Courts Tackle TCPA Constitutionality

TCPA Connect

The constitutionality of the Telephone Consumer Protection Act (TCPA) continues to make headlines, with recent decisions out of Delaware and Massachusetts, as well as a certiorari petition submitted to the Supreme Court.

In Delaware, Andrew Perrong accused Liberty Power Corporation of TCPA violations in a 2018 putative class action. The company filed a motion to dismiss the action, arguing that the entire law is unconstitutional due to a content-based debt collection exemption for government-backed debt. The federal government intervened, arguing that the exemption passed constitutional muster.

U.S. District Judge Maryellen Noreika agreed with Liberty Power and held that the exemption was unconstitutional. “The TCPA, on its face, distinguishes between phone calls based on their content. Automated calls—which are otherwise generally prohibited under the TCPA—are permitted if the call is ‘solely to collect a debt owed to or guaranteed by the United States.’ But automated calls dealing with other subjects, such as non-government owed or guaranteed debt, are not permitted,” the court said.

Contrary to the government’s argument, the debt collection exception does not regulate on the basis of relationship rather than content, the court said. “Indeed, the debt-collection exemption makes no reference ‘on its face’ to the relationship between the caller and the recipient of the automated phone call,” Judge Noreika pointed out.

Because she determined that the exception was content-based, Judge Noreika applied strict scrutiny to see whether it could remain in effect. While the court found that the government’s stated intent to protect the “well-being, tranquility and privacy” of consumers was a compelling state interest, the law was not narrowly tailored to achieve that interest, according to the court.

“There is no serious doubt that the debt-collection exemption would allow a substantial number of … intrusive calls,” she wrote, citing an opinion from the U.S. Court of Appeals, Fourth Circuit, that the exception “applies in a manner that runs counter to the privacy interests that Congress sought to safeguard.”

Even though Liberty Power prevailed in its argument that the exemption was unconstitutional, Judge Noreika went on to hold that the exemption was severable from the remainder of the TCPA, and thus denied Liberty Power’s motion to dismiss.

The Massachusetts case also involved Liberty Power in a suit filed by two consumers alleging TCPA violations. Liberty again responded with a motion to dismiss, contending that the TCPA is unconstitutional because the government debt collection exception is a content-based restriction on speech and could not survive strict scrutiny.

As did her colleague in Delaware, U.S. District Judge Allison D. Burroughs agreed.

“The government debt collection exception is content based because determining whether a given call comes within the exception turns on the purpose(s) of the call and its subject matter,” the court wrote. “In any case where the parties dispute whether a call was made ‘solely to collect a debt owed to or guaranteed by the United States,’ the purpose(s) of the call and its subject matter (i.e. what, if any, debt was at issue) will be critical and potentially dispositive of whether the call comes within the debt-collection exception.”

For support, Judge Burroughs cited opinions from the Fourth Circuit and Ninth Circuit, as well as decisions from district courts in California, Minnesota and New York, rejecting the government’s contention that the exception was “relationship-based, not content-based.”

As for whether the debt collection exception was narrowly tailored to serve a compelling state interest, Judge Burroughs agreed with the Ninth Circuit that the government’s position that the exception protects “the well-being, tranquility and privacy of the home” is “a head-scratcher.” The exception was created 24 years after the TCPA was enacted and serves to limit—rather than expand—the privacy protections offered by the statute, the court said. “Whatever Congress’s goal was in choosing to permit automated dialing and prerecorded calls for the collection of government debt, it simply cannot have had anything to do with protecting the tranquility or privacy of its citizens’ homes and pockets,” the court wrote.

As in the Delaware case, however, Liberty Power was ultimately unsuccessful in having the plaintiffs’ claims dismissed. Judge Burroughs severed the exemption from the remainder of the TCPA and permitted the plaintiffs’ claims to move forward.

While the lower courts continue to face the issue, the question of the TCPA’s constitutionality may be headed to the Supreme Court.

Facebook filed a writ of certiorari seeking review of the Ninth Circuit opinion in Duguid v. Facebook relied on by both the Delaware and Massachusetts federal courts.

Following its own precedent in Marks v. Crunch San Diego, the Ninth Circuit reversed the district court’s order of dismissal in favor of the defendant, ruling that Facebook’s equipment fell within the definition of an ATDS.

The court then sided with Facebook to declare the debt collection exception unconstitutional, although it declined to rule that the TCPA as a whole is facially unconstitutional, merely severing the exception and allowing Duguid’s suit to move forward.

To read the memorandum opinion in Perrong v. Liberty Power Corp., LLC, click here.

To read the memorandum and order in Katz v. Liberty Power Corp., LLC, click here.

To read the cert petition in Facebook v. Duguid, click here.

Why it matters: While there are no guarantees when it comes to the Supreme Court granting a cert petition, as the constitutionality of the government-backed debt collection exception to the TCPA continues to work its way through courts around the country, the chances of the justices deciding the question increases.



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