Reversing Lower Decision, Appeals Court Allows Robocall Suit Against Retail Supplier To Move Forward

The 6th U.S. Circuit Court of Appeals will allow a suit against Realgy, LLC to continue as the Appeals Court found that a lower court erred in dismissing the suit by erroneously interpreting a recent Supreme Court case concerning robocalls.

In brief, the Supreme Court recently ruled that an amendment to a federal prohibition on robocalls to cell phones was unconstitutional, because such amendment exempted some forms of speech from the prohibition (collection of debts owed to the U.S.), which amounted to impermissible content discrimination

In doing so, the Supreme Court severed the unconstitutional prohibition, leaving the blanket prohibition on robocalls in tact.

The question before the Appeals Court is whether such severance of the unconstitutional prohibition applied prospectively, or retrospectively for the period of time since the law was amended (2015) until the Supreme Court ruling (2020)

The lower court agreed with Realgy that severance could only be prospective (as retroactive severance would result in a court impermissibly re-writing a law), and since severance could not be retrospective, therefore the entire amending statute establishing the robocall prohibition was invalid and could not be enforced. The lower court thus dismissed the suit

The Appeals Court disagreed, reversing the lower court, and observed that, "In 1982, the Supreme Court considered '[t]he principle that statutes operate only prospectively, while judicial decisions operate retrospectively' so obvious as to be 'familiar to every law student.' United States v. Sec. Indus. Bank, 459 U.S. 70, 79 (1982). Today, we clarify that severability is no exception. We reverse."

Reuters quoted an attorney for Realgy as stating that the Appeals Court's decision, "is a significant blow to free speech," and further stating that, "In reaching the incorrect conclusion that judicial severance always applies retroactively, regardless of Congress's intent, the panel ignored binding Supreme Court precedent."

Counsel for Realgy further told Reuters that the Appeals Court "mischaracterized" Realgy's arguments, and that Realgy is weighing its next action in light of the court's order.

More specifically, as described by the Appeals Court, "In 1991, Congress prohibited almost all robocalls to cell phones and landlines. Barr v. Am. Ass’n of Pol. Consultants, Inc. (AAPC), 140 S. Ct. 2335, 2344 (2020) (plurality opinion); 47 U.S.C. § 227(b)(1)(B). That seemed to change in 2015, when Congress attempted to enact an amendment to those broad prohibitions to allow robocalls if they were made 'solely to collect a debt owed to or guaranteed by the United States.'"

The Appeals Court further noted, "The amendment, however, was unconstitutional. So held the Supreme Court in AAPC. The Court determined that adding the exemption for government-debt robocalls would cause impermissible content discrimination. AAPC, 140 S. Ct. at 2347 (plurality opinion); id. at 2357 (Sotomayor, J., concurring in the judgment); id. at 2363 (Gorsuch, J., concurring in part and dissenting in part). The Court also held that the exception was severable from the rest of the restriction, leaving the general prohibition intact."

The Appeals Court further noted, "During its severability analysis, the three-justice plurality offered a brief footnote musing on the liability of parties who made robocalls between the exception’s enactment and the Court’s AAPC decision. Id. at 2355 n.12 (plurality opinion). Those justices thought that 'no one should be penalized or held liable for making robocalls to collect government debt after the effective date of the 2015 government-debt exception,' but that their decision 'does not negate the liability of parties who made robocalls covered by the robocall restriction.'"

As described by the Appeals Court, "In late 2019 and early 2020, Roberta Lindenbaum received two robocalls from Realgy, LLC advertising its electricity services. She sued, alleging violations of the robocall restriction."

The Appeals Court noted that, "After the Supreme Court decided AAPC, Realgy moved to dismiss the case for lack of subject-matter jurisdiction. The district court granted the motion. It reasoned that severability is a remedy that operates only prospectively, so the robocall restriction was unconstitutional and therefore 'void' for the period the exception was on the books. Lindenbaum, 497 F. Supp. 3d at 298–99. Because it was 'void,' the district court believed, it could not provide a basis for federal-question jurisdiction."

In its decision, the Appeals Court said, "On the merits, Realgy contends that severability is a remedy that fixes an unconstitutional statute, such that it can only apply prospectively. As a fallback, it argues that if it can be held liable for the period from 2015 to 2020, but government-debt collectors who lacked fair notice of the unlawfulness of their actions cannot, it would recreate the same First Amendment violation the Court recognized in AAPC. Neither argument has merit."

"To sum up, the district court erred in concluding that, in AAPC, the Supreme Court offered 'a remedy in the form of eliminating the content-based restriction' from the TCPA. Lindenbaum, 497 F. Supp. 3d at 297. Instead, the Court recognized only that the Constitution had 'automatically displace[d]' the government-debt-collector exception from the start, then interpreted what the statute has always meant in its absence. See Collins, 141 S. Ct. at 1788. That legal determination applies retroactively. Harper, 509 U.S. at 94," the Appeals Court said

Appeals Court Docket: No. 20-4252

Appeal from the United States District Court for the Northern District of Ohio at Cleveland, No. 1:19-cv-02862