ACA International v. Maura HealeyACA International v. Maura Healey
MEMORANDUM AND ORDER ON PLAINTIFF‘S MOTION FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION
STEARNS, D.J.
Plaintiff ACA International (ACA) seeks a temporary restraining order and preliminary injunction enjoining Maura Healey, the Attorney General of Massachusetts (Attorney General) from enforcing
BACKGROUND
ACA is a registered Minnesota non-profit trade association with more than 2,300 members who work in the credit-and-collection industry (some within and others outside of Massachusetts), including in their ranks first-party creditors, debt buyers, and collections agencies.1 ACA provides its members products, services, and publications, including educational and compliance-related information. That ACA has standing to litigate this case is not a matter in dispute. See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 181 (2000).
The Attorney General issued the Regulation pursuant to
[f]or the ninety (90) days following the effective date of this regulation or until the State of Emergency Period expires, whichever occurs first, it is an unfair or deceptive act or practice for any creditor, including a debt collector, to: (a) initiate, file, or threaten to file any new collection lawsuit; (b) initiate, threaten to initiate, or act upon any legal or equitable remedy for the garnishment, seizure, attachment, or withholding of wages, earnings, property or funds for the payment of a debt to a creditor; (c) initiate, threaten to initiate, or act upon any legal or equitable remedy for the repossession of any vehicle; (d) apply for, cause to be served, enforce, or threaten to apply for, cause to be served or enforce any capias warrant; (e) visit or threaten to visit the household of a debtor at any time; (f) visit or threaten to visit the place of employment of a debtor at any time; and (g) confront or communicate in person with a debtor regarding the collection of a debt in any public place at any time.
[f]or the ninety (90) days following the effective date of this regulation or until the State of Emergency Period expires, whichever occurs first, it shall be an unfair or deceptive act or practice for any debt collector to initiate a communication with any debtor via telephone, either in person or by recorded audio message to the debtor‘s residence, cellular telephone, or other telephone number provided by the debtor as his or her personal telephone number, provided that a debt collector shall not be deemed to have initiated a communication with a debtor if the communication by the debt collector is in response to a request made by the debtor for said communication.
(Emphasis added).
The term “debt collector” is defined in
any person or business whose principal purpose is the collection of a debt, or who regularly collects or attempts to collect, directly or indirectly, a debt owed or due or asserted to be owed or due another. The term debt collector shall also include any person who buys or acquires debt that is in default at the
time of purchase or acquisition and who seeks to collect such debt. The term debt collector shall include a creditor who, in the process of collecting his own debt, uses any name other than his own which would indicate that a third person is collecting or attempting to collect the debt. The term debt collector shall also include a person in a business the principal purpose of which is the enforcement of security interests.
While the Regulation bars debt collectors from initiating telephone calls to consumers and creditors or seeking legal recourse on any matter involving a debt,
ACA members complain that their only alternative to telephone calls for the foreseeable future is letters, which “rarely yield collection results for a large proportion of the accounts in inventory and are largely used to convey the consumers’ rights under federal and state law.” Compl. ¶ 44. Also, ACAI represents that in the case of its medical provider clients, it provides information over the telephone about charity care and other health care programs for which distressed consumers may be eligible, some of which are time sensitive.
ACA‘s Complaint asserts the following claims against the Regulation - Count I and II - violations of the First Amendment; Count III - violation of the Massachusetts Anti-Slapp statute; Count IV - infringement of the Massachusetts common-law litigation privilege; Count V - violation of the Due Process Clause of the Fourteenth Amendment; Count VI - denial of Equal Protection; Count VII - violation of the separation of powers under the federal and state constitutions; and Count VIII - unlawful expansion of the Attorney General‘s regulatory authority under Chapter 93A. ACA filed for an emergency temporary restraining order on April 20, 2020, followed by a motion for an expedited hearing on April 24, 2020. The court allowed the motion for an expedited hearing and held a video conference on May 1, 2020.
