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 in Lindenbaum v. Realgy, LLC 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.