Opinions and Legal Insights

The U.S. Supreme Court Broadens The TCPA Class Action Trap For Unwary Businesses

By Gerald L. Maatman, Jr. and Jennifer A. Riley

Seyfarth Synopsis:  While many businesses hoped that the U.S. Supreme Court would blow up the ban on autodialed calls in the Telephone Consumer Protection Act (“TCPA”), on July 6, 2020, the nation’s highest court issued its long-anticipated decision in Barr v. American Association of Political Consultants, Inc., No. 19-631 (July 6, 2020), and accomplished the opposite.  Although the Supreme Court agreed that an exception allowing government debt-related robocalls was unconstitutional because it favored debt-collection speech, the Supreme Court merely struck down the carve out, effectively broadening the TCPA and reaffirming the law’s importance.

The ruling clears the way for a flood of TCPA-related lawsuits, as members of the plaintiffs’ bar move forward with TCPA-related lawsuits against those who use autodialers to collect debts, such as student loans or mortgages guaranteed by the federal government, and move forward with claims they previously put “on hold” pending the Supreme Court’s decision.  As a result, businesses that communicate with employees and customers via telephone and text message must continue to be cautious of the TCPA’s prohibitions.

Background

In response to consumer complaints, Congress passed the Telephone Consumer Protection Act in 1991 to prohibit, among other things, robocalls to cellular and residential telephone lines.  In 2015, Congress amended the robocall restriction and carved out calls made solely to collect a debt owed to or guaranteed by the United States.

The American Association of Political Consultants, Inc. and other political and non-profit organizations (“Plaintiffs”) filed a declaratory judgment action against the U.S. Attorney General and the FCC (the “Government”), arguing that the government-debt exception to the TCPA violated the First Amendment because it favored debt-collection speech over political and other speech.  Plaintiffs sought to invalidate the entire TCPA (rather than simply invalidate the government-debt exception).

Even though the district court identified the government-debt exception as a content-based restriction on speech, the district court held that the exception survived strict scrutiny because of the Government’s compelling interest in collecting debt.  Id.  On appeal, the U.S. Court of Appeals for the Fourth Circuit vacated the district court’s order.  Id. (citing Am. Ass’n of Political Consultants, Inc. v. FCC, 923 F.3d 159, 167 (4th Cir. 2019)).  The Fourth Circuit agreed that the government-debt exception was a content-based restriction on speech, but it held that the exception failed a strict scrutiny review and severed the exception.  Id. at 5-6.  The Supreme Court subsequently granted certiorari.

The Supreme Court’s Ruling

The Supreme Court affirmed the Fourth Circuit’s ruling.  As an initial matter, the Supreme Court found the TCPA’s robocall restriction, with the government-debt exception, a content-based restriction because it favors speech made for the purpose of collecting government debt over political and other speech.  As the Supreme Court explained, “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.”  Id. at 7.  As such, the Supreme Court found it subject to a strict scrutiny review.

The Supreme Court rejected the Government’s arguments to the contrary.  First, it noted that the TCPA does not draw any distinction based on the speaker, rather than the content, and, even if it did, that would not automatically render the distinction content neutral.  Id. at 8.  Second, it noted that the TCPA focuses on whether the caller is speaking about a particular topic and not, as the Government contended, on whether the caller is engaged in a particular economic activity.  Id.

Next, the Supreme Court held that the robocall restriction with the government-debt exception could not satisfy strict scrutiny.  It noted that the Government failed sufficiently to justify the differentiation between government-debt collection speech and other important categories of robocall speech, such as political speech, issue advocacy, commercial advertising, and the like.  Id. at 9.

Having so concluded, the Supreme Court then turned to the question of whether it should invalidate the entire TCPA or whether it could cure the problem by severing the government-debt exception from the remainder of the TCPA.  Because the TCPA was an amendment to the Communications Act, which contains an express severability clause, the Supreme Court concluded that it was required to sever the offending provision.  Id. at 18.

The Supreme Court noted that its “precedents reflect a decisive preference for surgical severance rather than wholesale destruction, even in the absence of a severability clause.”  Id. at 15.  Applying that preference, the Supreme Court explained it would sever the exception from the remainder of the TCPA because the remainder of the law “is capable of functioning independently” and in fact “function[ed] independently . . . 20-plus years before the government-debt exception was added in 2015.”  Id. at 18.

Implications Of The Supreme Court’s Ruling

Although many businesses hoped that the Supreme Court would invalidate the TCPA, the ruling in Barr gives it a boost.

Writing for the majority, Justice Kavanaugh noted that, while “Americans passionately disagree about many things,” they “are largely united in their disdain for robocalls” and he quoted legislative history that described robocalls as the “scourge of modern civilization.”  Id. at 1, 3.

As such, businesses should brace for a renewed flurry of TCPA-related class action lawsuits, as the plaintiffs’ bar moves forward with TCPA-related lawsuits against debt collectors and other businesses previously put “on hold” pending the Supreme Court’s decision, aided by Plaintiff-friendly “gems” from the opinion in Barr.

That said, the Supreme Court’s opinion opens the door to new defenses, including challenges to other portions of the TCPA.  The Supreme Court ruled that Plaintiffs “still may not make political robocalls to cell phones, but their speech is now treated equally with debt-collection speech.”  The TCPA and FCC regulations, however, provide for other exceptions that may be equally problematic and subject to challenge in that they similarly fail to treat speech equally.  Thus, as TCPA litigation gets a boost, the Supreme Court’s decision may provide a roadmap for new angles of attack.