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MADNESS: Court Holds Collector Can Be Liable Under TCPA for Calls That Were Exempt At the Time They Were Made
Tuesday, April 20, 2021

Well, folks, this is the TCPA’s jump-the-shark moment.

Yes, we’ve seen madness before. There was that time the FCC used an exemption in favor of government contractors to bring government contractors back under the TCPA. There was that time the ATDS definition turned on what a system might do in the future.

But this.

This, finally, is too much.

A collector of government-backed debt may be held liable under the TCPA for calls made at a time that the TCPA specifically-permitted such calls. That according to a federal district court in Delaware.

What’s more, the Court perceived no First Amendment or Due Process issues here.

So a caller can be sued for doing precisely what the statute said it could do at the time, and the evaporation of the defense–which the Court rules “was never really there to begin with”– operates retroactively.

I’m telling you. This is just too much.

Ok, where to start?

In AAPC you will all recall, the Supreme Court converted the First Amendment into an ironing board and held that the Constitution does not actually protect speech, it just requires everyone to be able to speak the same limited amount.

All right, fine. We’re past that. But in reaching that ruling it struck down the government-backed debt exemption that existed from 2015-2020. Although the Supremes were sure that was the right result, SCOTUS really did not think through the consequences very clearly–in a footnote the Court’s plurality opinion found both that the ruling was and was not retroactive.

Specifically, the Court found that folks that had relied upon the debt exemption should not be held liable for calls placed while it existed. But, on the other hand, the Court found that folks who had made calls during that timeframe might still be held liable–despite the Constitutional limitations on unequal restriction on speech that had animated the ruling to begin with–because the exemption had never really existed, to begin with, since it was unconstitutional.

Yeah, it's one of those time-traveling paradox things. But more like Back to the Future and less like Tenet and not at all like Endgame.

Anyway, the “did it exist or not” battle has animated the huge fight over Creasy which may be the most financially-impactful ruling in American history.

But it also animates a fight over whether or not a business can be held liable for taking advantage of the government-backed debt exemption at the time it (may or may not have) existed.

And that brings us, at long last, to Franklin v. Navient, Inc., No. 1:17-cv-1640-SB, 2021 U.S. Dist. LEXIS 74265  (D. De.  April 19, 2021.) There it was held that a collector of government-backed debt can be sued for calls made pursuant to the government-backed debt exemption because the exemption was never really there to begin with.

Now at the time the calls were made, of course, the exemption was absolutely there. Right there in the text of the statute. And courts (all of them) were enforcing it. Even against this same Defendant. 

But the Franklin court holds that all of that was a mirage. The exemption never really existed. The Supreme Court went back in time and snatched it from the Act before it ever took effect. So Navient can be liable after all.

No. I’m serious.

Here’s the analysis:

AAPC addressed only what the Act means going forward. 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. As Justice Kavanaugh put it, the exception was “‘not law’ at all.” 140 S. Ct. at 2351 n.8 (quoting Marbury, 5 U.S. at 177). 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.

It made a mistake?

Now look, I can get on board with the hyper-technical ruling that AAPC evaporated the exemption before it occurred. There’s a certain level of meta-intellectual honest involved to get there, but I can get there. But I have to get off the bus before this next part.

The Court goes on to hold that the First Amendment and the Due Process clause tolerate the application of springing TCPA liability.

On the Due Process argument, it has long been observed that restrictions on speech must be clear and that liability cannot attach where vague or uncertain provisions are applied against a speaker. Here, of course, the restriction was clear–it clearly allowed the speech. Reading the statute in any way that would restrict speech that was specifically permitted would surely and absolutely fail due process review. Yet the Court finds, essentially–that’s life:

So if a court first rules that a statute allows an action, but later changes its mind, someone who acted in the meantime is liable.

The Court’s First Amendment analysis is similarly blunt– it points out that Navient’s lawyers just failed to raise the correct argument. Essentially Navient (according to the Court) simply lobbed the First Amendment at the Court and stopped. The Court recognized–as I’ve laid out above–that in the First Amendment context due process concerns are heightened but found that Navient had not explored or presented that issue fully:

There is some logic to treating civil speech restrictions like criminal laws under Bouie, just as we do for vagueness. Unexpected liability could chill free speech. Plus, Bouie and vagueness are two strands of the same fair notice requirement. But Navient has not developed this theory, and the Court has not extended Bouie beyond criminal cases.


So there you have it TCPAWorld. AAPC‘s ruling means that the government-backed debt exemption does not prevent you from being sued for calls you made when it existed, because it never really existed.

Except, that it did.


And now I’m dizzy.

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