No-Call Ruling Hammers Industry

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A decision issued by a federal appeals court yesterday dismissed substantially all the arguments advanced by the telemarketing industry against the national no-call list.


The three-judge panel of the 10th Circuit Court of Appeals unanimously ruled that the no-call list does not violate First Amendment rights, as had been argued by the industry. According to the court, the list does not bar speech but rather gives consumers the option to block unwanted calls on their own.


"The national do-not-call registry offers consumers a tool with which they can protect their homes against intrusions that Congress has determined to be particularly invasive," the court wrote in the decision. "Just as a consumer can avoid door-to-door peddlers by placing a 'No Solicitation' sign in his or her front yard, the do-not-call registry lets consumers avoid unwanted sales pitches that invade the home via telephone, if they choose to do so."


The American Teleservices Association and the Direct Marketing Association, the two industry groups that challenged the no-call list in the appeal, said they were considering their options following the ruling.


The ATA's board of directors will examine the court's 51-page opinion and decide "soon" whether to ask the U.S. Supreme Court to review the case, said Tim Searcy, ATA executive director.


The ATA initially had succeeded at the district court level, winning rulings from a federal judge in Denver that cast doubt on the no-call list's constitutionality. However, the 10th Circuit Court of Appeals' preliminary decision in October to suspend the lower court rulings gave an indication of the appeals court's leanings in the case.


"It's disappointing but not surprising," Searcy said of the latest decision. "We try to keep in mind that we won on the district court level and lost on the appeal. So we're batting .500."


If the ATA board takes the case to the nation's highest court, it has the support of membership and financial backing to see the case to its conclusion, Searcy said. One encouraging factor is that if the Supreme Court reviews the case, it will take a fresh look at the evidence and give less stress to prior rulings.


"If we go forward, it really is a brand-new ballgame," he said.


In a statement, the DMA said its members would respect the ruling and continue to abide by the no-call list. But the DMA called on the Federal Trade Commission and Federal Communications Commission to fix problems with the list that threaten legitimate telemarketers.


"Our industry will respect the wishes of consumers who have placed their household telephone numbers on the do-not-call list," said H. Robert Wientzen, DMA president/CEO. "However, we urge the FTC and FCC to address the glaring problems with the list's online registration process and privacy safeguards as well as the need for the harmonization of inconsistent do-not-call rules between the two agencies, and we pledge our full cooperation and support to that end."


One option the DMA is considering is an appeal to the Supreme Court, said Louis Mastria, DMA spokesman. Another would be to ask for reconsideration of the three-judge panel's ruling by all the judges in the 10th Circuit Court of Appeals.


The DMA has pursued a two-pronged strategy in the no-call case, Mastria said. The association has made constitutional arguments against the list but, given the possibility that the list would be proven valid, the DMA also has lobbied for changes to address weaknesses in the list.


The FTC and FCC praised the appeals court ruling. The ruling ensures Americans that the no-call list will continue to protect them, the FTC said.


"We are pleased that this popular program, like America's dinner hour, will not be interrupted," said Timothy Muris, FTC chairman.


"This decision is a triumph for American consumers," FCC chairman Michael Powell said. "The national do-not-call registry is one of the most popular and successful consumer initiatives undertaken by the federal government and, along with the vast majority of our citizens, I commend the court for removing the shadow of judicial uncertainty."


The appeals court said that the no-call list meets four criteria that prove it is within the bounds of the First Amendment: It applies only to commercial speech; it specifically targets calls that invade the privacy of the home; it is an opt-in program that puts choice in the hands of consumers, not government; and it furthers the government's goal of preventing invasion of privacy.


The appeals court addressed the industry's argument that because political, business-to-business and nonprofit calls are exempt, the list will not achieve the government's goal. The list doesn't have to block all calls, the court stated.


Moreover, the court used one of the industry's own claims to support its ruling. It noted that the industry had stated that 50 percent of its jobs were threatened with layoffs due to the list, an indication that calls would substantially decrease.


"To be sure, the do-not-call list will not block all of these calls," the court wrote. "Nevertheless, it will prohibit a substantial number of them, making it difficult to fathom how the registry could be called an 'ineffective' means of stopping invasive or abusive calls, or a regulation that 'furnish[es] only speculative or marginal support' for the government's interests."


The appeals court also stated that the old company-specific system, whereby consumers could issue no-call requests to telemarketers who called them, was burdensome. It forced consumers to issue no-call requests repeatedly, and telemarketers often ignored the requests anyway, the court said.


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