INSIGHT: High Court Wary of TCPA Debt Exemption, But Not TCPA

May 21, 2020, 8:00 AM

The U.S. Supreme Court on May 6 tackled the constitutionality of the Telephone Consumer Protection Act, an extremely popular law that restricts communications made with an automated telephone dialing system, such as telemarketing.

In Barr v. AAPC (No. 19-631), the Department of Justice sought to defend a 2015 amendment to the TCPA exempting the collection of government-owned debt from the restrictions of the TCPA, which precluded making automated calls to cellular telephones.

The American Association of Political Consultants (AAPC) challenged the exemption claiming that the decision by Congress to exempt government-owned debt from the TCPA constituted a content-based regulation of speech in violation of the First Amendment. The AAPC asked the court to sever from the statute not just the government debt exemption, but to invalidate the entire cellular telephone restriction.

It was believed before argument that the justices may have been split on the issue of whether the exemption was in fact a content-based regulation. The significance of this distinction is the level of scrutiny a court applies in examining a statute’s validity.

Content-based speech regulation requires a court to presume the regulation is invalid unless the government can demonstrate a compelling interest to justify the policy—known as ‘strict scrutiny.’

Content-neutral regulation of commercial speech, however, only must pass intermediate scrutiny. There, the challenged law must further an important government interest and do so by a means substantially related to that interest.

But it was relatively clear from the outset that most, if not all, of the justices believed that the exemption regulated speech based on its content—collection of a government-owned debt. The government had effectively conceded in its briefing that the regulation could not survive strict scrutiny if the court were to decide it was content-based.

The court was mainly focused on the remedy afforded to AAPC. The government argued that if the exemption was found to violate the First Amendment, it alone needed to be severed from the TCPA.

On the other hand, AAPC contended that severing the government debt exemption did not go far enough and would not otherwise cure the statute’s impact on the political consultants who would still be unable to make automated calls. At stake is the viability of the heart of the TCPA—the cellular telephone ban.

The TCPA is an extremely popular law and that was not lost on the justices, several of whom pointed out that fact to counsel. The dilemma the justices face is whether to simply strike the exemption and provide no real relief to the plaintiff while also making speech more restrictive.

Essentially, the exemption increases permissive speech, even if it does so only in a discrete area. It is generally counterintuitive to First Amendment jurisprudence to hold a statutory provision in violation of the First Amendment and to remedy that by further restricting speech. The only available solution that advances freedom of speech is the elimination of the cellular telephone ban in its entirety. AAPC would have its victory and the court would simultaneously expand First Amendment protections.

However, the barrier to that conclusion is in divining congressional intent and weighing the severability of unconstitutional statutory provisions. Would Congress prefer to see the elimination of its exemption and keep the law in place even if it becomes more restrictive, or is the expansion of the government debt exemption reflective of Congress’ desire to pull back the curtain on communication to cellular telephones even if the public wants less speech?

Struggle on Severability

The justices’ struggle on severability manifested itself in different forms. Questions to the parties were directed at the severability language in the TCPA, AAPC’s standing to even bring a challenge to the exemption if the remedy afforded would not provide relief to AAPC, and whether there was any legal basis to sever the entire cellular telephone ban.

While AAPC’s position is intellectually appealing, the narrow parameters of the Supreme Court’s constitutional review combined with the unwelcomed consequences of neutering the TCPA seem likely to lead to the court simply striking the exemption. It will likely be accompanied with an explanation that while the remedy of restricting free speech is unfavored in the law, the specific facts of this case warrant the result.

The justices will be very careful not to create anti-First Amendment precedent.

Content-Based Speech Test

The almost unanimous view that the exemption was content-based poses broader questions about other regulations that target a particular industry or subject-matter.

Are regulated communications pertaining to debt collection under the Fair Debt Collection Practices Act or the Fair Credit Reporting Act restrictions on content-based speech? A recent decision by the U.S. District Court for the District of Massachusetts in ACA International v. Maura Healey (No. 20-cv-10767, May 6, 2020), granting a temporary restraining order against regulations promulgated by the state attorney general to prevent collection calls during the Covid-19 crisis as violating the First Amendment may be the precursor to future litigation in this area.

Many believed (or hoped) that Barr would mark the end of the TCPA. It appears that the TCPA will survive, and the underpinnings of its purpose may emerge stronger than ever with the imprimatur of the U.S. Supreme Court.

Instead, Barr could become the unexpected first volley in a series of constitutional challenges involving content-based speech against a litany of heretofore innocuous regulations.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Richard J. Perr is the co-managing partner of the Philadelphia office of Kaufman Dolowich & Voluck LLP and serves as chair of the firm’s Consumer Financial Services Practice Group. He is a past president of ACA International, the largest trade association of credit and collection professionals

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