Id. at *11.

[27] Id. at *13.

[28] Id. at *13–14.

[29] Id. at *3 (citation omitted).

[30] Id. at *9.

[31] See Facebook, Inc. v. Duguid , No. 19-511 (pet. filed Oct. 17, 2019); Charter Commc'ns, Inc. v. Gallion , No. 19-575 (pet. filed Nov. 1, 2019); Consumer and Governmental Affairs Bureau Seeks Comment on Interpretation of the Telephone Consumer Protection Act in Light of D.C. Circuit's ACA International Decision, CG Docket Nos. 18-152, 02-278, DA No. 18-493, Public Notice, 33 FCC Rcd. 4864 (May 14, 2018).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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