What’s Up With That? District Court Refuses to Stay TCPA Case Despite SCOTUS Ruling Being Just Days Away

We are literally days (hours?) away from a huge SCOTUS ruling on the TCPA and some district courts are yet refusing to await the big decision. Interestingly–and despite the Czar pegging the chances of the TCPA going away at about 45%–these courts seem to have made up their mind that the Supreme Court is simply not going to do away with the statute. I guess the Supremes just took the review for fun?

For instance in Katz v. Liberty Power Corp., 2020 U.S. Dist. LEXIS 110162, the district Court for Massachusetts refused to stay a TCPA case pending the Supreme Court’s decision.

As background, the Katz case has been heavily litigated since 2018.  Recently the main Defendant had filed a motion to dismiss the TCPA claims based on the fact that the TCPA is an unconstitutional content-based restriction on speech, since under the government debt-collection exemption, a phone call’s legality depends on the content discussed during the call. In ruling on the motion to dismiss, the Court agreed with the Defendant that the TCPA was unconstitutional.  However, the Court held that the problematic portion of the statute ought to be severed because the statute has been operating for twenty years before the exemption was added, and further, the TCPA includes a “separability” provision allowing for a presumption of severability.  The Court noted it was following the Fourth and Ninth Circuits that have adopted the severability approach.

After the Court denied the Defendant’s motion to dismiss the TCPA claims, the Defendant filed a motion to stay the proceedings pending the Supreme Court’s imminent decision in Barr v. American Association of Political Consultants, Inc., 140 S. Ct. 812, 812 (2020) (i.e. based on the fact that the Supreme Court granted certiorari to specifically consider whether the government debt exemption is unconstitutional, and if it is, whether severability is the proper remedy).  The Court denied the Defendant’s motion to stay yesterday.

The Court began its reasoning highlighting that government backed debt collection is not an issue in the instant case.  Thus, the Defendant’s motion to stay could be clarified to its essence as: the Defendant moved to stay on the possibility that the Supreme Court will strike down the entire TCPA because the problematic provision is not severable.  The Court cited a few decisions from other jurisdictions before denying the stay.  The Court explicitly stated its position that it “understands that in the unlikely event that the Supreme Court decides to find the entire TCPA unconstitutional instead of severing the debt collection exception” the parties risk spending unrecoverable resources unnecessarily litigating.  However the Court did not deem these expenses to be irreparable nor significant, especially as oral arguments have already been heard by the Supreme Court, making the wait time for its decision minimal.  Another driving factor in the Court’s decision included that the Plaintiffs had previously documented a loss of evidence which would be exacerbated by a stay, and thus making a stay prejudicial to the Plaintiff.

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