Roberta Lindenbaum v. Realgy, LLC ( 2021 )

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 21a0213p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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ROBERTA LINDENBAUM, individually and on behalf of
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all others similarly situated,
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Plaintiff-Appellant, │
> No. 20-4252
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UNITED STATES OF AMERICA, │
Intervenor-Appellant, │
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v. │
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REALGY, LLC, a Connecticut limited liability │
company, dba Realgy Energy Services, │
Defendant-Appellee. │
┘
Appeal from the United States District Court for the Northern District of Ohio at Cleveland.
No. 1:19-cv-02862—Patricia A. Gaughan, Chief District Judge.
Argued: July 29, 2021
Decided and Filed: September 9, 2021
Before: GIBBONS, STRANCH, and BUSH, Circuit Judges.
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COUNSEL
ARGUED: Ellen Noble, PUBLIC JUSTICE, PC, Washington, D.C., for Appellant. Lindsey
Powell, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Intervenor.
Ryan D. Watstein, KABAT CHAPMAN & OZMER LLP, Atlanta, Georgia, for Appellee.
ON BRIEF: Ellen Noble, Leah Nicholls, PUBLIC JUSTICE, PC, Washington, D.C., Katrina
Carroll, CARLSON LYNCH LLP, Chicago, Illinois, Adam T. Savett, SAVETT LAW OFFICES
LLC, Allentown, Pennsylvania, for Appellant. Lindsey Powell, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Intervenor. Ryan D. Watstein, Matthew
A. Keilson, KABAT CHAPMAN & OZMER LLP, Atlanta, Georgia, Paul A. Grammatico,
KABAT CHAPMAN & OZMER LLP, Los Angeles, California, for Appellee. Scott L. Nelson,
Allison M. Zieve, PUBLIC CITIZEN LITIGATION GROUP, Washington, D.C., Thomas M.
Fisher, OFFICE OF THE INDIANA ATTORNEY GENERAL, Indianapolis, Indiana, Tara
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Twomey, NATIONAL CONSUMER LAW CENTER, Boston, Massachusetts, David J. Carey,
AMERICAN CIVIL LIBERTIES UNION OF OHIO FOUNDATION, Columbus, Ohio, Jessica
L. Ellsworth, HOGAN LOVELLS US LLP, Washington, D.C., Roman Martinez, LATHAM &
WATKINS LLP, Washington, D.C., Michael H. Pryor, BROWNSTEIN HYATT FARBER
SCHRECK, LLP, Washington, D.C., Shay Dvoretzky, Parker A. Rider-Longmaid, SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP, Washington, D.C., for Amici Curiae.
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OPINION
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JOHN K. BUSH, Circuit Judge. Courts do not rewrite, amend, or strike down statutes.
We only “say what the law is.” Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177 (1803). The
district court held that a court conducting severability analysis defies that time-honored rule and
instead “eliminat[es]” part of a statute. Lindenbaum v. Realgy, LLC, 497 F. Supp. 3d 290, 297
(N.D. Ohio 2020). It does not. We therefore reverse.
I.
In 1991, Congress prohibited almost all robocalls to cell phones and landlines. Barr v.
Am. Ass’n of Pol. Consultants, Inc. (AAPC), 140 S. Ct. 2335, 2344 (2020) (plurality opinion);
47 U.S.C. § 227(b)(1)(B). That seemed to change in 2015, when Congress attempted to enact an
amendment to those broad prohibitions to allow robocalls if they were made “solely to collect a
debt owed to or guaranteed by the United States.” 47 U.S.C. § 227(b)(1)(A)(iii), (b)(1)(B).
The amendment, however, was unconstitutional. So held the Supreme Court in AAPC.
