Circuit Court Sides with Debt Collector in Reversing Controversial TCPA Ruling

The Eleventh Circuit Court of Appeals Monday unanimously reversed a lower court ruling in Mais v. Gulf Coast Collection Bureau, a case that was extremely controversial in the debt collection industry due to the district judge deliberately ignoring an FCC ruling regarding consent to call a cell phone.

Monday’s decision and opinion is seen as a major victory for debt collectors.

Not only was the original District decision ruling the subject of ire in the ARM industry, it was also  contentious in judicial circles as many other District judges recently began backing away from the reasoning.

Facts of the Case

Plaintiff Mark Mais sought medical treatment at a Florida emergency room in 2009. His wife filled out and signed admissions documents on his behalf, providing the hospital with personal information including Mark’s cell phone number. The forms also included a fairly standard notice that the information could be provided to and used by others should further medical care or bill payment issues arise.

The patient’s debt went unpaid and the account was forwarded to collections. Gulf Coast Collection Bureau was contracted to recover the debt. The firm used an automated dialing system to call Mais’s cell phone “between 15 and 30 times” and left a total of four messages.

Mais then sued Gulf Coast claiming violations of the TCPA for using an automated dialing system to call a cell phone without prior express consent. He also pushed to certify the case as a class action.

The 2008 FCC Declaratory Ruling

Gulf Coast immediately moved for summary judgment and dismissal, relying in part on a declaratory ruling issued in 2008 by the Federal Communications Commission, the federal agency that administers the TCPA.

In that ruling, the FCC concluded that when a consumer provides a cell phone number to a creditor – like on a credit application, or on an admissions form —  auto-dialed and pre-recorded message calls to wireless numbers were “deemed”  permissible under the Telephone Consumer Protection Act (TCPA) as calls made with the  “prior express consent” of the called party.  The FCC went on to conclude that “calls placed by a third party collector on behalf of that creditor are treated as if the creditor itself placed the call.”

A case came shortly after that tested the FCC’s 2008 “consent” ruling in Leckler v. Cash Call.  In Leckler, a California Federal District Court concluded that the FCC’s consent ruling was “manifestly contrary” to the TCPA and the court refused to follow it. But the decision was ultimately vacated pursuant to the Hobbs Act.  Under the Hobbs Act, only Federal Courts of Appeals are vested with the exclusive jurisdiction to enjoin, set aside, suspend, or to determine the validity of final orders of the FCC.

In Mais, a 2013 case, the district judge ruled that the Hobbs Act did not deprive it of jurisdiction to review the FCC ruling. In setting aside the Hobbs Act, the judge ruled that the FCC’s order constitutes “implied consent,” not express consent as defined in the TCPA. This meant that the order could be disregarded when making decisions about prior express consent.

Further, the district court ruled that that even if the FCC’s 2008 ruling was applicable, the ruling does not apply to medical debts; rather, the District Court opined that the 2008 consent ruling only pertained to consent in the context of consumer retail credit transactions.

The Circuit Court’s Opinion

The three-judge panel in the Eleventh Circuit yesterday disagreed with much of the district court’s reasoning. First, it wrote bluntly that “the district court lacked jurisdiction to review the [FCC]’s interpretation” of prior express consent under the TCPA. The judges wrote that “Mais’s wife provided his cell phone number to the creditor, consistent with the meaning of prior express consent announced by the FCC in its 2008 Ruling.”

The Circuit Court also explained that the FCC’s 2008 consent ruling applies to all creditors and collectors when calling wireless telephone numbers to recover goods and services received by consumers.  Debt collection is primarily regulated by the FDCPA, which includes medical bills within its broad definition of debt.  The collection of medical debt falls within the purview of the FCC’s 2008 consent ruling.

The Court reversed the lower court ruling and remanded the case to the district court with instructions to enter summary judgment in favor of Gulf Coast on its prior express consent defense.

But the Saga May Continue

Monday’s ruling is precedential, but is binding only in the Eleventh Circuit, which covers Alabama, Florida, and Georgia.

There have been plenty of recent cases that directly addressed and disregarded the Mais lower court ruling. Earlier this year in Murphy v. DCI Biologicals Orlando, another district judge in Florida explicitly rejected the reasoning in Mais that found that district courts had the authority to review federal regulatory orders and sided with the defendant. In July, a federal judge in Maryland in Penn v. NRA Group also reviewed Mais writing that the decision has been “justly criticized because the District Court failed to recognize the exclusive statutory authority given by Congress to the courts of appeals to review FCC orders.”

But there have been decisions that went the other way. Just two weeks ago, a district judge in New York agreed with the original Mais ruling at the urging of the plaintiff. In Zyburo v. NCSPlus, the judge wrote “this Court agrees with the Mais Court that ‘[t]he FCC’s construction is inconsistent with the statute’s plain language because it impermissibly amends the TCPA to provide an exception for ‘prior express or implied consent.’”

It remains to be seen if other districts will now defer to the FCC’s ruling.

David Kaminski, an ARM defense attorney and an expert on the TCPA, notes that this is the first federal appellate court ruling that clarifies the scope of the FCC’s 2008 consent ruling. So it would seem that the ruling now has additional support within court systems.