Consumer Finance Litigation

In May 2013, a ruling from the U.S. District Court for the Southern District of Florida caused great concern among creditors and debt collectors by taking an unprecedented stance against the supremacy of orders issued by the Federal Communications Commission ("FCC") regarding the Telephone Consumer Protect Act ("TCPA"). In Mais v. Gulf Coast Collection Bureau, Inc., 944 F. Supp. 2d 1226 (S.D. Fla. 2013), Judge Robert N. Scola, Jr. granted partial summary judgment on the plaintiff's TCPA claims against the defendant, Gulf Coast, which had obtained the plaintiff's cell phone number from an intake form filled out by the plaintiff's wife and provided to a hospital. After the plaintiff failed to pay his hospital bill, Gulf Coast attempted to collect the debt by making calls to the phone number listed on the plaintiff's hospital intake form. The plaintiff filed suit against Gulf Coast, contending that the number was a cell phone, that Gulf Coast was prohibited from calling the cell phone under 27 U.S.C. § 227(b)(1)(A) of the TCPA, and that Gulf Coast could not escape liability because it did not have "prior express consent" to call the number. Gulf Coast argued that, pursuant to a 2008 Ruling from the FCC, it had "prior express consent" to call the plaintiff's number with an automatic telephone dialing system ("ATDS") because the number was written on a hospital intake form and, thus, was "provided" to Gulf Coast. The oft-cited 2008 Ruling from the FCC clarified that "the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt." In finding for the plaintiff, the district court concluded that the FCC's interpretation was inconsistent with the language of the TCPA and, regardless, that the FCC's 2008 Ruling did not apply to medical collections. The district court certified several questions for interlocutory appeal to the Eleventh Circuit. In the intervening sixteen months, the Mais decision has been heralded by plaintiff's attorneys around the country and cited in numerous lawsuits in attempts to greatly expand the scope of the TCPA. The practical effect of the district court's decision was significant, because both the consumer credit and debt collection industries had long relied on the FCC's instruction that "prior express consent" could be obtained when a cell phone number was "provided" by a consumer to a creditor. The FCC has consistently interpreted the "prior express consent" provision since its first TCPA Ruling in 1992. Thus, if allowed to stand, the district court's decision would have represented a legal sea change for TCPA litigants. On September 29, 2014, the Eleventh Circuit issued its eagerly anticipated Mais decision, reversing every material aspect of the lower court's order. The Eleventh Circuit stated that "the district court lacked the power to consider in any way the validity of the 2008 FCC Ruling and also erred in concluding that the FCC's interpretation did not control the disposition of the case." Beginning with the district court's analysis of the 2008 FCC Ruling, the Eleventh Circuit stated that through the Hobbs Act, 28 U.S.C. § 2342, Congress "unambiguously deprived the federal district courts of jurisdiction to invalidate FCC orders by giving exclusive power of review to the courts of appeals." While the district court had acknowledged that the Hobbs Act gave the federal courts of appeals exclusive jurisdiction to review final FCC orders, the district court determined that it had jurisdiction to examine the FCC's interpretation of the FCC because the "central purpose" of the plaintiff's suit was to obtain damages for violations of the TCPA, not to collaterally attack or invalidate the 2008 FCC Ruling. The district court had also determined that the FCC's interpretation of "prior express consent" contained within the 2008 ruling was not entitled to deference because it conflicted with the clear meaning of the TCPA. The Eleventh Circuit stated that "[b]y refusing to enforce the FCC's interpretation, the district court exceeded its power." The court then stated that "[d]eeming agency action invalid or ineffective is precisely the sort of review that the Hobbs Act delegates to the courts of appeals in cases challenging final FCC orders." Rejecting the district court's argument that the central purpose of the suit was not an attack on the FCC's 2008 Ruling, the Eleventh Circuit stated that "Hobbs Act jurisdictional analysis looks to the 'practical effect' of a proceeding, not the plaintiff's central purpose for bringing a suit." The court continued, stating that "[i]n the face of ample federal appellate precedent undermining his argument, [the plaintiff] has pointed us to no decision from any other court concluding that a district court had jurisdiction to invalidate an order like the 2008 FCC Ruling in a dispute between private litigants." Further, the Eleventh Circuit found that the FCC's 2008 Ruling applies to many debtor/creditor relationships, including circumstances involving medical debt. The district court had concluded that the 2008 FCC Ruling did not apply to the medical debt in the Mais case because the FCC had addressed consent only in the context of consumer credit. However, the Eleventh Circuit noted that "the FCC did not distinguish or exclude medical creditors from its 2008 Ruling." The Eleventh Circuit continued, stating that "the FCC's general language sends a strong message that it meant to reach a wide range of creditors and collectors, including those pursuing medical debts." The court then explained that the inclusion of the words "credit application" in the 2008 Ruling was only illustrative and was not meant to limit the scope of the Ruling. The Eleventh Circuit also rejected the plaintiff's argument that he did not "provide" his number to "the creditor" but, instead, only provided it to the hospital, which then forwarded his number to Gulf Coast. The court stated that the plaintiff's narrow reading of the 2008 FCC Ruling would find prior express consent when a debtor personally delivered a form with his cell phone number to a creditor in connection with a debt, but not when the debtor filled out a nearly identical form that authorized another party to give the number to the creditor. The court concluded that the plaintiff "offer[ed] no functional distinction between these two scenarios" and stated that it saw "no sign that the FCC thought a cell phone number could be 'provided to the creditor' only through direct delivery." Through this new decision, the Eleventh Circuit has provided clarity and consistency in its application of the TCPA. The Eleventh Circuit has also given creditors and debt collectors confidence that they can rely upon FCC rulings and develop TCPA compliance programs that incorporate FCC guidance and interpretation.