FYI: 6th Cir Reverses Trial Court Ruling That TCPA Was Wholly Unconstitutional After 2015 Amendments

The Sixth Circuit recently reversed a trial court's dismissal of a putative class action lawsuit alleging violations of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227(b) (TCPA).

 

The trial court dismissed the case on the basis that amendments to the TCPA in 2015 rendered the entire Act unconstitutional until the Supreme Court of the United States severed the 2015 amendments in Barr v. Am. Ass'n of Pol. Consultants, Inc., 140 S. Ct. 2335 (2020) (AAPC).  This would have made any alleged TCPA violation not actionable from the date of the amendments in 2015 until the SCOTUS severed the unconstitutional provisions in 2020.

 

In reversing the trial court's ruling, the Sixth Circuit held that AAPC applied retroactively, and the TCPA was not invalidated by the 2015 unconstitutional amendments and before the date of the AAPC ruling.  In addition, the Sixth Circuit rejected the defendant's First Amendment arguments based on the retroactive application of AAPC.

 

A copy of the opinion is available at:  Link to Opinion

 

As you may recall, the TCPA prohibits many automated calls to cell phones and landlines.  In 2015, Congress amended the TCPA to allow robocalls if they were made "solely to collect a debt owed to or guaranteed by the United States." 47 U.S.C. § 227(b)(1)(A)(iii), (b)(1)(B).

 

However, the Supreme Court of the United States held in Barr v. Am. Ass'n of Pol. Consultants, Inc. (AAPC), 140 S. Ct. 2335 (2020), that "adding the exemption for government-debt robocalls would cause impermissible content discrimination" in violation of the First Amendment to the United States Constitution, and that "the exception was severable from the rest of the restriction, leaving the general prohibition intact." 

 

The plaintiff here received alleged non-consensual automated calls from the defendant in late 2019 and early 2020, and filed a putative class action lawsuit in federal court under the TCPA.  The defendant moved to dismiss for lack of subject matter jurisdiction.  The trial court granted the defendant's motion.

 

The trial court held that "severability is a remedy that operates only prospectively," and that the amended TCPA "was unconstitutional and therefore void for the period the exception was on the books" from 2015 to 2020.  Therefore, the trial court held, the TCPA "could not provide a basis for federal-question jurisdiction."

 

The plaintiff appealed, and the United States intervened in support of the plaintiff to defend the TCPA.

 

On appeal, the Sixth Circuit first noted that the motion to dismiss for lack of subject matter jurisdiction should have been treated as a motion to dismiss for failure to state a claim.  The Sixth Circuit explained that a trial court has jurisdiction when "the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another." Here, if the plaintiff's "arguments about the continuing vitality of the [TCPA] from 2015 to 2020 are correct, she is entitled to relief."

 

The Sixth Circuit then addressed the defendant's arguments.

 

The defendant first argued that "severability is a remedy that fixes an unconstitutional statute, such that it can only apply prospectively."  Because the SCOTUS ruling in AAPC severed the unconstitutional 2015 amendment from the TCPA, the defendant argued that the amended TCPA was wholly unconstitutional from the date of the amendments in 2015 until the SCOTUS severed the unconstitutional provisions in 2020.

 

The Sixth Circuit disagreed, holding that the SCOTUS in AAPC "recognized only that the Constitution had 'automatically displace[d]' the government-debt-collector exception from the start, then interpreted what the statute has always meant in its absence," and that the SCOTUS' "legal determination applies retroactively."

 

The Court explained that, in order "to say what the law is," courts "must exercise the negative power to disregard an unconstitutional enactment." Then, "[a]fter disregarding unconstitutional enactments, we then determine what (if anything) the statute means in their absence — what is now called 'severability' analysis."  However, the Sixth Circuit continued, "those steps are all part of explaining what the statute has meant continuously since the date when it became law and applying that meaning to the parties before us."

 

Relevant here, the Sixth Circuit noted that "the Constitution itself displaces unconstitutional enactments: a legislative act contrary to the constitution is not law at all."  Because the 2015 amendments were unconstitutional, and therefore "not law at all", the Court concluded that the remainder of the TCPA stayed in full force as if the 2015 amendments were never enacted.

 

The defendant also argued that "if it can be held liable for the period from 2015 to 2020, but government-debt collectors who lacked fair notice of the unlawfulness of their actions cannot, it would recreate the same First Amendment violation the Court recognized in AAPC."

 

The Sixth Circuit disagreed again, noting that "[w]hether a debt collector had fair notice that it faced punishment for making robocalls turns on whether it reasonably believed that the statute expressly permitted its conduct. That, in turn, will likely depend in part on whether the debt collector used robocalls to collect government debt or non-government debt." 

