Judicial Severance of an Invalid Provision From a Statute Is Not a “Remedy” with Only Prospective Effect, Holds Sixth Circuit

In Lindenbaum v. Realgy, LLC, No. 20-4252 (6th Cir. Sept. 9, 2021), the Sixth Circuit holds that severance of an offending section of a federal statute by the U.S. Supreme Court is not a judicial “remedy” that operates only prospectively and that severance thus has retrospective effect.

Two terms ago in Barr v. Am. Ass’n of Pol. Consultants, Inc. (AAPC), 140 S. Ct. 2335 (2020), the Supreme Court found unconstitutional a 2015 amendment to the Telephone Consumer Protection Act (TCPA)—which bans “robocalls” in interstate commerce—that exempted calls “solely to collect a debt owed to or guaranteed by the United States.” 47 U.S.C. § 227(b)(1)(A)(iii), (b)(1)(B). Rather than strike down the entire act, though, the Court severed the offending exemption.

The question presented here is whether the TCPA became unenforceable during 2015 to 2020, until the Supreme Court rescued the law by severance in AAPC. “In late 2019 and early 2020, [plaintiff] Lindenbaum received two robocalls from Realgy, LLC advertising its electricity services. She sued, alleging violations of the robocall restriction. After the Supreme Court decided AAPC, Realgy moved to dismiss the case for lack of subject-matter jurisdiction. The district court granted the motion. It reasoned that severability is a remedy that operates only prospectively, so the robocall restriction was unconstitutional and therefore ‘void’ for the period the exception was on the books.”

The Sixth Circuit reverses in a terse eight-page opinion. The panel summarizes that Realgy’s argument that “severability is a remedy that fixes an unconstitutional statute, such that it can only apply prospectively. As a fallback, it argues that if it can be held liable for the period from 2015 to 2020, but government-debt collectors who lacked fair notice of the unlawfulness of their actions cannot, it would recreate the same First Amendment violation the Court recognized in AAPC.”

With respect to the first argument, the panel states that Realgy misapprehends the operation of a court’s declaration of unconstitutionality of a statute, and of severance. “When making [dispositive] judgments, we must determine the legal rule that applies to the parties before us …. And to say what the law is, we must exercise ‘the negative power to disregard an unconstitutional enactment’ …. After disregarding unconstitutional enactments, we then determine what (if anything) the statute means in their absence—what is now called ‘severability’ analysis …. But those steps are all part of explaining what the statute ‘has meant continuously since the date when it became law’ and applying that meaning to the parties before us …. Courts do not change statutes.”

Thus, “[b]ecause unconstitutional enactments are not law at all, it follows that a court conducting severability analysis is interpreting what, if anything, the statute has meant from the start in the absence of the always-impermissible provision.” In the case of the TCPA, it meant that all provisions that remained “law” after the constitutional challenge and the striking of the 2015 amendment were always valid.

Conversely, judicial remedies such as injunctions, declarations, and damages operate only prospectively. The panel concedes that Supreme Court cases sometimes refer to severance a “remedy.” “But it still applied the rule its severability analysis generated to ‘all cases on direct review’ …. So the term ‘remedy’ was used [in those cases]—admittedly confusingly—as shorthand for the interpretation Congress would have wanted had it known of the statute’s constitutional problem, not in the traditional sense of a true remedy granted in a single case to make a party whole …. Because severance is not a remedy, it would have to be a legislative act in order to operate prospectively only.”

The panel also rejects the defendant’s First Amendment argument. Any hazard suffered by Realgy from relying on an uncertain statute is not rooted in free speech. “[T]he centuries-old rule that the government cannot subject someone to punishment without fair notice is not tied to speech …. Whether a debt collector had fair notice that it faced punishment for making robocalls turns on whether it reasonably believed that the statute expressly permitted its conduct. That, in turn, will likely depend in part on whether the debt collector used robocalls to collect government debt or non-government debt. But applying the speech-neutral fair-notice defense in the speech context does not transform it into a speech restriction.”

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