Katz v. Liberty Power Corp., LLC et al

Filing 208

Judge Allison D. Burroughs: MEMORANDUM AND ORDER entered. Liberty Power's motion for certification of an interlocutory appeal [ECF No. 199 ] is DENIED, and Liberty Power's motion to stay these proceedings pending the results of that appeal [ECF No. 200 ] is DENIED as moot. SO ORDERED.(McDonagh, Christina)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

SAMUEL KATZ and LYNNE RHODES
individually, and on behalf of all others
similarly situated,
Plaintiffs,
v.
LIBERTY POWER CORP., LLC AND
LIBERTY POWER HOLDINGS, LLC,

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Civil Action No. 18-cv-10506-ADB

Defendants.
MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION TO STAY
AND FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL
BURROUGHS, D.J.
Samuel Katz (“Katz”) and Lynn Rhodes (“Rhodes,” and together with Katz, “Plaintiffs”),
on behalf of four putative classes, allege that Liberty Power Corp., LLC and Liberty Power
Holdings, LLC (together, “Liberty Power”) or their agents placed calls in violation of the
Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. §§ 227 et seq. On September 24,
2019, the Court issued a memorandum and order denying Liberty Power’s motion for summary
judgment and granting in part Liberty Power’s motion to dismiss (“Order”). [ECF No. 195].
The Court found the TCPA’s debt-collection exception unconstitutional as a content-based
restriction on speech that did not serve a compelling government interest. [Id. at 13–16].
Because the Court found “little doubt” that the debt-collection exception is severable, however, it
found that the claims were unaffected by the exception’s unconstitutionality. [Id. at 16–17].
Presently before the Court are Liberty Power’s motion for certification of an interlocutory
appeal [ECF No. 199] and motion to stay these proceedings pending the resolution of that

interlocutory appeal [ECF No. 200]. For the reasons set forth below, Liberty Power’s motion for
certification of an interlocutory appeal [ECF No. 199] is DENIED and its motion to stay [ECF
No. 200] is DENIED as moot.
I.

BACKGROUND
A.

Procedural History

Katz first filed his complaint on March 16, 2018. [ECF No. 1]. On June 25, 2018,
Liberty Power answered and brought a third-party complaint against its vendor, Mezzi
Marketing LLC. [ECF No. 28]. Plaintiffs filed the operative second amended complaint on
November 14, 2018. [ECF No. 109]. On February 27, 2019, the Court bifurcated discovery and
stayed class discovery pending summary judgment motions on facts specific to the named
plaintiffs. [ECF No. 125].
Liberty Power filed its motion to dismiss on January 9, 2019. [ECF No. 118]. Plaintiffs
opposed on February 13, 2019, [ECF No. 124], and Liberty Power responded on March 15,
2019, [ECF No. 130]. Because Liberty Power argued that the TCPA is unconstitutional, the
government intervened and filed a brief advocating for the TCPA’s constitutionality on May 9,
2019. [ECF Nos. 141, 143, 144]. Liberty Power responded to the government on June 21, 2019.
[ECF Nos. 166, 167].
Liberty Power then filed its motion for summary judgment on June 21, 2019, in which it
argued that Katz and Rhodes lacked standing. [ECF No. 163]. Plaintiffs opposed on July 12,
2019, [ECF No. 175], and Liberty Power responded on August 1, 2019, [ECF No. 184].
The Court issued its Order on September 24, 2019, which denied Liberty Power’s motion
for summary judgment and granted its motion to dismiss in part, finding that Plaintiffs failed to
state a claim under Florida’s Uniform Fraudulent Transfer Act. [ECF No. 195]. Though the

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Court found the TCPA’s debt-collection exception unconstitutional, it allowed Plaintiffs’ TCPA
claims to go forward because it found the debt-collection exception severable. [Id. at 13–17].
On October 24, 2019, Liberty Power filed its motion for a certificate of appealability
[ECF No. 199] and its motion to stay the proceedings pending resolution of that interlocutory
appeal [ECF No. 200]. Plaintiffs opposed on October 25, 2019. [ECF No. 201]. The
government likewise opposed on November 7, 2019, and argued that there is no substantial
ground for difference of opinion on the debt-collection exception’s severability. [ECF No. 205].
B.