 

Because the defendant here was not collecting on government debt, which was the subject of now unconstitutional 2015 amendments, the Sixth Circuit held that "applying the speech-neutral fair-notice defense in the speech context does not transform it into a speech restriction."

 

Accordingly, the Sixth Circuit reversed the trial court's dismissal, and the case was remanded for further proceedings.

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 6^th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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FYI: 7th Cir Holds FDCPA "Debt Validation Notice" and "Caller Identification" Issues Not Enough For Standing

The U.S. Court of Appeals for the Seventh Circuit recently reversed and remanded a trial court's entry of summary judgment in favor of the plaintiff alleging violations of the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (FDCPA), with instructions to dismiss the case for lack of subject matter jurisdiction.

 

In so ruling, the Court held that the FDCPA violations alleged by the plaintiff did not cause her any concrete harm and were simply procedural violations that Article III precludes federal courts from adjudicating.

 

A copy of the opinion is available at:  Link to Opinion

 

A company hired the plaintiff and, in its offer letter, described a signing bonus: $3,750 payable after 30 days of employment, followed by another $3,750 after 180 days of employment. If the plaintiff voluntarily ended her employment or the company fired her for cause within 18 months, she was obligated to repay the full bonus.

 

The plaintiff collected both signing payments, but after she completed one year of employment, the company fired her. A debt collection agency, the defendant, attempted to recover the bonus payments. The debt collector mailed the plaintiff a collection letter and an agency employee called the plaintiff by telephone four times.

 

The plaintiff sued the debt collector, claiming that its letter and phone calls violated the FDCPA by failing to provide complete written notice of her statutory rights within five days of the initial communication and because the caller never identified herself as a debt collector.

 

The trial court entered summary judgment for the plaintiff and the debt collector timely appealed.

 

On appeal, the Seventh Circuit addressed the requirement of standing.  To establish standing to sue in federal court, "[t]the plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).

 

At issue in this case was whether the plaintiff suffered an injury in fact.

 

The injury analysis often occurs at the pleading stage, where the court is limited to the complaint's "general factual allegations of injury resulting from the defendant's conduct" to evaluate standing. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992).

 

But the burden increases at the summary-judgment stage: The plaintiff must "supply[y] evidence of 'specific facts' that, taken as true, show each element of standing." Spuhler v. State Collection Serv., Inc., 983 F.3d 282, 286 (7th Cir. 2020) (quoting Lujan, 504 U.S. at 561).

 

To be cognizable in federal court, an injury must be concrete, which is to say "'real,' and not 'abstract.'" Spokeo, 136 S. Ct. at 1548 (quoting WEBSTER'S THIRD NEW INT'L DICTIONARY 472 (1971)). Though "traditional tangible harms, such as physical harms and monetary harms," most readily qualify as concrete injuries, "[v]arious intangible harms can also be concrete." TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2204 (2021).

 

However, a plaintiff cannot establish standing simply by pointing to a mere procedural violation of a statute. Spokeo, 136 S. Ct. at 1549; Casillas, 926 F.3d at 333. Rather, she "must show that the violation harmed or 'presented an "appreciable risk of harm" to the underlying concrete interest that Congress sought to protect.'" Casillas, 926 F.3d at 333 (quoting Groshek v. Time Warner Cable, Inc., 865 F.3d 884, 887 (7th Cir. 2017)).

 

Applying those principles here, the Seventh Circuit held that the plaintiff would have suffered a concrete injury only if the debt collector's failure to provide notice of the plaintiff's statutory rights caused her to suffer a harm identified by the FDCPA, "such as paying money she did not owe" or would have disputed. Smith v. GC Servs. Ltd. P'ship, 986 F.3d 708, 710 (7th Cir. 2021).

 

In her complaint and testimony, the plaintiff alleged only that she suffered emotional harm, specifically personal humiliation, embarrassment, mental anguish, and emotional distress. Furthermore, the plaintiff testified at her deposition that she never paid the debt collector or the company any money after the debt collector contacted her, nor did she rely on the debt collector's communication to her detriment in any other way. Instead, she stated that she got less sleep and felt intimidated, worried, and embarrassed.

 

The Seventh Circuit concluded that anxiety and embarrassment are not injuries in fact for the purposes of FDCPA standing. Indeed, the Court pointed out that it already expressly rejected "stress" as constituting a concrete injury following an FDCPA violation. Pennell v. Global Tr. Mgmt., 990 F.3d 1041, 1045 (7th Cir. 2021). Likewise, the Court already found that it is not enough for a plaintiff to be "annoyed" or "intimidated" by a violation. Gunn v. Thrasher, Buschmann & Voelkel, P.C., 982 F.3d 1069, 1071 (7th Cir. 2020).

 

Accordingly, the Seventh Circuit reversed the judgment and remanded with instructions to dismiss the case for lack of jurisdiction.

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, 6^th Floor
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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