Banking and Finance Law Daily Government-debt exception to the TCPA ruled unconstitutional
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Monday, July 6, 2020

Government-debt exception to the TCPA ruled unconstitutional

By Jody

Telephone Consumer Protection Act prohibition on robocalls to cell phones was upheld, with the Court severing the debt collection portion of the Act rather than invalidating the entire robocall restriction.

The U.S. Supreme Court has struck down a section of the Telephone Consumer Protection Act (TCPA) that exempted autodialed calls made to cell phones for the purpose of collection of debts owed to or guaranteed by the federal government. Organizations that participate in the political system had filed suit against the government arguing that the TCPA’s prohibition on robocalls violated their First Amendment right to free speech. The plurality opinion, written by Justice Brett Kavanaugh, upheld the prohibition on robocalls to cell phones, but found that political robocalls and debt-collection calls should be treated equally. Chief Justice John Roberts and Justices Samuel Alito and Clarence Thomas joined Kavanaugh’s opinion. Justices Sonia Sotomayor, Stephen Breyer, and Neil Gorsuch filed concurring opinions, although Breyer and Gorsuch dissented in part (Barr v. American Association of Political Consultants, Inc., July 6, 2020, Kavanaugh. B.).

The American Association of Political Consultants (AAPC) and two political groups filed a lawsuit alleging that the debt-collection exemption to the automated call ban contravened their free speech rights because it was a content-based restriction on speech that failed to satisfy strict scrutiny review. Although the district court held that the debt-collection exemption to the automated call ban constitutes a content-based restriction on speech, applying strict scrutiny review to the debt-collection exemption, it ruled that the exemption did not violate the Free Speech Clause.

On appeal, the U.S. Court of Appeals in Richmond, Virginia, held that the debt-collection exemption failed to satisfy strict scrutiny, constituted an unconstitutional content-based restriction on speech, and violated the Free Speech Clause. The court said the exemption was "fatally under-inclusive" because the debt-collection exemption subverts the privacy protections underlying the ban and because the impact of the exemption deviates from the purpose of the automated call ban. The court noted in part that the huge-number of loans that are guaranteed by the federal government means that the exemption does not pass a requirement that content-based restrictions on speech be "narrowly tailored." However, the court agreed with the government that "controlling authorities require a severance of the exemption from the automated call ban."

In its petition for certiorari, the U.S. Department of Justice asked the Supreme Court to consider "[w]hether 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."

The TCPA’s automated call ban prohibits calls to cell phones by use of an automated dialing system or an artificial or prerecorded voice, subject to three statutory exemptions (47 USC § 227(b)(1)(A)). One exemption concerns emergency calls, another pertains to calls made with the prior express consent of the called party, and the third—the debt-collection exception—authorizes automated calls that relate to the collection of debts owed to or guaranteed by the federal government.

Content-based restriction. Rejecting the government’s arguments to the contrary, the Court concluded that the debt-collection exception was content-based and thus subject to strict scrutiny. A law is content-based if "a regulation of speech ‘on its face’ draws distinctions based on the message a speaker conveys." Kavanaugh noted, "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." The government argued that the law was content-neutral because it drew distinctions based on speakers, rather than content. However, in previous decisions, the Court had found that a distinction that is speaker-based does not automatically render the distinction content neutral, and that "laws favoring some speakers over others demand strict scrutiny when the legislature’s speaker preference reflects a content preference." Also, the Court rejected the government’s "slippery slope" argument that if the TCPA is content-based because it singles out debt-collection speech, then so are statutes that regulate debt collection, like the Fair Debt Collection Practices Act.

Strict scrutiny. The government conceded, and the Court agreed, that the debt-collection exception failed to satisfy strict scrutiny. Although collecting debt is "no doubt a worthy goal", the government failed to justify the differentiation between government-debt collection speech and other important categories of robocall speech, such as political speech, charitable fundraising, issue advocacy, and commercial advertising.

Severability. In applying ordinary severability principles, the Court severed the debt-collection exception from the remainder of the TCPA. "From Marbury v. Madison to the present," said the plurality opinion, the Court has worked to salvage rather than destroy laws and has preferred surgical severance rather than wholesale destruction, even in the absence of a severability clause. In deciding whether to sever the exception here, the Court noted that the TCPA is an amendment to the Communications Act, which includes a severability clause. Even if the severability clause in the Communications Act did not apply to the government-debt provision, the Court would still apply the presumption of severability. "The Court has long applied severability principles in cases like this one, where Congress added an unconstitutional amendment to a prior law." Also, the TCPA is able to function as a law once the exception is severed.

