Due Process Concerns Prevent TCPA Damages, Despite Barr, Says Colorado Federal Court

TCPA Connect


In the latest post-Barr development, a federal district court in Colorado held that the government-backed debt exception was always invalid, but found that due process concerns prevented enforcement of the Telephone Consumer Protection Act (TCPA) lawsuit against the defendant.

The case is Mehaffey v. Navient Solutions, LLC. The plaintiff, Tina Mehaffey, allegedly received dozens of calls from Navient Solutions seeking to recover payments for a student loan. She sued under the TCPA, as the calls were all attempts to reach someone by the name of Alexis Whitcomb, who purportedly provided the number to Navient in 2014 before it was reassigned to Mehaffey in 2018.

After Barr v. American Association of Political Consultants, Inc., was decided in 2020, severing the government-backed debt exception, the parties renewed their motions for summary judgment.

Although U.S. District Judge Robert E. Blackburn agreed with Mehaffey that the severance of the exception from the TCPA operated retroactively, he nevertheless declined to award damages against Navient.

Blackburn looked to the Barr decision for guidance, but found the conflicting opinions filed in the plurality decision unhelpful. Consequently, he returned “to first principles,” noting that judicial decisions apply retroactively, meaning that without the government debt exception in place, the calls Navient made to Mehaffey violated the TCPA.

However, when the court addressed how to account for Navient’s reliance on the exception—which was still part of the statute at the time the calls were made—Blackburn considered what happens when a party faces potential criminal liability for past acts that subsequently have been determined to be unlawful.

[D]ue process prohibits application of an unforeseen criminal penalty to conduct which at the time taken was lawful,” the court wrote. “As ‘private fines intended to punish the defendant and to deter future wrongdoing,’ punitive damages are ‘quasi-criminal’ in nature. For this reason, ‘[r]etroactive imposition of punitive damages would raise a serious constitutional question.’”

That question: Do the damages available under the TCPA constitute punitive damages?

Yes, Blackburn held.

“Aside from the fact that such treble damages are not tied to any notion of compensation for actual harm a plaintiff has suffered, they are available only on proof of willing or knowing violation of the law, which indicates an intent to punish such violations beyond the scope of what is ordinarily permitted under the statute,” he wrote. “I thus conclude the treble damages provisions of the TCPA are the functional equivalent of punitive damages.”

Because of the debt collector exemption in place at the time of the alleged calls, Navient could not have known it was violating the TCPA when it called Mehaffey, the court added, let alone have done so willfully.

“Yet where quasi-criminal punitive penalties are sought, due process demands a party have notice that its conduct will subject it to liability,” the court said. “Navient could not have foreseen, and was not required to foresee, that the exception would be found unconstitutional. Retroactively applying [Barr] to Ms. Mehaffey’s request for treble damages would deprive Navient of the due process to which it is entitled before being subjected to an award of quasi-criminal damages.”

Blackburn granted summary judgment in favor of Navient as to Mehaffey’s request for treble damages—as well as her request for statutory damages of $500 per violation.

In the U.S. Court of Appeals, Tenth Circuit, penalties in excess of actual damages are penal, he said. The court recognized that this was a minority position, citing a recent Delaware federal court decision.

“Nevertheless, lacking clearer or more persuasive authority … I conclude I am bound to adhere to the pronouncements of the Tenth Circuit and find the statutory damages provision of the TCPA constitute a penalty,” he wrote. “Thus, as with treble damages, because due process forbids the imposition of quasi-criminal penalties on a party who lacked notice that its conduct would subject it to liability, Navient is entitled to summary judgment on this aspect of Ms. Mehaffey’s claim as well.”

To read the order in Mehaffey v. Navient Solutions, Inc., click here.

Why it matters: The case demonstrates the continuing impact that the Barr decision is having on litigants. While a minority of courts have held that the entire autodialer provision was unconstitutional from when it was enacted to when Barr was decided, this court did not. Yet while the court agreed with the plaintiff that the defendant’s calls violated the TCPA because the severance of the government-backed debt exception meant it never existed, it also found that the defendant could not be liable for damages under the statute because they are quasi-criminal in nature. This argument could prove useful for defendants in the debt collection industry that hope to avoid costly statutory damages under the TCPA.

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