By Chris Villani

Law360 (May 1, 2020, 3:54 PM EDT ) Massachusetts Attorney General Maura Healey's ban on debt collection calls during the COVID-19 pandemic represents an unprecedented government overreach and should not be allowed to stand, a trade group told a federal judge Friday.

Lawyers for ACA International Inc. told U.S. District Judge Richard G. Stearns during a hearing that the regulation, which was announced March 27 and temporarily bans most types of debt collection, including calls to consumers and the filing of new lawsuits, violates its members' freedom of speech and also hurts consumers.

"Consumers are already shielded from all of the debt collection practices the AG identifies in her brief by hers and other existing regulations," said David Bizar of Seyfarth Shaw LLP. "They are unable to cite any court decision anywhere in the country that has ever upheld a similar call initiation ban."

Just because times are tough doesn't mean Healey has the power to limit communication between a debt collector and a debtor in this way, Bizar argued. He said people can still not answer the phone or say they do not want to speak to a collection agent if they so choose.

"That is part of the price we all pay to live in a free society — that people get to try to interact with one another," Bizar said.

While Healey has stressed that the measure is temporary and will expire either on June 24 or after the state of emergency ends, ACA claims that some of its members — which include third-party collection agencies, law firms, creditors, asset-buying or debt-buying companies and vendor affiliates — may be put out of business in the next couple of weeks, as they report dips in revenue from Massachusetts operations of 20% to 50%.

And the loss of a fundamental constitutional right, even temporarily, is considered an irreparable injury, Bizar argued as he sought an injunction to halt the regulation.

That argument seemed to catch a sympathetic ear from Judge Stearns, who did not rule from the bench but took the motion under advisement. The judge said that, even when advancing state interests, constitutional rights "don't take a vacation."

"Ensuring domestic tranquility, that is an important state interest," Judge Stearns said, posing a hypothetical. "But the AG couldn't wake up and say, 'Because we are in a state of emergency, we are going to suspend the Second Amendment for six months to preserve domestic tranquility.' It just can't work that way."

Arguing for Healey, Assistant Attorney General Eric Haskell said the state's position is more "fine-grained" than that.

"What we are saying is that the circumstances of this crisis, of the new normal in which we find ourselves, are relevant and really important to deciding what the government interest is that justifies and gives form to these regulations," Haskell said. "The ability of the state and the power of the state to define its interests does have some flexibility in times of exigency like the times we find ourselves in right now."

Haskell noted that all communication between debtors and creditors is not "choked off," with written communications and emails still allowed. He also pointed to measures the state's Supreme Judicial Court has taken during the pandemic.

"We are talking about a time-limited moratorium here, and it also fits well with an order our SJC has passed down and renewed in the effect of tolling the state statute of limitations," Haskell said. "In our view, that's an important part of the analysis because it's part and parcel to the effect that it's not a permanent deprivation of substantive rights, it's a temporary postponement of the ability to go to court and vindicate these rights."

But Bizar argued that placing a single phone call to talk about a debt cannot constitute an unfair debt practice, particularly because such calls are often helpful to consumers.   

If that were the case, "no calls could ever be made," Bizar said. "Debts were not caused by COVID-19, debt collection wasn't caused by COVID-19."

Judge Stearns gave both sides until the end of the day May 4 to supplement their arguments if they so choose, but said a ruling will likely be made shortly thereafter.

Despite some technical difficulties during the video hearing, including having to mute himself to prevent the attorneys' arguments from causing an unintelligible echo, the judge said he saw some pluses to the format.

"I do get a better view of each of you than I do in a courtroom when you're 50 feet away, and the system makes it almost impossible for me to interrupt you when you're giving your presentation," Judge Stearns said, chuckling. "Maybe I miss that part of it."

ACA is represented by David M. Bizar and Robert J. Carty Jr. of Seyfarth Shaw LLP.

Healey is represented by Eric A. Haskell and Jennifer E. Greaney of the state attorney general's office.

The case is ACA International v. Healey, case number 1:20-cv-10767, in the U.S. District Court for the District of Massachusetts.

--Editing by Alanna Weissman.

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