For nearly five years, the TCPA explicitly excluded from liability calls made to collect government-backed debt. Naturally, government debt collectors relied on this exception and called debtors without fear of TCPA liability. In 2020, the Supreme Court ruled that this exception was unconstitutional and severed it from the statute. Now, a federal district court has ruled that government debt collectors may be liable for calls made prior to the Supreme Court Ruling, despite their reasonable reliance on the exception. In doing so, the court brushed aside due process concerns.
As previously reported, the government debt exception was severed from the statute by the Supreme Court’s decision in Barr v. AAPC. The AAPC decision was highly fractured—with the Court issuing four opinions but none commanding a majority. Since, district courts have been grappling with AAPC means for the statute.
For instance, several federal district courts have questioned whether they may enforce the statute as to claims based on alleged conduct that occurred while the exception was in place, i.e. from November 2, 2015 through July 6, 2020. Further complicating the judicial landscape is a recent opinion from the District of Delaware in Franklin v. Navient, Inc., No. 1:17-CV-1640-SB, 2021 WL 1535575, at *1 (D. Del. Apr. 19, 2021). In Franklin, the court took the unusual view that because the government debt exception was found to be unconstitutional, calls to collect government debt made while the exception was part of the statute are actionable despite a caller’s lack of notice that the exception was unreliable.
In Franklin, Navient robocalled Franklin eighty-six times between 2015 and 2017 to collect his government-backed student loan. Franklin brought a TCPA action against Navient. In September 2019, the court granted summary judgment for Navient, limiting the case to calls made prior to the November 2015 enactment of the exception. In July 2020, the Supreme Court in Barr found the government debt exception unconstitutional. In November 2020, Franklin filed a motion to alter the award of summary judgment, arguing that Navient could not rely on the exception because AAPC found it unconstitutional. Navient argued that even though the exception was unconstitutional, it was on the books—so Navient lacked fair notice that its calls were illegal. According to Navient, imposing liability for calls that were, at the time, expressly permitted by the statute at the time would violate due process and the First Amendment.
The court rejected Navient’s argument, reasoning that “[i]n civil cases, courts may apply surprising rulings to past acts. There is no exception for free speech. . . .” Id. at *2. On that basis, the court concluded that AAPC applies retroactively.
As to Navient’s argument that it lacked notice, the court stated, “[I]t had no right to more notice,” and, “Due process does not bar retroactive civil decisions.” Id. at *3. The court reasoned that it was merely recognizing “a civil duty that existed the whole time.” Id. As to Navient’s First Amendment concerns, the court found that because the TCPA imposes civil (not criminal) liability, applying it unexpectedly would not violate the First Amendment. Id. at *4.
The Franklin court recognized that its imposition of liability on government debt collectors defies the expectations of the AAPC plurality, but concluded that their expected result did not seem workable:
Id. at *5.
The Franklin court further acknowledged that AAPC “addressed only what the [TCPA] means going forward.” Id. at *3. But then reasoned that “if the exception was void the day it was passed . . . then it never took effect. As Justice Kavanaugh put it, the exception was ‘not law at all’” Id. (quoting AAPC, 140 S. Ct. at 2351 n.8).
While the Franklin court’s findings as to retroactivity were decidedly plaintiff friendly, the court found for the defendant on damages. The court determined that the statutory damages of $500 per call were so disproportionate to any damages that Franklin suffered, that they were quasi-criminal, and therefore Franklin could “not get the full $500” per call automatically. Id. Rather, he would need some proof of losses to recover. Id.
Whether other courts will follow Franklin remains to be seen. The only thing we know for sure is that AAPC has caused murkiness for litigants and courts alike.
The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.