Federal Court Enjoins Enforcement of Portions of Massachusetts Attorney General's Emergency Debt Collection Regulation

A federal judge in Boston has enjoined the Massachusetts Attorney General from enforcing the provisions of her emergency debt collection regulations that (i) ban telephonic communications initiated by “debt collectors” (as defined in the regulation) with consumers in connection with payment of debt (the entirety of 940 CMR 35.04), and (ii) bar debt collectors (as defined in the regulation) from bringing enforcement actions in court. That regulation, announced on March 27, declares certain specified debt collection practices to be unfair and deceptive practices under the Massachusetts Consumer Protection Act, Massachusetts General Laws chapter 93A, during the Massachusetts pandemic state of emergency. 940 C.M.R. § 35.00. 

Proceeding from the proposition that “constitutional rights do not take a holiday simply because governing authorities declare an emergency,” Judge Richard Stearns found the regulation inconsistent with the First Amendment rights to freedom of expression and to petition for redress of grievances in court. He found the speech restricted by the regulation (telephone calls) to be protected commercial speech, and applied the “intermediate scrutiny” tests set forth in Central Hudson Gas & Elec. Corp. v. Public Service Comm’n of N.Y., 447 U.S. 557, 566 (1980). He assumed for purposes of his decision that preserving domestic tranquility is a sufficiently significant state interest, but found that interest would not be advanced by the regulation to a material degree, stating that he did “not believe that the Regulation adds anything to [the] protection [of Massachusetts citizens] that the existing comprehensive scheme of [federal and state] law and regulation already affords to debtors, other than an unconstitutional ban on one form of communication.”

The court also found the regulation’s moratorium, in section 35.03, on initiating debt collection lawsuits violated the First Amendment right to petition the government, rejecting the Attorney General’s arguments that the regulation’s restriction should be excused because it is temporary or merely procedural.

Three aspects of the court’s temporary restraining order as to this latter part of its decision are unclear. The order states, “The court also enjoins the Attorney General from enforcing 940 CMR 35.03 in so far as it bars the defined debt collectors from bringing enforcement actions in the state and federal courts of Massachusetts” (emphasis supplied).

• First, section 35.03’s prohibitions apply not only to “debt collectors” but also to “creditors.” The reasoning in the judge’s decision behind granting relief as to section 35.03 seems equally applicable to creditors. And as the judge explains, he did not need a showing of irreparable harm (e.g., by creditors) because "a finding of a First Amendment violation obviates the need for an additional showing of irreparable harm."
• Second, the regulation’s infringement on the right to petition extends not only to “bringing” debt collection lawsuits (“initiate” or “file” as it is phrased in the regulation), but also to pursuing remedies obtained through such suits, such as “act[ing] upon any legal or equitable remedy for the garnishment, seizure, attachment, or withholding of wages, earnings, property or funds for the payment of a debt to a creditor” (§ 35.03(1)(b)).
• Third, the court’s reasoning concerning the unconstitutionality of the regulation’s restriction of expression in section 35.04 seems equally applicable to the restrictions in section 35.03(1)(a) – (f)—proscribing threats to take various actions (including initiating or filing collection lawsuits).

As to the rest of the regulation, by its terms it is effective until the earlier of 30 days after the Massachusetts Governor lifts the pandemic state of emergency or 90 days after the regulation’s effective date. The latter should be the outside limit: the Massachusetts Administrative Procedure Act provides that a regulation issued on an emergency basis without notice and a hearing can be valid for no more than 90 days. However, as the court noted in its decision, “[a]t oral argument, the Attorney General essentially conceded that the 90-day period is a matter of grace, not right, and that the Regulation may well be extended should she deem the present emergency to be ongoing.”