The Court determined that adding the exemption for government-debt robocalls would cause
impermissible content discrimination. AAPC, 140 S. Ct. at 2347 (plurality opinion); id. at 2357
(Sotomayor, J., concurring in the judgment); id. at 2363 (Gorsuch, J., concurring in part and
dissenting in part). The Court also held that the exception was severable from the rest of the
restriction, leaving the general prohibition intact. Id. at 2356 (plurality opinion); id. at 2357
(Sotomayor, J., concurring in the judgment); id. at 2363 (Breyer, J., concurring in part and
dissenting in part). During its severability analysis, the three-justice plurality offered a brief
footnote musing on the liability of parties who made robocalls between the exception’s
enactment and the Court’s AAPC decision. Id. at 2355 n.12 (plurality opinion). Those justices
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thought that “no one should be penalized or held liable for making robocalls to collect
government debt after the effective date of the 2015 government-debt exception,” but that their
decision “does not negate the liability of parties who made robocalls covered by the robocall
restriction.”1 Id.
In late 2019 and early 2020, Roberta Lindenbaum received two robocalls from Realgy,
LLC advertising its electricity services. She sued, alleging violations of the robocall restriction.
After the Supreme Court decided AAPC, Realgy moved to dismiss the case for lack of subject-
matter jurisdiction. The district court granted the motion. It reasoned that severability is a
remedy that operates only prospectively, so the robocall restriction was unconstitutional and
therefore “void” for the period the exception was on the books. Lindenbaum, 497 F. Supp. 3d at
298–99. Because it was “void,” the district court believed, it could not provide a basis for
federal-question jurisdiction. Id. at 299. Lindenbaum timely appealed. The United States
intervened in support of Lindenbaum to defend its statute.
II.
Realgy moved to dismiss for lack of subject-matter jurisdiction under Federal Rule of
Civil Procedure 12(b)(1), but its motion “is more accurately considered a Rule 12(b)(6) motion
to dismiss for failure to state a claim.” Orion Marine Constr., Inc. v. Carroll, 918 F.3d 1323,
1330 (11th Cir. 2019); cf. Tackett v. M&G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir.
2009) (treating a motion to dismiss as a motion for summary judgment). After all, a district
court has jurisdiction when “the right of the petitioners to recover under their complaint will be
sustained if the Constitution and laws of the United States are given one construction and will be
defeated if they are given another.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 89
(1998) (quoting Bell v. Hood, 327 U.S. 678, 685 (1946)). That is the case here. If Lindenbaum’s
arguments about the continuing vitality of the robocall restriction from 2015 to 2020 are correct,
she is entitled to relief. So we will treat the district court’s dismissal as one under Rule 12(b)(6)
1No other justice indicated agreement with that dictum, so it is relevant only to the extent of its power to
persuade. See Fed. Express Corp. v. Tenn. Pub. Serv. Comm’n, 925 F.2d 962, 966 n.2 (6th Cir. 1991) (“[A]
concurring opinion has no binding authority.”).
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and review it de novo, assuming all facts in the complaint to be true. West v. Ky. Horse Racing
Comm’n, 972 F.3d 881, 886 (6th Cir. 2020).
III.
On the merits, Realgy contends that severability is a remedy that fixes an unconstitutional
statute, such that it can only apply prospectively. As a fallback, it argues that if it can be held
liable for the period from 2015 to 2020, but government-debt collectors who lacked fair notice of
the unlawfulness of their actions cannot, it would recreate the same First Amendment violation
the Court recognized in AAPC. Neither argument has merit.
A. SEVERABILITY
The judicial power is the “power . . . to decide” cases through “dispositive judgments.”
Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 218–19 (1995) (cleaned up). When making those
judgments, we must determine the legal rule that applies to the parties before us. That requires
us to “say what the law is.” Marbury, 5 U.S. at 177. And to say what the law is, we must
exercise “the negative power to disregard an unconstitutional enactment.” Massachusetts v.
