On January 10, 2020, the Supreme Court agreed to review a Fourth Circuit decision challenging the constitutionality of an exemption to the Telephone Consumer Protection Act of 1991 (the “TCPA”). See Barr v. American Ass’n of Political Consultants, No. 19-631.

The TCPA was enacted in 1991 in response to unwanted, automated phone calls that affect many Americans on a daily basis. The TCPA broadly prohibits telephone solicitation through the use of “automatic telephone dialing systems.” See 47 U.S.C. § 227. However, in response to the rapid technological advancements since 1991, Congress has curtailed the provisions of the TCPA through the enactment of certain statutory exemptions.

In 2015, Congress enacted a third exemption to the TCPA, which allows for automated phone calls if “made solely to collect a debt owed to or guaranteed by the United States.” See Bipartisan Budget Act of 2015, Pub. L. No. 114-74, § 301(a), 129 Stat. 584, 588 (2015) (amending 47 U.S.C. § 227(b)(1)(A)(iii)) (the “federal exemption”). In 2016, the Supreme Court expanded the scope of the federal exemption in stating that “the United States and its agencies, it is undisputed, are not subject to the TCPA’s prohibitions.” See Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 672 (2016). Commentators believe that the federal exemption was instituted to address the federal student loan bubble and enable the government to collect on its debts through the use of private debt collection companies.

However, many businesses that wish to use automatic telephone dialing systems in an effort to reduce their operational expenses have objected to the federal exemption on the grounds that it is a content-based restriction on free speech. For example, in May 2016, the American Association of Political Consultants, Inc. (“AAPC”) sought to challenge the federal exemption in its lawsuit against the United States Attorney General and the United States Federal Communications Commission in the Eastern District of North Carolina. Am. Ass’n of Political Consultants v. Sessions, 323 F. Supp. 3d 737 (E.D.N.C.  2018).

Specifically, AAPC contended that Congress’s enactment of the federal exemption unconstitutionally favors one group of individuals to conduct itself in a manner that would otherwise be unlawful pursuant to the TCPA. To determine what persons or entities fall under the federal exemption requires an examination of the content of the speech contained in the automated calls, which is a violation of the Free Speech Clause under strict scrutiny review. The Eastern District of North Carolina rejected AAPC’s argument and granted summary judgment to the Government. The District Court found that the content-based restriction of speech satisfies the strict scrutiny analysis, and the Fourth Circuit examined the issue on appeal.

The Fourth Circuit ultimately determined that the District Court erred in granting summary judgment to the Government because the federal exemption fails strict scrutiny review. “In order to survive strict scrutiny, the Government must show that the debt-collection exemption has been narrowly tailored to further a compelling governmental interest.” Am. Ass’n of Political Consultants, Inc v. FCC, 923 F.3d 159, 167 (4th Cir. 2019) (citing Reed v. Town of Gilbert, 135 S. Ct. 2218, 2231 (2015)). The Fourth Circuit asserted that the content-based restriction in the federal exemption fails the strict scrutiny test because the exemption violates the privacy protections afforded by the TCPA and the overall impact stemming from the exemption circumvents the overall purpose of the TCPA.

Accordingly, the Supreme Court’s decision in Barr v. American Ass’n of Political Consultants will have lasting effects on the TCPA landscape, especially in the class-action context. If the Supreme Court agrees with the Fourth Circuit’s conclusion that the federal exemption is unconstitutional, Congress may be forced to revamp or eliminate the TCPA all together. Specifically, if the federal government wishes to continue to operate its debt collection practices pursuant to the federal exemption, all businesses may need to be permitted to use automatic telephone dialer technology, thus, effectively eliminating some of the TCPA’s most stringent requirements. This, in turn, may drastically reduce the number of class-action lawsuits brought around the country. However, if Congress chooses to eliminate the federal exemption in response to the Supreme Court’s decision, businesses will remain restricted from use of the technology and the federal government’s third-party debt collection companies may need to find alternative measures to conduct its business practices.

UPDATE: May 8, 2020
By Samantha Lewis

On May 6, 2020, the Supreme Court heard the oral arguments in Barr v. American Ass’n of Political Consultants, No. 19-631 via teleconference. The primary issue in Barr is whether the government debt collection exemption to the Telephone Consumer Protection Act violates the First Amendment’s free speech clause, and if so, whether the proper remedy would be severing the exemption.

A significant portion of the oral arguments focused on the viability of a severance remedy rather than the First Amendment issue. Accordingly, this may signal that the majority may consider the exemption to be an unconstitutional content-based restriction on free speech, which cannot withstand a strict scrutiny analysis. However, it was fairly clear that the Justices are against invalidating the TCPA all together due to its popularity and the importance of consumer privacy interests.

It is not clear if a decision will be issued by June 2020 given the coronavirus pandemic. However, whenever the decision is published, it will likely impact at least portions of the TCPA, which will in turn affect litigants’ abilities to utilize the TCPA in the class action context.