STANDARD FOR INJUNCTIVE RELIEF
The standard for issuing a temporary restraining order is “the same as for a preliminary injunction.” Bourgoin v. Sebelius, 928 F. Supp. 2d 258, 267 (D. Me. 2013). In order for a court to grant this species of relief, a plaintiff “must establish that [it] is likely to succeed on the merits, that [it] is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in the public interest.” Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26, 32 (1st Cir. 2011), quoting Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).4 In
DISCUSSION
Before turning to the ACA‘s likelihood of success on the merits, let me note that much of plaintiff‘s briefing is addressed to issues of state law. Among these are whether the Attorney General in issuing the Regulation exceeded the authority granted her by the Legislature under the Massachusetts Consumer Protection Statute,
These are matters of genuine importance, but I agree with the Attorney General that it is not for a federal court to police the boundaries of a state constitution for violations by its officials. This is for important reasons of Eleventh Amendment sovereign immunity as well as respect for comity among sovereign judicial systems. As established in a long line of cases flowing from Ex parte Young, 209 U.S. 123 (1908), the injunctive power of a federal court over state officials is defined and confined by the extent that such relief is necessary to vindicate a violation of federal law. See Edelman v. Jordan, 415 U.S. 651, 664 (1974) (“Petitioner concedes that Ex parte Young, supra, is no bar to that part of the District Court‘s judgment that prospectively enjoined petitioner‘s predecessors from failing to process applications within the time limits established by the federal regulations.“); Idaho v. Coeur d‘Alene Tribe of Idaho, 521 U.S. 261, 277 (1997), quoting Papasan v. Allain, 478 U.S. 265, 277 (1986) (citation and internal quotation marks omitted) (“The [Ex parte Young] exception has been ‘tailored to conform as precisely as possible to those specific situations in which it is necessary to permit the federal courts to vindicate federal rights.‘“).
As cautioned by the Supreme Court in Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 106 (1984): “[I]t is difficult to think of a greater intrusion on state sovereignty than when a federal court instructs state officials on how to conform their conduct to state law.” It is true that in a footnote in Pennhurst, the Court admitted of a possible exception when a state official is acting ultra vires, see id. at 101 n.11, an argument that counsel for ACA raised at oral argument. However, as the Court further explained, “a state officer may be said to act ultra vires only when [s]he acts ‘without any authority whatever,‘” id., quoting Fla. Dep‘t of State v. Treasure Salvors, Inc., 458 U.S. 670, 697 (1982), while a claim as is made here that she erred in the exercise of the authority that had been delegated to her, is not sufficient, id.
Likelihood of Success on the Merits
ACA took the position in its motion for a temporary restraining order that the disputed speech of its members is “pure” speech for First Amendment purposes, and that any restriction based on its content faces strict scrutiny in a reviewing court. See Pl.‘s Mem. at 8-14.6 Content-based restrictions on expressive speech in traditional public fora are “presumptively invalid” under the First Amendment, R.A.V. v. City of St. Paul, Minn., 505 U.S. 377, 382, 394 (1992), while “time, place, [and/]or manner” restrictions which are content-neutral are, on the other hand, subject to intermediate scrutiny, Nat‘l Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 736, 741 (1st Cir. 1995). The test of content-neutrality “is whether government has adopted a regulation of speech because of disagreement with the message it conveys.” Globe Newspaper Co. v. Beacon Hill Architectural Comm‘n, 100 F.3d 175 (1st Cir. 1996), quoting Nat‘l Amusements, 43 F.3d at 737.
In applying strict judicial scrutiny, the operative test is whether a regulation “is necessary to serve a compelling state interest and is narrowly drawn to achieve that end.” Arkansas Writers’ Project, Inc. v. Ragland, 481 U.S. 221, 231 (1987). Where intermediate scrutiny pertains, restrictions on the time, place, or manner of protected expression “are valid provided that they are justified without reference to the content of the regulated speech, that they are narrowly tailored to serve a significant governmental interest, and that they leave open ample alternative channels for communication of the information.” Clark v. Cmty. for Creative Non-Violence, 468 U.S. 288, 293 (1984).