Mellon, 262 U.S. 447, 488 (1923). After disregarding unconstitutional enactments, we then
determine what (if anything) the statute means in their absence—what is now called
“severability” analysis. See Tilton v. Richardson, 403 U.S. 672, 684 (1971). But those steps are
all part of explaining what the statute “has meant continuously since the date when it became
law” and applying that meaning to the parties before us. Rivers v. Roadway Express, Inc.,
511 U.S. 298, 313 n.12 (1994). Courts do not change statutes.
Instead, as the Supreme Court has made clear in recognizing the power of judicial review,
the Constitution itself displaces unconstitutional enactments: “a legislative act contrary to the
constitution is not law” at all. Marbury, 5 U.S. at 177; see also Ex parte Siebold, 100 U.S. 371,
376 (1879). This foundational principle of law is far from the “legal fiction” Realgy argues it to
be—the Court continues to reaffirm that principle to this day. See Collins v. Yellen, 141 S. Ct.
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1761, 1788–89 (2021) (“[T]he Constitution automatically displaces any conflicting statutory
provision from the moment of the provision’s enactment . . .”).2
Because unconstitutional enactments are not law at all, it follows that a court conducting
severability analysis is interpreting what, if anything, the statute has meant from the start in the
absence of the always-impermissible provision. See Tilton, 403 U.S. at 684 (citing Champlin
Ref. Co. v. Corp. Comm’n, 286 U.S. 210, 234 (1932)). The Court’s standard for severability
questions supports that understanding. It looks to Congress’s intent, a hallmark of any federal
statutory interpretive endeavor. See Murphy v. NCAA, 138 S. Ct. 1461, 1482 (2018). And when
assessing the severability of state statutes, the court looks to the intent of the state legislature.
See Leavitt v. Jane L., 518 U.S. 137, 139 (1996) (per curiam). If severability were a remedy for
violation of the federal constitution, then federal courts could do it without reference to state law;
because it is interpretive, federal courts must apply the state’s law of severability.
Therefore, like any judicial interpretation, a court’s severability analysis is subject to the
“fundamental rule of ‘retrospective operation’ that has governed ‘[j]udicial decisions . . . for near
a thousand years.’” Harper v. Va. Dep’t of Tax’n, 509 U.S. 86, 94 (1993) (alterations in original)
(quoting Kuhn v. Fairmont Coal Co., 215 U.S. 349, 372 (1910) (Holmes, J., dissenting)).
Realgy’s argument that severance is instead a remedy misconstrues the nature of
remedies. Remedies consist of “an injunction, declaration, or damages.” See AAPC, 140 S. Ct.
at 2351 n.8 (plurality opinion).3 Further, that “[t]he relief the complaining party requests does
not circumscribe” the severability inquiry also demonstrates that it cannot be a remedy. Levin v.
Com. Energy, Inc., 560 U.S. 413, 427 (2010); see also Sessions v. Morales-Santana, 137 S. Ct.
1678, 1701 n.29 (2017) (“That Morales-Santana did not seek this outcome does not restrain the
2This principle makes the severability inquiry clearer in the case of an unconstitutional amendment.
Because it is “a nullity,” it is “powerless to work any change in the existing statute”; the original statute “must stand
as the only valid expression of the legislative intent.” Frost v. Corp. Comm’n, 278 U.S. 515, 526–27 (1929); see
also Truax v. Corrigan, 257 U.S. 312, 342 (1921); Eberle v. Michigan, 232 U.S. 700, 705 (1914).
3The Court has, at times, described severance as a “remedy.” See, e.g., Seila Law LLC v. Consumer Fin.
Prot. Bureau, 140 S. Ct. 2183, 2207 (2020); United States v. Booker, 543 U.S. 220, 245 (2005). But it still applied
the rule its severability analysis generated to “all cases on direct review.” Booker, 543 U.S. at 268. So the term
“remedy” was used—admittedly confusingly—as shorthand for the interpretation Congress would have wanted had
it known of the statute’s constitutional problem, not in the traditional sense of a true remedy granted in a single case
to make a party whole. Id. at 246.
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Court’s judgment. The issue turns on what the legislature would have willed.”). In AAPC, the
Court severed the exception in a way that gave AAPC none of the relief it sought. 140 S. Ct. at
2344 (plurality opinion); id. at 2365–66 (Gorsuch, J., concurring in part and dissenting in part)
(criticizing that outcome). That cannot have been a remedy.
