Circuit Court Rules Against Debt Collector in TCPA Decision Supported by FCC Brief

The Second Circuit Court of Appeals Thursday ruled against a debt collection agency in a TCPA express prior consent case, reversing a lower court decision and hewing closely to a requested amicus brief filed by the FCC on the matter.

The closely-watched case, Nigro v. Mercantile Adjustment Bureau, involved a consumer receiving autodialed calls to his cell phone. But the consumer plaintiff was not the account holder, rather, he provided his cell number to an electric company while attempting to shut off service.

Nigro contacted a power company in New York to shut off electricity at his recently deceased mother-in-law’s house. In that process, he provided the company with his cell phone number. Mercantile Adjustment Bureau (MAB), acting on behalf of the power company, subsequently called Nigro 72 times over a nine month period to collect on a $67 delinquency that remained on his mother-in-law’s account.

Nigro filed suit alleging, among other things, that the collection agency violated the TCPA by not obtaining his consent to call his cell phone for the purpose of debt collection. A district court judge sided with MAB, granting it summary judgment. The judge relied, in part, on the FCC’s 1992 rulemaking order that declared, “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.”

When Nigro appealed the case to the Second Circuit, the judges reached out to the FCC for clarification.

In its amicus brief in the case, the FCC pointed to its 2008 declaratory ruling — issued at the request of ACA International — in concluding that MAB’s debt collection calls did violate the TCPA and that the district court’s ruling should be reversed on appeal. The FCC noted that the 2008 ruling held that “prior express consent is deemed to be granted only if the wireless number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed.”

The Second Circuit panel deferred to the FCC’s brief, writing, “Under the FCC’s interpretation of the statute, Nigro did not consent” because his number was not provided in that context.

The judges noted that the FCC has recently shifted its treatment of debt collection calls, specifically, under the TCPA. “Initially, the FCC provided no special treatment for debt collection calls,” the panel wrote. “The Commission held that these calls were adequately covered by the ‘established business relationship’ rule. More recently, however, the FCC has provided specific limits on automated calls by debt collectors,” referring to the “during the transaction that resulted in the debt owed” provision.

Using that standard, the Second Circuit judges wrote, “Nigro plainly did not consent. He did not provide his phone number ‘during the transaction that resulted in the debt owed.’ Indeed, he provided his number long after the debt was incurred and was not in any way responsible for – or even fully aware of – the debt. For the same reason, he was not a ‘consumer’; he was a third party.”

The case was reversed and remanded to the district court for further proceedings.

In a footnote, the judges noted that they were deciding the case narrowly on the facts and that other circumstances could result in a different disposition:

“We do not decide what the outcome would be if a consumer were to open an account with a creditor and initially provide only his home phone number, but later in the course of the relationship provide a wireless number. Whether a subsequently given phone number is given as part of a continuing ‘transaction,’ or a transaction separate from the initial one that ‘resulted in the debt owed,’ is a question for future courts.”