Earlier this week, the Fourth Circuit struck down a provision of the Telephone Consumer Protection Act (“TCPA”) that exempted government-backed debts from the statute’s prohibition on automated calls to cellular telephones. According to the Court in American Association of Political Consultants, Inc., et al v. FCC, the debt-collection exemption does not pass strict scrutiny and, therefore, contravenes the Free Speech Clause of the United States Constitution. The Court, however, did not go so far as to find the TCPA’s ban on automated calls unconstitutional as a whole. Instead, the Court severed “the flawed exemption” from the TCPA. Ultimately, the Fourth Circuit’s decision represents another example of courts heavily scrutinizing the TCPA’s reach.
The TCPA, in existence since 1991, regulates calls to cellular telephones using an automatic telephone dialing system or an artificial or prerecorded voice. Historically, the TCPA has included two exclusions: one for calls made with the called party’s prior express consent and a second for calls made for emergency purposes. In 2015, Congress enacted a third exemption for calls “made solely to collect a debt owed to or guaranteed by the United States.”
In May 2016, a group of plaintiffs including the American Association of Political Consultants, the Democratic Party of Oregon, Public Policy Polling, the Washington State Democratic Central Committee, and the Tea Party Forward PAC filed suit in the Eastern District of North Carolina to challenge the third exemption as a content-based restriction on speech that does not satisfy strict scrutiny. The plaintiffs contended that the debt collection exemption created a regime that unconstitutionally favored a select group and turned on the call’s content, in violation of the Constitution. Both the plaintiffs and the government filed motions for summary judgment. The District Court found in favor of the government, concluding that the exemption, though content-based, passed strict scrutiny and was constitutional.
The Fourth Circuit reversed. The panel first agreed with the District Court’s conclusion that the exemption was content-based, finding that “the relationship between the federal government and the debtor is only relevant to the subject matter of the call. In other words, the debt collection exemption applies to a phone call made to the debtor because the call is about the debt, not because of any relationship between the federal government and the debtor.” But the Fourth Circuit disagreed with the District Court on whether the exemption survived strict scrutiny for two reasons: First, the Fourth Circuit found that the exemption authorized “the intrusive calls that the [TCPA] was enacted to prohibit,” thereby subverting any privacy protections. Second, the exemption deviated “from the purpose of the automated call ban,” meaning that it was “an outlier among the other statutory exemptions.”
The Court, however, stopped short of invalidating the TCPA entirely. To do so, it held that the TCPA could still constitute a meaningful statute in the absence of the debt collection exemption. The Court reasoned that the TCPA operated successfully for 24 years without the exemption, which suggested that severing the exemption was a better outcome than a wholesale invalidation of the statute.
For consumer-facing companies, the decision may be an indication of the Fourth Circuit’s stance (or at least a panel of the Fourth Circuit’s stance) on the TCPA’s protections. Though the Court found that the debt-collection exemption was unconstitutional, the decision includes substantial dicta regarding the importance of the privacy concerns the TCPA seeks to protect, referring to debt collection calls as “intrusive” and “some of the most disruptive phone calls [American consumers] receive.” Historically, the Fourth Circuit has not seen the same volume of TCPA litigation as other circuits, but the language used in this opinion may invite further lawsuits.