As Clark implies, not all speech is created equal. As First Amendment jurisprudence has evolved, the Supreme Court has recognized a distinction between expressive, or as it is sometimes labeled, “political” speech,7 and what has come to be known as “commercial” speech, that is, “expression related solely to the economic interests of the speaker and its audiences.” El Dia, Inc. v. P.R. Dep‘t of Consumer Affairs, 413 F.3d 110, 115 (1st Cir. 2005), quoting Central Hudson Gas & Elec. Corp. v. Pub. Serv. Comm‘n, 447 U.S. 557, 561 (1980).
Commercial speech, because it is untethered to the general public interest, is accorded less First Amendment protection than its more exalted cousin. At its fringes, commercial speech that is misleading may be banned altogether. Rocket Learning, Inc. v. Rivera-Sánchez, 715 F.3d 1, 13-14 (1st Cir. 2013). But the mere fact that speech proposes a commercial transaction does not mean that the First Amendment drops altogether from the picture. A State has no constitutional power to suppress “truthful, nonmisleading commercial messages.” 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 501 (1996) (plurality opinion).
In part, commercial speech is defined by its primary economic motivation. Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 67 (1983). The speech at issue here cannot be categorized as anything but commercial. This is true even when, as ACA argues, its members are in their “good cop” mode, “work[ing] with consumers and their creditor-clients to exhaust all options before resorting to litigation and to honor crisis-related requests to forbear on existing legal remedies during national or state-specific emergencies.” Pl.‘s Mem. at 3. After all, “good cop or “bad cop,” the aim is to persuade, or in the worst case, intimidate, a debtor into making payment. Nonetheless, as the Supreme Court has made clear, commercial speech, properly defined, “is entitled to the protection of the First Amendment, albeit to protection somewhat less extensive than that afforded ‘noncommercial speech.‘” Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 637 (1985). That level of protection falls, if not always neatly, into the category of “intermediate scrutiny,” as guided by the factors set out in Central Hudson, 447 U.S. at 566.8
Under the Hudson test, “[a]t the outset, [a court] must determine whether the expression is protected by the First Amendment.” Id. If the answer is “yes,” there are three more questions to be answered: (1) is the asserted governmental interest substantial; (2) does the disputed regulation advance that governmental interest; and (3) is the regulation no more extensive than necessary to serve that interest. Id.
In turning to the first of the Hudson tests, it is apparent that
The third of the asserted state interests, vouchsafing the financial wellbeing of Massachusetts residents, seems to have little to do with the prohibition of only one form of communication facilitating collection of payment on a debt, that is, a telephone call. While the Regulation promises some relief from unwanted telephone calls, it does not pretend to offer any relief from the debt itself or the obligation to repay it in full. The supporting cases cited by the Attorney General, Yakus v. United States, 321 U.S. 414 (1944), and Block v. Hirsh, 256 U.S. 135 (1921), are not concerned with debt relief or debt collection but with the legality of wartime rent control and price control regimes that weigh directly on landlords and purveyors, not debtors. More importantly, these cases have nothing to do with the suppression of speech. The case that appears most on point, Home Building & Loan Ass‘n v. Blaisdell, 290 U.S. 398 (1934), which upheld a Minnesota state law permitting mortgagees to delay foreclosure on their homes, also does not involve any issue of speech. Moreover, it has even less pertinence as the Attorney General‘s Regulation explicitly exempts the collection of mortgage and tenant debts from the telephone ban.
The second asserted governmental interest – preserving domestic tranquility – stands on somewhat firmer ground, as a “residential privacy” interest has been recognized by several lower courts in rejecting analogous First Amendment challenges to the restrictions on consumer contacts set out in the Telephone Consumer Protection Act. See, e.g., Moser v. Fed. Communications Comm‘n, 46 F.3d 970, 974 (9th Cir. 1995). I will assume for present purposes that preserving domestic tranquility is a sufficiently significant state interest for the Regulation to pass muster under the second prong of Hudson.
