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Unusual First Amendment Challenge Rejected in Fax TCPA Case: Court Upholds TCPA Applying Intermediate Scrutiny in Struggle Over Lawfulness of Statutory Damages

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With all the buzz generated by the Gallion First Amendment challenge in the Ninth Circuit Court of Appeal, we’ll report on First Amendment TCPA challenges wherever we find them from now on.

We have a strange one out of Arkansas from last month that Westlaw just alerted us to today. The case is McCall Law Firm, PLLC v. Crystal Queen, Inc., Case No. 4:15-cv-00737, 2018 WL 4691627 (ED. Ark. Sept. 20, 2018). There the Court held that the TCPA survived a First Amendment challenge tethered to the large amount of statutory damages provided by the statute. The Court applied an intermediate scrutiny analysis rather than strict scrutiny, which was probably appropriate since the Defendant strangely did not pose an equal protection challenge or argue that strict scrutiny ought to be applied.

Indeed, in McCall the Defendant seems to have lobbed numerous constitutional challenges at the court based upon the size of the statutory damages permitted by the TCPA.  While the Court seemed generally sympathetic to the Defendant’s arguments, the Court repeatedly rejected the application of due process challenges prior to certification of the putative class action. That said, the Court reserved the defendant’s ability to test the constitutionality of any ultimate judgment– “the Crystal Defendants will have the opportunity to show that the statutory damages are in fact ‘so severe and oppressive’ as to be unconstitutional.” See McCall at *7. (These are the very sort of challenges that we discussed with TCPA Defense Force scion David Carter on the Ramble a few weeks back.)

More pertinently to the current debate on First Amendment issues, the Court rejected the Defendant’s argument that the TCPA infringed upon free speech because the statutory damages are too high. While one can certainly argue that the TCPA’s statutory damages enhance the probability of lawfully protected speech being chilled by the vague enactment, large damages–or other severe penalties– for unlawful speech in a vacuum have never been held to violate the First Amendment to my knowledge. Rather it is the vague nature of the statute that renders the damages so problematic–the focus (from a First Amendment perspective) is on the potential for innocent actors to be caught up in a web designed for others–or else the crushing damages being applied unevenly based upon content– rather than that the remedy to prevent unlawful speech is too effective.

Not surprisingly, therefore, the McCall court struggled to comprehend precisely what the Defendant was arguing, and ultimately cast the challenge as an argument that the TCPA’s damages provision violates the third prong of the Central Hudson test–an intermediate scrutiny paradigm that really should no longer have application to the statute following the 2015 content-specific amendments.  Since the Eighth Circuit had already rejected an intermediate scrutiny challenge to the TCPA’s fax rules following Central Hudson in Missouri ex rel. Nixon v. American Blast Fax, Inc., 323 F.3d 649 (8th Cir. 2003), however, this was an open and shut case in favor of upholding the TCPA. See McCall at *7-8.

But take heart gentle reader, the Gallion case poses a very different–and dare I say, better supported–First Amendment challenge to the TCPA. So while the McCall ruling is yet another in a long line of cases upholding the TCPA under intermediate scrutiny principles, the battle over whether the TCPA survives strict scrutiny is yet to be decided.

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