Federally-Backed Debt Collection Exception Not the Supreme Court’s Cup of T(CPA)

Barr v. Am. Ass’n of Political Consultants, Inc., 2020 WL 3633780, 591 U.S. __ (2020).[1]

Earlier this month, the Supreme Court held, in a fractured decision yielding multiple concurring or dissenting opinions, that the 2015 government-debt exception to the Telephone Consumer Protection Act (the TCPA) permitting robocalls to cellphones solely to collect a debt owed to or guaranteed by the United States violated the First Amendment, affirming the Fourth Circuit’s decision. Id. at *2. Applying traditional severability principles, seven Justices concluded that, rather than invalidate the entire TCPA, the 2015 government-debt exception must be severed from the remainder of the statute. Id. The bottom line: the government-debt exception is gone; the rest of the TCPA remains.

Questions Before the Supreme Court

  • Is the government debt exception to the robocall ban to cell phones unconstitutional? YES
  • Is the exemption a content-based restriction requiring strict scrutiny? YES
  • If so, is severing the exemption from the TCPA the appropriate remedy? YES

Reasoning

The initial question before the Court in its First Amendment analysis was whether the robocall restriction, with the government-debt exception, is content-based. Id. at *5. The Court answered in the affirmative because the law favored speech made for collecting government debt over political and other speech. Id. at *5. The Court rejected the government’s arguments that the TCPA drew distinctions based on speakers rather than content, that the legality of a robocall depends on whether a caller is engaged in a particular economic activity, not its content, and that if the TCPA is content-based, so are debt collection statutes. Id. Applying Reed, the Court reasoned that, because the government-debt exception is content-based, it is subject to strict scrutiny. Id. at *6 (citing Reed v. Town of Gilbert, 576 U. S. 155, 163 (2015)). The Government conceded that it could not satisfy strict scrutiny to justify the differentiation between government-debt collection speech and other categories of robocall speech, such as political speech, charitable fundraising, issue advocacy, commercial advertising, etc., and the Court agreed. Id.

Having concluded that the 2015 government-debt exception created an unconstitutional exception to the TCPA, the Court was left to decide whether to invalidate the entire statute, or instead to invalidate and sever the 2015 government-debt exception. Id. at *6. In its analysis, the Court rejected plaintiffs’ broader argument that the entire TCPA is unconstitutional. Plaintiffs argued that, because Congress was willing to carve out an exception for government debt, its credibility regarding an interest in privacy was undermined. Id. at *6–7. The Court reasoned, however, that “Congress’s continuing broad prohibition of robocalls amply demonstrates Congress’s continuing interest in consumer privacy.” Id. at *7.

The Court ultimately determined that it must invalidate the 2015 government-debt exception and sever that exception from the remainder of the statute. Id. at *11. The Court relied on the text of the Communications Act’s severability clause and the presumption of severability. Id. The majority disregarded Justice Gorsuch’s suggestion that the decision provided “no relief” to plaintiffs, reasoning that invalidating and severing the government-debt exception properly addressed the unequal treatment underlying plaintiffs’ claim. Id. at *13. The Court noted that Justice Gorsuch’s remedy would result in harm to “tens of millions of consumers who would be bombarded every day with nonstop robocalls notwithstanding Congress’s clear prohibition of those robocalls.” Id.

Justice Sotomayor concurred in the judgment, yet reasoned that strict scrutiny should not apply to all content-based distinctions. Id. at *14. However, she concluded that the government-debt exception still failed intermediate scrutiny because it is not “narrowly tailored to serve a significant governmental interest.” Id.

Justice Breyer, with whom Justices Ginsburg and Kagan joined, concurred in the judgment with respect to severability and dissented in part. Id. at *14. Justice Breyer disagreed that the exception violates the First Amendment. Id. He reasoned that strict scrutiny was inappropriate and that intermediate scrutiny should apply. Id. at *15. Justice Breyer reasoned that not all content-based distinctions are subject to strict scrutiny regardless of context or practical effect. Id. at *19. He did agree, however, with Justice Kavanaugh’s conclusion that the provision is severable. Id.

Justice Gorsuch, with whom Justice Thomas joined in part, concurred in the judgment in part and dissented in part. Justice Gorsuch agreed with Justice Kavanaugh that the government-debt exception violates the First Amendment. Id. at *19–20. However, he disagreed as to why and the remedial consequences. Id. at *20. Justice Gorsuch agreed that the exception is a content-based restriction that fails strict scrutiny, but reasoned that plaintiffs are entitled to an injunction precluding TCPA enforcement against them. Id. at *21.

Takeaways

Alleged TCPA violations are the basis of an increasing number of lawsuits each year, and the statute appears to be here to stay.

Because the TCPA is heavily litigated and lacks a statutory limitation or cap on the amount of damages that can be awarded for each violation, it can lead to tens of millions of dollars in potential exposure. Therefore, companies seeking to reduce their exposure to TCPA litigation should consult a legal professional for advice on compliance and mitigation of litigation risk.

Morrison & Foerster has advised extensively on TCPA disputes and represented numerous Fortune 500 companies in TCPA litigation. Follow Morrison & Foerster’s Class Dismissed blog to stay informed on TCPA developments.


[1] Morrison & Foerster filed an amicus brief in this case.