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Court Deals Telemarketers Another Surprise Victory

After a day full of setbacks, the telemarketing industry won another victory yesterday in federal court that could deal a blow to the national no-call list that this time even Congress can't fix.

Siding with the American Teleservices Association and two private plaintiffs in their challenge to the no-call list, Judge Edward Nottingham of the U.S. District Court in Denver issued a ruling late yesterday declaring that the registry violated First Amendment free speech rights.

Nottingham wrote that because the no-call list exempted certain types of calls, such as nonprofit and political calls, the list represented a government restriction of speech based on content that previous case law has held to be unconstitutional.

“The registry creates a burden on one type of speech based solely on its content, without a logical, coherent privacy-based or prevention-of-abuse-based reason to support the disparate treatment of different categories of speech,” he wrote.

The ruling came just hours after Congress finished approving a bill that explicitly gave the Federal Trade Commission authority to launch the no-call list. On Sept. 23, Judge Lee West of the U.S. District Court in Oklahoma City decided in favor of the Direct Marketing Association, which had filed a separate challenge to the no-call list, and ruled that the FTC lacked congressional authorization it needed to launch the registry.

Congress took the unusual step of passing legislation in a single day to grant that authority to the FTC. Members of both the House and the Senate blasted the telemarketing industry and West over the decision before sending the legislation to President Bush to sign.

The congressional action seemed to undo what at first appeared to be a victory for the telemarketing industry. Earlier in the day, the FTC said it planned to start enforcing the list as scheduled on Oct. 1, and the ATA acknowledged that West's ruling for the DMA would be of little aid in its own challenge.

However, ATA executive director Tim Searcy and Lisa DeFalco, who took over as chairwoman of the ATA board of directors just two weeks ago, spent the day defending their case before media outlets and holding to their position that the no-call list would be ruled unconstitutional.

“Although the press gave us a tough time, we always maintained that this would be the outcome,” Searcy said.

Searcy said he was excited about the decision and hoped it would lead to a more collaborative environment in which the industry works with regulators to craft guidelines. As of now, the no-call list will be unenforceable as of the Oct. 1 deadline, he said.

When asked about the likely event that the FTC would appeal the decision, Searcy said that the ATA would defend its rights as outlined in Nottingham's ruling. Earlier in the day, the FTC filed for an emergency stay to West's ruling while it pursued an appeal in that case.

Before Nottingham's ruling, the DMA had issued a statement urging telemarketers to respect the wishes of the more than 50 million consumers who signed up for the no-call registry regardless of the outcome of court challenges to the list.

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