September 24, 2019, Motion to Dismiss Order

The Court presumes familiarity with the underlying facts alleged in the complaint, which
were summarized in the Court’s Order granting in part and denying in part Liberty Power’s
motion to dismiss. See [ECF No. 195 at 2–8]. Below, the Court summarizes the portions of the
Order that are relevant to Liberty Power’s request for an interlocutory appeal.
The Order began by addressing Liberty Power’s argument that the second amended
complaint failed to state a claim. [Id. at 10–11]. The Court found that the second amended
complaint adequately addressed what acts each defendant committed such that Plaintiffs were
plausibly entitled to relief. [Id.]
The Court next considered Liberty Power’s argument that the TCPA was unconstitutional
as a content-based restriction on speech. [Id. at 11–17]. The Court found that the TCPA is a
content-based restriction on speech, because, under the TCPA, the legality of a phone call
depends entirely on the call’s subject matter. [Id. at 14–15]. “[A] private debt collector could
make two nearly identical automated calls to the same cell phone using prohibited technology,
with the sole distinction being that the first call relates to a loan guaranteed by the federal
government, while the second call concerns a commercial loan with no government guarantee.”

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[Id. at 14 (quoting Am. Ass’n of Political Consultants, 923 F.3d 159, 166 (4th Cir. 2019))]. The
Court found that the TCPA was not narrowly tailored to serve a compelling government interest.
[Id. at 15–16]. Though the government argued that the debt-collection exception is justified
because it protects the “well-being, tranquility, and privacy” of citizens’ homes, the Court found
the argument unpersuasive. [Id. at 15]. The Court therefore found the debt-collection exception
unconstitutional. [Id. at 16].
Because the debt-collection exception is severable from the TCPA, however, the Court
found that Plaintiffs’ claims were unaffected by the exception’s unconstitutionality. [Id. at 16–
17]. Courts are to give effect to “the valid portion of a partially unconstitutional statute so long
as [1] it remains fully operative as a law, and . . . [2] it is not evident from the statutory text and
context that Congress would have preferred no statute at all.” [Id. at 16 (quoting Exec. Benefits
Ins. Agency v. Arkison, 573 U.S. 25, 37 (2014) (quotation marks and citations omitted))].
First, it was clear that severing the debt-collection exception would not make the TCPA
inoperable, as the statute had been “fully operative” for more than twenty years before Congress
added the debt-collection exception. [Id. at 17]. Second, Chapter 5 of Title 47, which includes
the TCPA, includes a “Separability” provision stating that “[i]f any provision of this chapter or
the application thereof to any person or circumstances is held invalid, the remainder of the
chapter and the application of such provision to other persons or circumstances shall not be
affected thereby.” [Id. at 16–17 (quoting 47 U.S.C. § 608)]. The fact that the provision speaks
directly to severability “creates a presumption of severability absent ‘strong evidence that
Congress intended otherwise.’” Duguid v. Facebook, Inc., 926 F.3d 1146, 1156 (9th Cir. 2019)
(quoting Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 686 (1987)). In finding the debtcollection exception severable, the Court adopted the reasoning of the Fourth and Ninth Circuits.

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[ECF No. 195 at 17 (first citing Duguid, 926 F.3d at 1156–57, and then citing Am. Ass’n of
Political Consultants, 923 F.3d at 170–71)].
II.

LEGAL STANDARD
A district court may certify an interlocutory appeal in a written order when issuing an

otherwise not-appealable civil order if it is “of the opinion that such order involves a controlling
question of law as to which there is substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the ultimate termination of the
litigation.” 28 U.S.C. § 1292(b). The First Circuit has “repeatedly emphasized that
‘interlocutory certification under 28 U.S.C. § 1292(b) should be used sparingly and only in
exceptional circumstances, and where the proposed intermediate appeal presents one or more
difficult and pivotal questions of law not settled by controlling authority.’” Caraballo-Seda v.
Municipality of Hormigueros, 395 F.3d 7, 9 (1st Cir. 2005) (quoting Palandjian v. Pahlavi, 782
F.2d 313, 314 (1st Cir. 1986)).
“As a general rule, [the First Circuit does] not grant interlocutory appeals from a denial of
a motion to dismiss.” Id. (citing McGillicuddy v. Clements, 746 F.2d 76, 76 n.1 (1st Cir. 1984)).
“This reflects [the First Circuit’s] policy preference against piecemeal litigation as well as
prudential concerns about mootness, ripeness, and lengthy appellate proceedings.” Id. (citation
omitted). In addition, the First Circuit has recognized that “the ‘fact that appreciable trial time
may be saved is not determinative,’ and neither is the fact that the case has ‘tremendous
implications’ . . . .” Id. (citations omitted) (first quoting Palandjian, 782 F.2d at 314, and then
quoting Slade v. Shearson, Hammill & Co., 517 F.2d 398, 400 (2d Cir. 1974)).

