TCPA’s Content-Specific Government-Backed Debt Exemption Struck Down on First Amendment Grounds

This one is big. The Fourth Circuit Court of Appeals, in a first-in-the-nation result, just held that the TCPA violates the First Amendment because the government-backed debt exception is an unconstitutional, content-based restriction on speech. Unfortunately – and probably incorrectly – the court also held that the statute could be saved by severing the government-backed debt exception from the statute. See American Association of Political Consultants v. FCC, No. 18-1588 (4th Cir. 2019).

2015 turned out to be a big year for First Amendment challenges to the TCPA. That is when Congress enacted the government-backed debt exception to the TCPA and the Supreme Court decided Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015). The government-backed debt exception meant that calls placed by a private debt collector to collect debt owed to or guaranteed by the government are exempt from the TCPA, but calls from the exact same debt collector (or creditor) not so owed or guaranteed are subject to the TCPA.

The Fourth Circuit held, in a facial challenge to the TCPA’s constitutionality, that the government-backed debt exception renders the TCPA a content-based regulation. That is significant. A few district courts have reached that conclusion, but the Fourth Circuit is the first appellate court to do so. And in doing so, it rejected the argument that the government-backed debt exception regulates based on the relationship of the debtor and creditor, not the content of the speech. As the Fourth Circuit correctly held, the statute does not regulate based on a relationship at all. Instead, the exemption turns on whether a caller asks for payment on a government-backed debt versus a purely private debt – in other words, the content of call, not the relationship between the caller and called party.

Because the government-backed debt exception creates a content-based restriction, the TCPA is subject to strict scrutiny. Thus far, it has survived district court challenges based on an asserted compelling interest in “personal and residential privacy.” The Fourth Circuit made quick work of that argument. It held that, under Reed v. Town of Gilbert, the government-backed debt exemption itself has to serve a compelling interest and be narrowly tailored to that interest, not the statute as a whole. The court ultimately held that the exemption is not narrowly tailored to the asserted privacy interest.

Thus, in a first-in-the-nation result, the Fourth Circuit held that the TCPA is an unconstitutional, content-based restriction on speech.

So far, so good.

But unfortunately, the Fourth Circuit then turned to the severability issue and probably got it wrong. The court held that the TCPA can be saved by severing the government-backed debt exception. The court thus held that the way to save a statute that violates the First Amendment is to prohibit more speech.

Severability is often the correct course of action when only part of a statute is unconstitutional. But as multiple courts have held, that is not the case when severing a statute would result in prohibition of more speech. Ninth Circuit judges made that point several times in the Gallion argument. When a statute is a facially underinclusive, content-based restriction on speech, the remedy is to strike the entire statute, not prohibit speech that Congress plainly intended to allow. Otherwise, you have the odd result of a court prohibiting speech against the wishes of elected officials.

The Fourth Circuit’s decision does have two significant limitations that open the door for future First Amendment challenges. The first is that it only addresses a facial challenge, meaning that TCPA defendants can still attack the statute on an as-applied basis, even in the Fourth Circuit. The second is that the court declined to address the argument that FCC’s regulatory exemptions were also content-based because the plaintiffs disclaimed any intent to pursue it below. That limitation is very significant, because the various FCC’s regulatory exemptions allow defendants to challenge outright prohibitions on speech versus less-restrictive regulation applicable to certain types of content. Challenges properly raising that argument are currently working their way through lower courts.

Stay tuned, folks. The immediate take away from the case is that defendants in the Fourth Circuit are not able to rely on the government-backed debt exception. But although American Association of Political Consultants is significant, it is by no means the last word on the constitutionality of the TCPA. And the Ninth Circuit’s apparent reluctance to sever the statute in a manner that would restrict more speech just gained even more significance.

As always, we have you covered.

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