At the third step in Hudson, the Attorney General must show that the Regulation advances the interest in preserving domestic tranquility to a “material degree.” 44 Liquormart, 517 U.S. at 505. At the fourth step, she must show that the restriction on speech imposed by the Regulation in safeguarding that interest is not more extensive than necessary, Central Hudson, 447 U.S. at 564, or phrased differently, that the government could not have achieved its interest in preserving domestic tranquility “in a manner that does not restrict speech, or that restricts less
The best that can be said for the Regulation is that it decreases incrementally the number of times that a phone might ring in a debtor‘s home with a wanted or unwanted call from one species of debt collector – although in this day and age of cell phones and caller ID the option of simply not answering the phone or placing it in silent mode is a viable alternative for consumers. I say incrementally because the prior supplanted regulation had already imposed a limit of two calls per week by debt collectors. The Regulation does not insulate a home dweller from debt collection efforts – mortgagors, landlords, and nonprofit entities, among others are excepted from the ban – rather it singles out one group debt collectors and imposes a blanket suppression order on their ability to use what they believe is their most effective means of communication, the telephone.9 If what the
Attorney General meant to accomplish by way of the Regulation was a strict-liability ban on all deceptive and misleading debt collection calls, the Regulation is redundant as that is already the law, both state and federally.
Like Chapter 93A, the Federal Trade Commission Act (FTCA),
The Massachusetts statute at issue here, Chapter 93A, straightforwardly declares that “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are . . . unlawful.”
Mass. Gen. Laws ch. 93A, § 2(a) . “[T]he intent of the legislature” is that a court hearing a Chapter 93A claim will be “guided by the interpretations given by the Federal Trade Commission and the Federal Courts to section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. [§] 45(a)(1) ), as from time to time amended.”Mass. Gen. Laws ch. 93A, § 2(b) . The statute permits the Massachusetts Attorney General to implement “rules and regulations interpreting the provisions” of Chapter 93A, but these “shall not be inconsistent with the rules, regulations and decisions of the Federal Trade Commission and the Federal Courts interpreting the provisions of the” Federal Trade Commission Act, “as from time to time amended.”Mass. Gen. Laws ch. 93A, § 2(c) .
McDermott v. Marcus, Errico, Emmer & Brooks, P.C., 775 F.3d 109, 116 (1st Cir. 2014) (alterations in original). The First Circuit has found that “[i]t follows that, because Massachusetts has folded the FTC Act into Chapter 93A, unfair or deceptive conduct that violates the FTC Act also violates Chapter 93A.” Id. at 122.
More specific to the Attorney General‘s purpose, the Federal Debt Collection Practices Act (FDCPA),
The Consumer Financial Protection Act (part of the Dodd-Frank Act) also allows the Consumer Financial Protection Bureau to identify and prohibit unfair, deceptive, or abusive acts and practices by certain debt collectors. See
Moreover, Massachusetts has its own unfair debt collection statute,
As is pointed out in ACA‘s brief, the Attorney General has issued comprehensive debt-collection regulations (see
DOB Regulation
While I laud the Attorney General‘s desire to protect citizens of Massachusetts during a time of financial and emotional stress created by the Covid-19 pandemic, I do not believe that the Regulation adds anything to their protections that the existing comprehensive scheme of law and regulation already affords to debtors, other than an unconstitutional ban on one form of communication.
In addition to the
The First Amendment provides that “Congress shall make no law . . . abridging . . . the right of the people . . . to petition the Government for a redress of grievances.” The constitutional guarantee of the right of citizen access to the courts, state and federal, has been identified by the United States Supreme Court as “among the most precious of the liberties safeguarded by the Bill of Rights.” United Mine Workers of Am., Dist. 12 v. Illinois State Bar Ass‘n, 389 U.S. 217, 222 (1967); see also California Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972) (“The right of access to the courts is indeed . . . one aspect of the right of petition.“); NAACP v. Button, 371 U.S. 415, 433 (1963) (noting that First Amendment freedoms, including the right to petition, are “delicate and vulnerable, as well as supremely precious in our society” and therefore demand exacting protection).
