On January 10, 2020, the Supreme Court granted certiorari to review the Fourth Circuit's decision to strike the Telephone Consumer Protection Act's (TCPA) "government-debt exemption." See Am. Ass'n of Political Consultants, Inc. v. FCC, 923 F.3d 159 (4th Cir. 2019). Because this federal statute is heavily litigated, the Court's decision may have a significant impact on federal dockets.
The TCPA was enacted in 1991 to impose certain requirements regarding the use of "automated telephone dialing systems" (ATDS) and prerecorded phone calls. § 2(10), 105 Stat. 2394. In the decades since Congress enacted the TCPA, thousands of lawsuits have been filed alleging billions in damages, and TCPA lawsuits continue to weigh heavily on the dockets of federal courts across the country. In 2015, Congress added a new exemption to the TCPA, sparking several constitutional challenges to the TCPA on First Amendment grounds. This most recent exemption permitted automated calls to be made "solely to collect a debt owed to or guaranteed by the United States"—the so-called "government-debt exemption." Bipartisan Budget Act of 2015, Pub. L. No. 114-74 Tit. III, § 301(a)(1)(A), 129 Stat. 588. The exemption was estimated to save the government $120 million over 10 years. See Office of Mgmt. & Budget, Exec. Office of the President, Fiscal Year 2016: Analytical Perspectives of the U.S. Government 127 tbl. 11-3, 128 (2015), https://go.usa.gov/xUtw2.
Fourth Circuit Challenge
The government-debt exemption has faced scrutiny in multiple circuits. In the Fourth Circuit, challengers of the government-debt exemption—an association of political organizations (including fundraisers and pollsters)—sued the attorney general and the Federal Communications Commission (FCC) in the Eastern District of North Carolina in 2016. See Am. Ass'n of Political Consultants, Inc. v. FCC, 923 F.3d 159 (4th Cir. 2019). The challengers asserted that the government-debt exemption was a form of content-based discrimination that violated the First Amendment. The district court agreed with the challengers that strict scrutiny applied to the exemption because it was a content-based form of speech discrimination; however, the court held that the exemption was narrowly tailored to serve a compelling government interest and therefore survived strict scrutiny.
The plaintiffs appealed to the Fourth Circuit. Like the lower court, the Fourth Circuit applied strict scrutiny. This time, however, the court was persuaded by the plaintiff's assertion that the government-debt exemption was an unconstitutional violation of the First Amendment. The Fourth Circuit found the exemption was "fatally underinclusive" and opted to sever the exemption in lieu of invalidating the entire TCPA. Similarly, in June 2019, the Ninth Circuit struck down the exemption while maintaining the remainder of the TCPA. See Duguid v. Facebook, Inc., 926 F.3d 1146 (9th Cir. 2019).
Supreme Court Review
Earlier this month, the Supreme Court granted the attorney general's petition for certiorari in the Fourth Circuit case.
The potential outcomes have a range of potential impacts on the current TCPA landscape.
First, the Court may overturn the Fourth Circuit. The government asserts that the Fourth Circuit was incorrect in applying strict scrutiny, arguing that the government-debt exemption "does not depend on the content of the speech at issue. Rather, it depends on the call's economic purpose." Brief for Petitioner at 6, Barr v. Am. Ass'n of Political Consultants, Inc., No. 18-1588 (emphasis added). In applying strict scrutiny, the Fourth Circuit reasoned that "a private debt collector could make two nearly identical automated calls to the same cell phone using prohibited technology, with the sole distinction being that the first call relates to a loan guaranteed by the federal government, while the second call concerns a commercial loan with no government guarantee." Am. Ass'n of Political Consultants, Inc., 923 F.3d at 166. In response, the government argues that two calls "having precisely the same content" would be "treated differently . . . depending on the precise nature of the economic activity on which the caller was engaged." Brief for Petitioner at 7-8, Barr v. Am. Ass'n of Political Consultants, Inc., No. 18-1588. If the Court agrees with the government's argument and applies a lower level of scrutiny, the government-debt exemption has a stronger chance of surviving Supreme Court review.
Second, the Court may uphold the Fourth Circuit's decision and sever the government-debt exemption. While the government vigorously disputes the application of strict scrutiny, it agrees with the Fourth Circuit's remedy of severability. The Fourth Circuit noted the Supreme Court's "strong preference" for severance. See Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2018) ("[W]e do not believe Congress would have wanted the whole [Affordable Care] Act to fall" if one provision of the Act is struck down). The Fourth Circuit explained, "Congress has explicitly mandated that, if a TCPA provision is determined to be constitutionally infirm, severance is the appropriate remedy." Am. Ass'n of Political Consultants, Inc., 923 F.3d at 171. If the Court takes this approach, its holding would be narrow and less likely to affect the broader field of TCPA litigation because the core function of the statute would remain in effect.
Third, as some observers believe, the Court may invalidate the TCPA altogether, finding that the statute's restriction on which mediums can be used for speech contravenes the First Amendment. By taking this approach, the Court would upend the entire TCPA landscape, providing a defense for companies and organizations that have faced decades of lawsuits. It would remain to be seen whether such a decision would lead to new legislation.
Once again, TCPA litigation has set the stage for an important decision by the Supreme Court. See PDR Network, LLC v. Carlton & Harris Chiropractic, Inc., 139 S. Ct. 2051 (2019) (remanding the case to the Fourth Circuit to determine if a 2006 FCC rule prohibiting unsolicited advertisements offering free goods or services was binding on the courts); see also Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016) (holding that a federal contractor did not share the government's unqualified immunity from liability and could be sued for TCPA violations and also holding that a rejected settlement offer does not moot a plaintiff's individual or class claims). This latest TCPA case is poised to further define the bounds of First Amendment protections in a new era of technology and communication.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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