Kavanaugh noted that "[t]his is an equal-treatment case, and equal-treatment cases can sometimes pose complicated severability questions." When the issue is unequal treatment, courts may cure that unequal treatment either by extending the benefits or burdens to the exempted class, or by nullifying the benefits or burdens for all. The Court concluded that the government-debt exception was a relatively narrow exception to the broad robocall restriction, and severing the government-debt exception did not raise any other constitutional problems. Thus, there was no need to address all the possible hypothetical applications of severability doctrine in equal-treatment cases.

The Court also addressed the argument that the entire robocall restriction was unconstitutional. The AAPC argued that Congress’s willingness to enact the government-debt exception made it clear that Congress lacked a genuine concern for consumer privacy, the asserted interest of the prohibition. The Court found that the addition of the government-debt exception did not "cause us to doubt the credibility of Congress’s continuing interest in protecting consumer privacy."

Breyer opinion. Justice Breyer, along with Justices Ginsburg and Kagan, concurred in the judgment with respect to severability and dissented in part. Specifically, Breyer argued that the debt-collection exception did not violate the First Amendment and that the Court erred in "reflexively" applying strict scrutiny. Because the exception at issue concerned debt collection, which has nothing to do with the free marketplace of ideas or the transmission of the people’s thoughts and will to the government, but is rather a government response to the public will through ordinary commercial regulation, applying strict scrutiny "to the economically based exemption here is thus remarkable." Breyer argued that the debt-collection exception would survive an intermediate scrutiny analysis. However, Breyer agreed with the majority that the exception was severable from the TCPA.

Sotomayor opinion. Justice Sotomayor agreed with Breyer that strict scrutiny should not apply to the exception in this case, but disagreed that the exception would pass an intermediate scrutiny test because it is not "narrowly tailored to serve a significant governmental interest." The government failed to show how a debt-collection robocall about a government-backed debt is any less intrusive or could be any less harassing than a debt-collection robocall about a privately backed debt. Sotomayor also agreed with the plurality decision that the exception was severable.

Gorsuch opinion. Justice Gorsuch argued that the TCPA’s rule against cellphone robocalls is a content-based restriction that failed strict scrutiny because the government offered no compelling justification for its prohibition of political speech. In his dissent from the majority opinion, Gorsuch said that the proper remedy in this cause should have been an injunction preventing enforcement of the TCPA against them. Severing the debt-collection exemption, as the majority did, was outside the authority of the Court and did not address the harm to the plaintiff, Gorsuch argued. "Respectfully, if this is what modern ‘severability doctrine’ has become, it seems to me all the more reason to reconsider our course," said Gorsuch.

Reaction. Alana Joyce, the Executive Director of the AAPC said: "We are grateful that the Supreme Court recognized the importance of the First Amendment and the harms imposed by content-based restrictions on speech but are disappointed that the Court did not rule in favor of the AAPC entirely. There remain open questions about what the TCPA means and how it applies to those who engage in First Amendment-protected policy and political discussions. We hope the Court grants review to resolve those issues in the pending Facebook case, addressing the proper interpretation of the TCPA’s auto dialer definition. AAPC is committed to vigorously supporting our members' ability to deliver high quality, powerful services, through education, collaboration, and legal action where necessary."

Archis Parasharami, a litigation partner in Mayer Brown’s Washington DC office, believes that the Supreme Court will have to weigh in again on the larger issues of autodialers. "After the argument in May, it seemed pretty clear that a majority of the Supreme Court was not prepared to invalidate the TCPA across the board due to the later-enacted government debt-collection exception. But the Court’s work in assessing this statute is not done. The courts of appeals are deeply divided over what counts as an autodialer within the meaning of the TCPA. That question is one of the central issues in assessing whether a business might be liable for making calls or sending text messages to cell phones. There is little doubt that the Court will have to step in to resolve the conflict—hopefully sooner rather than later."

The case is No. 19-631.

Attorneys: Noel J. Francisco, U.S. Department of Justice, for William P. Barr. Roman Martinez V (Latham & Watkins, LLP) for American Association of Political Consultants, Inc.

Companies: American Association of Political Consultants, Inc.

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