TCPA Update – Amendment Exempting Federal Debts Held Retroactive

April 12, 2016

A case out of the Northern District of California has ruled that recent amendments to the Telephone Consumer Protection Act (TCPA), 47 U.S.C. §227, that exempt federally guaranteed loans from TCPA liability, are retroactive. The TCPA prohibits certain calls made using automated dialing systems, commonly called “robocalls.” The 2015 legislation that approved the federal budget included a significant amendment to the TCPA, effective November 2, 2015. These amendments exempt certain businesses from the TCPA for calls made in connection with “collection of a debt owed to or guaranteed by the United States.”

This amendment appears to make it clear that collection calls made by servicers of federally backed mortgage loans and federally funded student loans are exempt from the TCPA. The most significant impact of the amendments is the freedom these businesses now have from often crippling class-action litigation under the TCPA.

The amendment itself did not specify whether it would apply retroactively. On March 31, 2016, the United States District Court for the Northern District of California ruled that the amendment does apply retroactively, and dismissed a lawsuit that was filed in 2014 (Silver v. Pennsylvania Higher Education Assistance Agency, USDC N.D. Cal. 14-cv-00652 PJH). Specifically, in the Silver case, a putative class action was brought against a federal student loan servicer, alleging violations of the TCPA based on alleged automated collection calls. In dismissing the action, the Silver court examined previous Supreme Court precedent on the issue of retroactive application of congressional amendments, specifically the 1994 case, Landgraf v. USI Film Products. The Silver court found that retroactive applicability of the amendment would not impair the plaintiff’s rights, and that “the amendment actually decreases liability for past conduct.”

Although district court opinions like Silver do not carry the same precedential value as appellate opinions from the Circuit Courts of Appeals or United States Supreme Court, this opinion could carry great weight, since it appears to be the only case in the country that has weighed in on the retroactivity of the recent TCPA amendment. Further, although this case discusses federal student lending, and not mortgages backed or owned by the various government-sponsored entities, this opinion has potential application to other TCPA cases brought against lenders and servicers of federally mortgage-backed loans, even if those cases were filed before the amendment’s effective date.