New Supreme Court Decision Offers Hope That Sanity May Return

Author:
Eric J. Troutman

It’s an all too familiar story. Congress passes a consumer protection statute to remedy a perceived abuse–junk faxes and unwanted cell phone solicitations in the case of the Telephone Consumer Protection Act–with a per violation penalty (an automatic $500 per call and up to $1,500 for intentional violations). The class action bar looks at it as the next mother lode and starts mining. The factual underpinnings for the claims are limited only by class counsel’s imagination, which is boundless. The penalties multiplied by thousands of calls creates gargantuan exposure and the suits proliferate. The gold rush is on!

We recently took a run at limiting one of the more extreme misapplications of the TCPA in a case called Breslow v. Wells Fargo, 755 F.3d 1265 (11th Cir. 2014) The issue in Breslow was whether the phrase “called party” as used in the TCPA’s express consent exemption means “subscriber” or “intended recipient.” Obscure though it may seem, the definition of the phrase is actually of broad-ranging impact and determines, for instance, whether a dialer can be held liable for calls placed to its customer when the phone number has changed hands without the knowledge of the dialer. Spoiler alert: it can be.

We faced an uphill climb in Breslow because the Seventh Circuit had previously produced a decision, Soppet v. Enhanced Recovery Co., 679 F.3d 637 (7th Cir. 2012), finding, contrary to common sense, that the phrase “called party” means “subscriber.” Soppet was penned by the esteemed Judge Easterbrook and his ruling was not only antithetical to our position in Breslow, it heaped gratuitous scorn upon it. “The phrase ‘intended recipient’ does not appear anywhere in TCPA Section 227, so what justification could there be for equating ‘called party’ with ‘intended recipient of the call’?”, the decision inquires with disdain. Indeed, throughout the decision Judge Easterbrook finds repeated opportunity to point out just how silly it is to believe that “called party” might mean “intended recipient.”

The problem is, of course, that the notion is not silly at all. Congress crafted the express consent exemption to give the dialer a defense to the steep penalties imposed by the TCPA when it has permission to dial a number. Obviously a dialer can only obtain permission from someone it interacts with and can only use it with respect to someone it intends to call. Congress surely did not expect creditors, for example, to seek the consent of the person paying its customer’s cell phone bill before placing debt collection calls to a number the customer provided. For instance, a caller should not have to obtain an employer’s permission to make a call to one of its employees (its customer) about his or her account just because the employer is technically the subscriber on that phone line. As used in the express consent exemption, therefore, defining the phrase “called party” to mean “intended recipient” is far more logical, reasonable, and consistent with Congressional intent than defining the term to mean “subscriber.”

So what happened? How did Soppet get it so wrong?

The answer comes from the old presumption that a word or phrase in a statute means the same thing throughout the statute. Stripping away all of the rhetoric, Soppet’s reasoning is extremely simple–the phrase “called party” plainly means “subscriber” in some sections of the TCPA, and therefore the phrase means “called party” in all sections of the TCPA.

But not so fast. Case law is equally clear that the presumption in favor of interpreting the same phrase consistently throughout the statute does not apply when different portions of the statute are designed to further different objectives. That is the case here.

In approaching matters in Breslow, therefore, we argued that Soppet reached the wrong result because it applied the wrong analytic model. Rather than finding one possible definition of “called party” that worked within one portion of the statute and then stopping, the task–never attempted in Soppet–was to consider the best use of the phrase in the context of the express consent exemption so as to give effect to Congressional intent. We urged the Eleventh Circuit, therefore, to disregard Soppet and reach a contrary conclusion.

Unfortunately, we were headed off at the pass in Breslow by another Eleventh Circuit panel that ruled on the same issue after Breslow was argued. Osorio v. State Farm, 746 F.3d 1242 (11th Cir. 2014). Osorio followed Soppet. Breslow followed Osorio. The Eleventh Circuit ruled in Breslow that “called party” means “subscriber” throughout the statute. Simple as that.

But it’s not that simple.

The United States Supreme Court recently issued a ruling called Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014). The decision has nothing to do with the TCPA per se, but rather focuses on the authority of an administrative agency to interpret a statute and the limits of Chevron deference. The decision includes the following passage that gives hope that common sense will prevail, by analogy, in the TCPA realm:

One ordinarily assumes “‘that identical words used in different parts of the same act are intended to have the same meaning.’” In this respect (as in countless others), the Act is far from a chef d’oeuvre of legislative draftsmanship. But we, and EPA, must do our best, bearing in mind the “‘fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.’” As we reiterated the same day we decided Massachusetts, the presumption of consistent usage “‘readily yields’” to context, and a statutory term–even one defined in the statute–“may take on distinct characters from association with distinct statutory objects calling for different implementation strategies.”

134 S. Ct. at 2441 (emphasis added). That, of course, is what we argued in Breslow. The objective of the express consent exemption is to provide a meaningful defense to a dialer. That objective can only be met if the phrase is defined to mean “intended recipient” in that section, hence the presumption that identical words always mean the same thing must yield.

Unfortunately the ship has already sailed in Breslow. But hopefully Utility Air breathes life back into the argument for one of the many other pending cases that are working their way through the courts. Perhaps attorneys can advance this argument and bring a little common sense back to the TCPA.

For more information about the TCPA in general or Breslow in particular, please contact Eric J Troutman at ejt@severson.com.

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