As reiterated by the Court most recently in Borough of Duryea, Pa. v. Guarnieri, 564 U.S. 379 (2011):
This Court‘s precedents confirm that the Petition Clause protects the right of individuals to appeal to courts and other forums established by the government for resolution of legal disputes. “[T]he right of access to courts for redress of wrongs is an aspect of the First Amendment right to petition the government.” Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 896-897 (1984); see also BE & K Constr. Co. v. NLRB, 536 U.S. 516, 525 (2002); Bill Johnson‘s Restaurants, Inc. v. NLRB, 461 U.S. 731, 741 (1983); California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 513 (1972). . . . The right to petition applied to petitions from nobles to the King,
from Parliament to the King, and from the people to the Parliament, and it concerned both discrete, personal injuries and great matters of state.
Id. at 387, 395 (alteration in original);13 see generally, Benjamin Plener Cover, The First Amendment Right to a Remedy, 50 U. C. Davis L. Rev. 1741 (2017).
While not disputing that right of ACA members to access to the courts, the Attorney General argues that that the law nonetheless “permits measures that impose mere procedural obstacles to the vindication of substantive rights.” Def.‘s Opp‘n at 21. She cites as examples the Prison Litigation Reform Act‘s (PLRA) requirements that inmates exhaust available administrative remedies before filing a lawsuit in federal court (i.e., prisoner must complete an application to qualify for in forma pauperis status or to request court permission prior to filing a new lawsuit if previously deemed a vexatious filer. See Rivera v. Allin, 144 F.3d 719, 725 (11th Cir. 1998) (the PLRA disqualification of some inmates from in forma pauperis status does not infringe the right of petition because it is “purely procedural” and “in no way prescribe[s] rules of decision“). Putting aside the fact that prisoners enjoy fewer constitutional protections than ordinary citizens, see, e.g., Overton v. Bazzetta, 539 U.S. 126, 133-135 (2003), the PLRA does not divest an inmate of any remedies at all, it simply requires a resort to administrative remedies before invoking judicial relief. The analogy, in other words, does not fit.
The Attorney General argues, as with the ban on telephonic communication, that the Regulation is temporary and as “[a]ll state statutes of limitation have been tolled, . . . no creditor will find itself without legal recourse for recovery of alleged debts. . . . Thus, the effect of § 35.03 is merely to delay a creditor‘s day in court, while temporarily protecting consumers from a method of debt collection that is uniquely threatening under the circumstances of the pandemic.” Def.‘s Opp‘n at 22.14 However, as the Court recognized in the Blaisdell mortgage case on which the Attorney General relies, the mere fact of an emergency does not increase constitutional power, nor diminish constitutional restrictions.15 Unlike § 35.03, the Minnesota law specified that “relief may be had
took evidence and issued a judgment after the Minnesota Supreme Court remanded the case requiring it to do so.17
Irreparable Harm
As the court has previously noted, a finding of a First Amendment violation obviates the need for an additional showing of irreparable harm. See Sindicato Puertorriqueño de Trabajadores, 699 F.3d at 10-11.18
Balance of the Equities; Public Interest
Given the plethora of protection provided to debtors by the laws and regulations the court has previously cited, the interest a debtor may have in the Regulation may not weigh as heavily as the threat of extinction faced by smaller collection agencies who have been effectively put out of business. Of perhaps greater concern is the impact the Regulation may have on hospitals and utilities who depend on collection agencies to remain solvent. Finally, the court recognizes the argument advanced by ACA that a capitalist society has a vested interest in the efficient functioning of the credit market which depends in no small degree on the ability to collect
ORDER
For the foregoing reasons, the court hereby enters a temporary restraining order enjoining the Attorney General from enforcing the provisions of the Regulation that ban telephonic communications initiated by the defined debt collectors with consumers in connection with the payment of a debt that is due and owing (the entirety of
SO ORDERED.
/s/ Richard G. Stearns
UNITED STATES DISTRICT JUDGE