Sixth Circuit: Death, Taxes and TCPA Claims

TCPA Connect

A Telephone Consumer Protection Act (TCPA) claim survives the death of the plaintiff, the U.S. Court of Appeals, Sixth Circuit has ruled, declaring the statute is “remedial” in nature and not penal.

On Dec. 22, 2015, Jeremy Parchman filed a putative class action lawsuit against SLM Corporation, Navient Corporation, Navient Solutions Inc. f/k/a/ Sallie Mae Inc., and Sallie Mae Bank, alleging the defendants repeatedly called his cellphone even though he never gave them his cellphone number, never owed any debt to the defendants and told them to stop calling him. Parchman passed away on May 25, 2016, and his daughter sought to amend the complaint, substituting herself.

A district court denied the daughter’s motion to amend, reasoning that TCPA claims do not survive a plaintiff’s death. But the federal appellate panel reversed.

The question of survivability is a matter of federal law, and because the TCPA does not contain an expression of congressional intent regarding survival, federal common law governs the answer, the Sixth Circuit said. Pursuant to federal common law, “remedial” claims—those that compensate the plaintiff—survive a party’s death, while “punitive” claims—those intended to punish the defendant—do not.

To determine whether the statute is remedial or penal, the court examined three factors: whether the purpose of the statute was to redress individual wrongs or more general wrongs to the public, whether recovery under the statute runs to the harmed individual or to the public, and whether the recovery authorized by the statute is wholly disproportionate to the harm suffered.

Only one court has previously undertaken this analysis, the Sixth Circuit noted, when a federal court in New York determined in a 2016 decision that the TCPA is penal in nature. Rejecting that court’s analysis, the panel undertook its own review.

First, “the primary purpose of the TCPA was to protect individuals from the harassment, invasion of privacy, inconvenience, nuisance and other harms associated with unsolicited, automated calls,” the court said. That such harm was widely shared did not mean that it was a general public wrong, however. “In all, we think that the purpose of the TCPA was to redress individual wrongs felt by individual consumers. Consequently, this first factor suggests that the TCPA is remedial.”

Recovery under the statute runs to the harmed individual and not the public, also suggesting that TCPA claims are remedial. As for the third factor, “[w]e cannot say that $500 is wholly disproportionate to the harm suffered as a result of receiving these irritating and invasive calls, especially where the harm is hard to quantify and may vary significantly from person to person. However, the treble damages provision is more likely disproportionate because it gives the court discretion to increase damages that, at $500 per call, are already greater than actual damages in most cases. This factor, then, leans at least in part toward finding that TCPA claims are penal.”

But the TCPA should not be found penal “merely because one remedy authorized by the statute may be disproportionate to the harm suffered,” the court said, particularly as the statute gives the court discretion to decide in each case whether and how much to increase damages.

“In all, then, we think that claims under the TCPA are best characterized as remedial,” the panel concluded. “‘The fact that the statute allows for accumulated recovery does not convert an otherwise remedial statutory scheme into a penal one.’ As a result, claims under the TCPA do survive a plaintiff’s death. Accordingly, we reverse the district court’s holding regarding the survivability of Parchman’s TCPA claims.”

To read the opinion in Parchman v. SLM Corporation, click here.

Why it matters: The first federal circuit court to weigh in on the question has now ruled that a TCPA claim survives the plaintiff’s death. In so holding, the Sixth Circuit rejected a New York district court case and determined that the TCPA is remedial, not penal, in nature, although the panel expressed some misgivings about whether the $500–$1,500 per-call recovery is proportionate to the harm suffered. While no other circuits have yet opined on the issue, the contradictory opinions in New York and the Sixth Circuit could signal a future split of authority. For now, at least in the Sixth Circuit, heirs of a deceased TCPA plaintiff may continue the suit on his behalf.



pursuant to New York DR 2-101(f)

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