Post-Barr, Liability Attaches for Debt Collector—but With Damages Limitation—in Delaware

TCPA Connect

Interpreting the Supreme Court’s ruling in Barr v. American Association of Political Consultants, Inc., severing the government-backed debt exception from the Telephone Consumer Protection Act (TCPA), a federal court in Delaware held that a debt collector could be liable under the statute for claims that arose prior to the Court’s decision.

The case is Franklin v. Navient, Inc. The plaintiff, Ricky Franklin, claimed that he received 86 calls between 2015 and 2017 from Navient, seeking to collect on his federal government-backed student debt. Navient moved for summary judgment on calls after November 2015, when Congress added the exception for government-backed debt to the TCPA.

The court granted summary judgment in Navient’s favor. But after the Supreme Court in Barr v. AAPC held in 2020 that the exception violated the First Amendment by discriminating against other types of robocalls, Franklin asked the court to reconsider.

Because the government-backed debt exception is void, the court erred in relying on it, he argued. Navient objected, countering that even though the exception was void, the company lacked fair notice that its speech was illegal, and enforcing the TCPA against it would violate due process and the First Amendment.

Judge Stephanos Bibas of the U.S. Court of Appeals, Third Circuit, sitting by designation, sided with Franklin.

“Courts cannot change the law; they can only declare what the law has always been,” he wrote. “When the Supreme Court severed the government-debt exception from the Act, it ruled that the law never had the exception—despite the law’s text. So Navient cannot get summary judgment based on the exception’s coverage.”

Since the Supreme Court decision clarified what the law always meant, its decision applies retroactively, the court said. Further, the TCPA’s severability clause kicked in, meaning the rest of the statute remained in effect while the exception never became law.

AAPC addressed only what the Act means going forward,” Bibas said. “But if the exception was void the day it was passed, and Congress’s fallback rule was to nix it, then it never took effect. … If Navient relied on the government-debt exception, it made a mistake. Because the Constitution trumps the Act, the Act never had a valid exception.”

Enforcing the TCPA would not violate Navient’s due process, the court said, as the government may impose a new civil duty or liability based on past acts, and due process does not require advance notice. When a court merely recognizes that a civil duty has existed the whole time, the due process objection is even weaker, Bibas added.

Nor would the enforcement violate Navient’s First Amendment rights, he said. While the Supreme Court has held that due process forbids applying an “unforeseeable judicial enlargement of a criminal statute” retroactively, no case law exists extending that position to civil law.

“[T]he calls were not legal at the time,” Bibas said. “[T]he robocalling ban never had a valid exception for government debt. Navient cannot rely on one. And while it reasonably thought it was covered by the exception, that is no defense to paying compensation.”

However, the court limited Franklin’s recovery, finding that he “did not plausibly suffer $500, let alone $1,500, in damages per call.”

Should Franklin win, Bibas said he could recover “a part of the statutory damages that reflects both monetary and nonmonetary losses,” including emotional and psychological harms, but that he had to provide proof of his losses and could not “get the full $500 automatically, let alone treble damages.”

“Those sums would be punitive and so quasi-criminal,” he wrote. “Unlike compensatory civil liability, criminal and quasi-criminal liability must be reasonably foreseeable. And here it would not be: I cannot reasonably charge Navient with predicting that an act of Congress was unconstitutional.”

In hindsight, the Barr decision makes sense, Bibas said. “But as Niels Bohr supposedly quipped, prediction is very difficult, especially if it is about the future. … AAPC was unforeseeable and expanded the reach of the Act’s punitive damages. So Navient may not be punished for making calls to collect government debt after 2015. It may need to cover Franklin’s monetary losses, or total provable losses up to $500 per call. But anything more would violate due process.”

The court reversed the partial grant of summary judgment for Navient.

To read the opinion in Franklin v. Navient, Inc., click here.

Why it matters: The Delaware court walked a careful line; while the holding of Barr v. AAPC means that the government-backed debt exception once found in the TCPA was never in effect—making the defendant potentially liable for calls made during the time period the exemption was thought to be in effect—the court attempted to limit the damages Navient could potentially owe the plaintiff, given the fact that it reasonably believed the exception was valid. The case also shows the impact that the Barr decision is continuing to have on the district courts, causing them to revisit many prior TCPA decisions for and against defendants that claimed protection under the now-invalid government debt collector exemption.



pursuant to New York DR 2-101(f)

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