Welcome
Tech & Telecom Law News

Anti-Robocall Law Exemption Faces Test in Supreme Court Argument

May 5, 2020, 10:00 AM

The Supreme Court on Wednesday will hear argument as to whether automatic phone calls for government debt collection should be exempt from an anti-robocall law.

Businesses are hopeful the court will invalidate the law’s exemption for the debt calls—and then strike down the entire anti-robocall statue as unconstitutional.

There’s a “good chance” justices will find the debt exemption unconstitutional, said Christine Reilly, a partner at Manatt, Phelps & Phillips LLP. The question is whether they’ll take the “nuclear option” and strike down the entire statute, she said.

How the court rules on the exemption may have broad consequences for the Telephone Consumer Protection Act, a 1991 law that bans companies from making automated calls and texts without first getting customers’ permission. The law is loathed by businesses that risk expensive class-action lawsuits for sending unsolicited calls and texts.

A 2015 amendment to the law exempts calls for collecting government debt, such as student loans. It was one of a number of carve-outs under the law that also include calls about prescription drugs, package deliveries, and money transfers.

“It just doesn’t smell right, the idea that you’d carve out something for the federal government for its own self-interest at the exclusion of other parties,” said Reilly, who heads the firm’s TCPA practice.

If the court rules that the exemption violates the First Amendment, it would face the difficult decision of whether to sever it from the TCPA or strike down the entire statute, said Artin Betpera, a partner at Womble Bond Dickinson in Orange County, Calif., whose practice focuses on the law.

“There’s no easy answer, especially considering the broader potential implications of the court’s opinion,” he said.

Restricting Speech

The U.S. Court of Appeals for the Fourth Circuit, in a 2019 decision appealed by the Justice Department, ruled that the government-debt exemption, by allowing some content to be treated differently than other content, is an unconstitutional, content-based restriction on free speech. The Fourth Circuit decided to sever the exemption from the rest of the TCPA.

“By authorizing many of the intrusive calls that the automated call ban was enacted to prohibit, the debt collection exemption subverts the privacy protections underlying the ban,” the court said in its opinion.

Justice, in its appeal, argues that the court erred in ruling that the exemption restricts calls based on content. The amendment exempts calls about a “certain kind of economic activity,” the department said in a Feb. 24 brief.

The American Association of Political Consultants Inc. and other political groups that challenged the exemption argue that the Fourth Circuit should have struck down the entire TCPA.

“When a statute restricts speech based on content, it is the restriction—not a speech-promoting exception—that must be struck down,” the political consultants wrote in a March 25 brief. “That result follows from the text of the First Amendment, standard remedial principles, and common sense.”

The political groups say striking down the TCPA would allow them to make automated calls to solicit candidate donations, conduct polls, and encourage voter turnout without the risk of expensive litigation.

High Stakes

The U.S. Chamber of Commerce, which filed in support of the political groups, said businesses have faced a torrent of class-action litigation due to the law, including almost 3,000 cases filed just in the first three months of 2019.

“The rush will continue unless this Court intervenes,” the group said in an April 1 brief.

Class-action lawsuits can result in expensive settlements. Wells Fargo & Co. agreed to pay nearly $18 million in a settlement approved last year over alleged unsolicited texts and calls.

Megan Iorio, appellate advocacy counsel at the Electronic Privacy Information Center, which filed a March 2 brief supporting the government, counters that the law is essential for protecting consumers from unwanted telemarketing calls.

Striking down the law “would essentially make cell phones unusable,” Iorio said.

The case is Barr v. AAPC, U.S., No. 19-631, Oral argument 5/6/20

To contact the reporter on this story: Jon Reid in Washington at jreid@bloombergindustry.com

To contact the editor responsible for this story: John Hughes at jhughes@bloombergindustry.com; Keith Perine at kperine@bloombergindustry.com

To read more articles log in. To learn more about a subscription click here.