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WBK Industry News - Litigation Developments

9th Circuit Holds Federal Debt Collection Exception to TCPA Unconstitutional

The U.S. Court of Appeals for the Ninth Circuit recently (i) affirmed that court’s broad definition of an automatic telephone dialing system (ATDS) under the Telephone Consumer Protection Act (TCPA); and (ii) held that a 2015 amendment to the TCPA excepting calls “made solely to collect a debt owed to” the United States government was invalid. 

In the course of reinstating a putative class action against a large social networking site for its alleged use of an ATDS, a Ninth Circuit panel affirmed the definition of an ATDS from the court’s September 2018 decision in Marks v. Crunch San Diego: “equipment which has the capacity to—(1) to store numbers to be called or (2) to produce numbers to be called, using a random or sequential number generator—and to dial such numbers automatically.”  This definition differs greatly from the ones adopted by the Second and Third Circuits, which take a narrower view of ATDS.  In June 2018, the Second and Third Circuits had issued opinions which held that the definition of ATDS is limited to devices with the “present capacity” to function as an autodialer, by generating random or sequential telephone numbers and dialing those numbers.  

Additionally, the court severed the federal “debt-collection exception” from the TCPA as “an unconstitutional restriction on speech.”  The panel found that the exception was “content-based”—because it only excepted communicative content related to federal debt-collection—and thus, “incompatible with the First Amendment.”  The court stated that the plaintiff had standing to raise the constitutional issue despite the fact that the site’s 2014 conduct pre-dated the 2015 amendment, because the plaintiff adequately alleged a concrete injury in fact, where (i) plaintiff sought “damages on behalf of a putative class for violations that occurred in part in 2016;” and (ii) he had the right to “forward-looking injunctive relief based on the post-amendment TCPA.”  Seeking to show that the exception was not impermissibly content-based, the government argued that the exception “furthers a compelling government interest and is narrowly tailored to that end.”  However, the panel found contradictory the government’s stated interest in “personal and residential privacy,” “because robocalls to collect government debt are just as invasive of privacy rights as robocalls placed for other purposes.”  Additionally, the court disapproved of the government’s alleged alternative interest in “protecting the public fisc,” as the exception was not the least restrictive means to achieve that interest.  The Ninth Circuit thus joins the Fourth Circuit in holding that the so-called “debt-collection exception” violates the First Amendment.