On The Case

Retailers’ trade group crashes TCPA love-fest at Supreme Court

(Reuters) - Amicus briefs rolled into the U.S. Supreme Court this week in Barr v. American Association of Political Consultants, a case that could potentially lead to the invalidation of the Telephone Consumer Protection Act. For the most part, the amici backing the Justice Department’s defense of the TCPA’s constitutionality offer paeans to the anti-robocalling law. There are strange bedfellows among them: Indiana and several other conservative states, for instance, are not natural allies of the Democratic Senators and Representatives who submitted a brief extolling the TCPA as a “critical piece of legislation (that) prevents a countless number of unwanted robocalls every year, every day, and indeed every hour and minute.” But those right-leaning states and Democratic lawmakers, like the Electronic Privacy Information Center, Public Citizen and the National Consumer Law Center believe that the TCPA’s restrictions on autodialed calls to cellphones are either not subject to the First Amendment (because the TCPA restricts how speech is delivered, rather than the speech itself) or are constitutionally tailored to serve the government’s overwhelming interest in protecting people’s privacy.

And then there’s the brief from the Retail Litigation Center – a true skunk at the TCPA garden party. Nominally, the trade group is not supporting the Justice Department or the AAPC, which, as I’ll explain, contends that a 2015 amendment to the TCPA is unconstitutional. But the brief’s message is clear: The TCPA’s real beneficiaries are not consumers frustrated by unwanted robocalls but plaintiffs’ lawyers. And its real victims, according to the brief, are not scamsters but legitimate businesses facing “massive liability for communications far removed from the harassing, unwanted telemarketing calls that motivated the statute’s enactment.”

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I doubt the fate of the entire TCPA is at stake in the AAPC case. In the 2019 ruling  under review, the 4th U.S. Circuit Court of Appeals deemed unconstitutional a 2015 provision exempting private collectors of government debt from TCPA liability. The appeals court found that the exemption was a content-based restriction on speech and therefore violated the First Amendment. But the 4th Circuit also said the problematic exemption could be severed from the rest of the law, which has been in effect for nearly 30 years. The 9th Circuit reached precisely the same conclusion about both the constitutionality and severability of the government debt collection provision in its subsequent ruling in Duguid v. Facebook. (More on that below!)

To be sure, the Justice Department and most of its amici argue that the circuits were wrong about the constitutionality of the 2015 provision. It defies common sense, they contend, to find a provision that actually loosens restrictions on speech – remember, the 2015 exemption allows government debt collectors to make robocalls that would otherwise be subjected to TCPA liability – is a violation of the First Amendment. But even if the Supreme Court finds the 2015 amendment to be unconstitutional, DOJ and its backers argue, the answer is not to strike down the entire TCPA but simply to invalidate the exemption for government debt collectors. After all, they pointed out, the TCPA has been up and running for decades, and no court found the law to be unconstitutional before Congress added the 2015 provision.

“Now is not the time to eliminate the TCPA auto-dialer ban,” EPIC’s brief said. “Severance would bolster privacy protection and address any problem of under-inclusiveness. The alternative—jettisoning the entire auto-dialer ban—would … undermine the government’s substantial interest, well established over 30 years, to protect consumers from unwanted automated calls.” (For details on why robocalls are a pervasive scourge, I recommend the amicus brief of the National Consumer Law Center, which was joined by Verizon and the Consumer Federation of America, which explains how unscrupulous telemarketers are constantly running a step ahead of regulators.)

The brief from the Retail Litigation Center and the National Retail Federation, filed by counsel of record Joseph Palmore of Morrison & Foerster, provides a counterpoint to all that TCPA love, even while taking no position on the actual questions presented in the AAPC case. The brief argues that it would be just fine with retailers and other legitimate businesses that communicate by phone and text with consenting customers if the Supreme Court were to invalidate the TCPA entirely. Striking down the law, the brief said, “would provide relief from an arbitrary and punitive regime that actually harms customers by chilling retailers’ ability to provide communications customers want and need.”

The TCPA has been a favorite scapegoat of the business lobby for years. As TCPA class actions have proliferated – from 14 suits in 2008 to nearly 5,000 in 2016, according to the retailers’ brief – the U.S. Chamber and other trade groups have lobbied hard to rein in the law. They have argued, among other things, that they’re unfairly on the hook for calling reassigned phone numbers or numbers mistakenly entered by customers who have consented to receive calls and texts. (The retailers’ brief notes a concurrent rise in the number of demand letters from individual call recipients, threatening to file class actions unless companies settle quickly.) TCPA settlements are also ballooning, the brief said: 21 cases filed in the last 10 years have settled for $10 million or more. Nine class actions have settled for $30 million or more.

The retailers’ brief boldly posits that the TCPA is chilling speech in contravention of the First Amendment -- not because of the 2015 exemption for government debt collectors or because of the law’s restrictions on autodialing but because fear of exposure to litigation is “discouraging legitimate businesses from sending desired communications to their customers.” Ditching the law, the brief said, will eliminate this impediment to useful communications.

We may see more amicus briefs like the retailers’ after the AAPC, represented by Latham & Watkins, weighs in. And even though the AAPC case seems to be an unlikely vehicle for killing the TCPA altogether, the retailers’ brief is bringing business’ complaints about TCPA litigation to the justices’ attention.

And if the Supreme Court decides the AAPC case narrowly, there’s another big TCPA case awaiting their review. I mentioned that the 9th Circuit’s ruling in Duguid v. Facebook tracked the 4th Circuit’s AAPC ruling on the issue of the constitutionality of the 2015 exemption. But the 9th Circuit’s Facebook decision also weighed in on another controversial TCPA issue, concluding that defendants can be liable for automated calls and texts to phone numbers stored in databases. Facebook petitioned the Supreme Court for review on both the 2015 exemption and the autodialer definition issues. Ordinarily, the autodialer question would be a strong contender for the justices’ attention because there’s an entrenched (and deepening) split among the federal circuits. But the Supreme Court appears to be waiting to resolve the AAPC case before deciding whether to grant Facebook’s petition.

If retailers and other businesses can’t rein in the TCPA in the AAPC case, in other words, they’ll try again in Facebook. Based on the retailers’ brief, they’ve got nothing to lose except litigation risk.