Collector - July 2020 - 41


of Massachusetts issued a memorandum
opinion and order granting ACA's motion
for a temporary restraining order.

After an incisive analysis, discussed in
some detail below, the court imposed ACA's
requested preliminary relief by enjoining
the attorney general from enforcing the
provisions of the regulation that banned
debt collectors' telephonic communications
and from enforcing the provisions of the
regulation that barred debt collectors from
bringing enforcement actions in the state
and federal courts of Massachusetts.

In granting ACA's requested preliminary
relief, the court noted that although
misleading commercial speech may
be banned altogether, a state has no
constitutional power to suppress truthful,
nonmisleading commercial messages on
the grounds that they have the potential to
mislead. Where commercial speech merits
First Amendment protection, i.e., where it
is not inherently false or misleading, three
questions must 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? Finding
that debt collection speech, "in its
normal practice," is not inherently false,
misleading or deceptive, the court turned
to these three questions.

In its briefings, the attorney general had
asserted three government interests to
support the regulation: "(1) shielding
consumers from aggressive debt collection
practices that wield undue influence in view
of the coronavirus pandemic; (2) protecting
residential tranquility while citizens have
largely had to remain at home during the
coronavirus pandemic; and (3) temporarily
vouchsafing citizens' financial wellbeing
during the coronavirus pandemic."


The court dismissed the first and third
asserted interests almost out of hand but, for
the purposes of preliminary relief, assumed
without deciding that the government's
interest in protecting residential tranquility
might suffice to prop up the regulation.
In considering the regulation's
effect on domestic tranquility in light
of Massachusetts' existing regulatory
regime-which limits collectors to two
communications to a given consumer per
week-the court determined that "[t]he 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."
Ultimately, the court found that the
"redundant" regulation did not add
"anything" to the protections already
afforded to debtors under state and federal
law-except for an "unconstitutional ban on
one form of communication."
The court further noted that, given the
regulation's exceptions for mortgagors,
landlords and nonprofit entities, the attorney
general had clearly "single[ed] out one
group, debt collectors, and impose[d] a
blanket suppression order on their ability to
use what they believe is their most effective
means of communication, the telephone."
At the same time, the court-quoting
ACA's argument verbatim-found
the prohibition on filing lawsuits and
pursuing post-judgment remedies to be
impermissible under federal law, noting
that "[t]he 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.'"
And so, noting that "the mere fact
of an emergency does not increase
constitutional power, nor diminish
constitutional restrictions," the court
found unconstitutional the regulation's

infringement of ACA members' rights to
speech and petitioning activity.

In evaluating the "irreparable harm"
necessary to support a grant of
preliminary relief, the court noted the
deep-seated rule that "a finding of a First
Amendment violation obviates the need
for an additional showing of irreparable
harm." But the court observed in a
footnote that ACA's member-declarants
had additionally suffered real economic
harm as a result of the regulation.

Finally, in balancing the equities of the case
and considering the public interest, the
court presented three reasons, for granting
ACA's request for preliminary relief:
"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 debts."

At the time of this writing, the ultimate
outcome of the case had not been determined,
but as of late May, the temporary restraining
order remained in place, enjoining the
attorney general's enforcement of the
regulation and allowing ACA's members to
get back to business in Massachusetts.
Colin Winkler is ACA International's
corporate counsel.



Collector - July 2020

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