Because severance is not a remedy, it would have to be a legislative act in order to
operate prospectively only. One district court that accepted arguments like Realgy’s forthrightly
acknowledged that premise, explaining that “a severability decision is quasi-legislative, and
thereby prospective.” Cunningham v. Matrix Fin. Servs., LLC, No. 4:19-CV-896, 2021 WL
1226618, at *6 (E.D. Tex. Mar. 31, 2021). Realgy is less candid, but the cases on which it relies
make the necessity of that premise equally clear. Grayned v. City of Rockford, for example,
rejected an argument that a subsequent legislative amendment affected the “facial
constitutionality of the ordinance in effect when appellant was arrested and convicted.” 408 U.S.
104, 107 n.2 (1972); see also Morales-Santana, 137 S. Ct. at 1699 n.24 (describing Grayned as
showing that “a defendant convicted under a law classifying on an impermissible basis may
assail his conviction without regard to the manner in which the legislature might subsequently
cure the infirmity”). Similarly, Landgraf v. USI Film Products dealt with the question whether a
legislative enactment applies retroactively. 511 U.S. 244, 265 (1994). Neither has any bearing
on this case. “Under our constitutional framework, federal courts do not sit as councils of
revision, empowered to rewrite legislation in accord with their own conceptions of prudent
public policy.” United States v. Rutherford, 442 U.S. 544, 555 (1979). In short, severance is
interpretation, not legislation.
To sum up, the district court erred in concluding that, in AAPC, the Supreme Court
offered “a remedy in the form of eliminating the content-based restriction” from the TCPA.
Lindenbaum, 497 F. Supp. 3d at 297. Instead, the Court recognized only that the Constitution
had “automatically displace[d]” the government-debt-collector exception from the start, then
interpreted what the statute has always meant in its absence. See Collins, 141 S. Ct. at 1788.
That legal determination applies retroactively. Harper, 509 U.S. at 94.
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B. FIRST AMENDMENT
There are exceptions to the general rule that judicial decisions apply retroactively.
Sometimes, “a previously existing, independent legal basis (having nothing to do with
retroactivity)” will preclude the application of a newly recognized rule. Reynoldsville Casket
Co. v. Hyde, 514 U.S. 749, 759 (1995). Realgy argues that the First Amendment provides one
such basis here. As a premise, it contends that government-debt collectors have a due-process
defense to liability because they did not have fair notice of their actions’ unlawfulness. If that is
so, Realgy claims, then holding private-debt collectors liable would create the same content-
discriminatory system that the Court held unconstitutional in AAPC: it would be liable, and
government-debt collectors would not. We need not decide whether Realgy is correct about
government-debt collectors because this case does not present the issue. Even assuming that it is
correct, that does not create a First Amendment problem.
The First Amendment limits government regulation of speech. Reed v. Town of Gilbert,
576 U.S. 155, 163 (2015). In AAPC, it applied because the robocall restriction regulated speech.
140 S. Ct. at 2346 (plurality opinion). Here, by contrast, the centuries-old rule that the
government cannot subject someone to punishment without fair notice is not tied to speech. See,
e.g., Landgraf, 511 U.S. at 282–83 (discussing that principle with regard to employer liability
under Title VII); Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 17–18 (1976) (same for
retroactive liability for mining-based illnesses). Whether a debt collector had fair notice that it
faced punishment for making robocalls turns on whether it reasonably believed that the statute
expressly permitted its conduct. That, in turn, will likely depend in part on whether the debt
collector used robocalls to collect government debt or non-government debt. But applying the
speech-neutral fair-notice defense in the speech context does not transform it into a speech
restriction.
IV.
In 1982, the Supreme Court considered “[t]he principle that statutes operate only
prospectively, while judicial decisions operate retrospectively” so obvious as to be “familiar to
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every law student.” United States v. Sec. Indus. Bank, 459 U.S. 70, 79 (1982). Today, we clarify
that severability is no exception. We reverse.