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III.

DISCUSSION
Congress enacted the TCPA in 1991 in response to concerns over intrusive and unwanted

telephone calls from telemarketers. Pub. L. No. 102-243, 105 Stat. 2394. Congress sought “to
protect residential telephone subscriber privacy rights by restricting certain commercial
solicitation and advertising uses of the telephone and related telecommunications equipment.”
H. R. Rep. No. 102-317, at 5 (1991). The TCPA therefore prohibits any person within the
United States from using an automated telephone dialing system to make a non-emergency call
without the recipient’s express consent. 47 U.S.C. § 227(b)(1).
In 2015, Congress amended the TCPA and created an exception for calls “made solely to
collect a debt owed to or guaranteed by the United States.” Bipartisan Budget Act of 2015, Pub.
L. No. 114-74, § 301(a), 129 Stat 584 (2015). The permissibility of a phone call therefore
depends on the content of the call, specifically whether the call is seeking to collect on a loan
guaranteed by the federal government. The Court therefore found the debt-collection exception
unconstitutional, but severable from the TCPA. Liberty Power requests certification of an
interlocutory appeal to allow the First Circuit to consider the provision’s constitutionality and
severability.
A.

The Severability of the Debt-Collection Exception Is Not a Controlling
Question of Law as to Which There Is Substantial Ground for Difference of
Opinion

There is not a substantial ground for a difference of opinion regarding the debt-collection
exception’s severability. Liberty Power predominantly relies on a Third Circuit case which held
that “the proper remedy for content discrimination generally cannot be to sever the statute so that
it restricts more speech than it did before—at least absent quite specific evidence of a legislative
preference for elimination of the exception.” Rappa v. New Castle Cty., 18 F.3d 1043, 1073 (3d

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Cir. 1994). In this case, the Court found that there was “specific evidence of a legislative
preference” for severing the debt-collection exception. See id.; [ECF No. 195 at 16–17]. The
separability provision, codified at 47 U.S.C. § 608 makes clear that Congress intended that any
unconstitutional provisions, including the debt-collection exception, be severed from the TCPA,
rather than having the entire statute deemed unconstitutional. 47 U.S.C. § 608 (“If any provision
of this chapter or the application thereof to any person or circumstances is held invalid, the
remainder of the chapter and the application of such provision to other persons or circumstances
shall not be affected thereby.”)
Every court that has considered the constitutionality of the TCPA’s debt-collection
exception has distinguished or ignored Rappa v. New Castle Cty., 18 F.3d 1043, 1073 (3d Cir.
1994), and found that Congress was explicit in its intent that the debt-collection exception be
severable. See, e.g., Duguid, 926 F.3d at 1157 (quoting Rappa and finding “specific evidence
of” Congress’ preference that the debt-collection exception be severed); Am. Ass’n of Political
Consultants, Inc., 923 F.3d at 171 (“[S]everance of the debt-collection exemption from the
balance of the automated call ban will comply with the explicit directive of Congress and with
controlling Supreme Court precedent.” (emphasis added)); Smith v. Truman Road Dev., LLC,
No. 4:18-cv-00670, 2019 WL 5654352, at *16 (W.D. Mo. Oct. 31, 2019) (“Given the general
presumption in favor of severability, the apparent Congressional intent that the unconstitutional
provision be severed, and the TCPA’s demonstrated ability to be fully operative without the
severed provision, the Court finds the government-debt exception is severable.”); Perrong v.
Liberty Power Corp., No. 18-cv-00712, 2019 WL 4751936, at *7 (D. Del. Sept. 30, 2019) (“The
Court is not persuaded that removing [the debt-collection exception] amendment would
somehow render unconstitutional a statute that had been repeatedly upheld as constitutional in its

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previous form.”); Parker v. Portfolio Recovery Assocs., LLC, No. 18-cv-02103, 2019 WL
4149436, at *2 (C.D. Cal. July 11, 2019) (“[S]pecific evidence of the legislature’s preference for
retaining the valid TCPA provision is provided.”); Wijesinha v. Bluegreen Vacations Unlimited,
Inc., No. 19-cv-20073, 2019 WL 3409487, at *5 (S.D. Fla. Apr. 3, 2019) (“[S]pecific evidence
of Congress’s legislative preference for elimination of the exception is shown by the fact that
Congress enacted the TCPA without the government-debt exception . . . .”); Sliwa v. Bright
House Networks, LLC, No. 16-cv-00235, 2018 WL 2296779, at *3 (M.D. Fla. May 21, 2018)
(finding specific evidence of Congress’ intent to sever the debt-collection exception under
Rappa); Woods v. Santander Consumer USA Inc., No. 2:14-cv-02104, 2017 WL 1178003, at *3
n.6 (N.D. Ala. Mar. 30, 2017) (“[T]here is no evidence that Congress would not have enacted the
TCPA without the exception for government debt. To the contrary, Congress did enact the
TCPA without the exception for government debt, the version of the TCPA without the
exception has been upheld as a valid time, place, or manner restriction by several courts
throughout the country.”).
Liberty Power has therefore failed to demonstrate that there is a substantial ground for a
difference of opinion regarding the debt-collection exception’s severability, as required for an
interlocutory certification under 28 U.S.C. § 1292(b).
B.

An Immediate Appeal Would Not Materially Advance the Ultimate
Termination of the Case

In addition, certification of an interlocutory appeal is not warranted because any appeal
would not materially advance the ultimate termination of the case. The fact that an interlocutory
appeal might save the parties from appreciable trial time is insufficient to justify certifying an
interlocutory appeal. Caraballo-Seda, 395 F.3d at 9. The Court therefore gives little weight to
Liberty Power’s argument that an appellate decision would avoid protracted and expensive

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discovery, another round of summary judgment, class certification, and trial. [ECF No. 199 at 8–
9]. See Lauo Lines s.r.l. v. Chasser, 490 U.S. 495, 499 (1989) (noting that the Supreme Court
has “declined to find the costs associated with unnecessary litigation to be enough to warrant
allowing the immediate appeal of a pretrial order”).
Further, Liberty Power’s argument that an interlocutory appeal would advance the
termination of this case rests on the assumption that the First Circuit would find that the debtcollection exception was unconstitutional and also could not be severed from the TCPA. Given
that every court to have considered this issue to date has found that the debt-collection exception
is severable, as discussed above, such a conjectural claim is insufficient to demonstrate that an
interlocutory appeal would advance the ultimate termination of the litigation. See, e.g., In re
Zofran (Ondansetron) Prods. Liab. Litig., 235 F. Supp. 3d 317, 320 (D. Mass. 2017) (declining to
certify an interlocutory appeal when party’s claim that the appellate court would remand the
claim to state court was conjectural); Johnson v. Watts Regulator Co., No. 92-cv-00508, 1994
WL 421112, at *2 (D.N.H. Aug. 11, 1994) (finding that party’s “claim that an interlocutory
appeal would advance the ultimate termination of the litigation is conjecture”).
If there was an interlocutory appeal and the First Circuit agreed with the Court that the
debt-collection exception is severable, which seems likely, then the case would almost certainly
be remanded back to this Court. Once the Court considered any summary judgment motions or
held a trial (or both), Liberty Power could once again appeal to the First Circuit. “[F]or an
already overburdened court of appeals[,] judicial economy will be better achieved if only one
appeal is taken in this case.” Johnson, 1994 WL 421112, at *2. Liberty Power has therefore
failed to demonstrate that “exceptional circumstances justify a departure from the basic policy of
postponing appellate review until the entry of final judgment.” S. Orange Chiropractic Center,

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LLC v. Cayan LLC, No. 15-cv-13069, 2016 WL 3064054, at *1 (D. Mass. May 31, 2016)
(quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978)).
IV.

CONCLUSION
Accordingly, Liberty Power’s motion for certification of an interlocutory appeal [ECF

No. 199] is DENIED, and Liberty Power’s motion to stay these proceedings pending the results
of that appeal [ECF No. 200] is DENIED as moot.
SO ORDERED.
November 15, 2019

/s/ Allison D. Burroughs
ALLISON D. BURROUGHS
U.S. DISTRICT JUDGE

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