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Ohio Ruling Weakens Existing-Relationship Exemption

An Ohio state Supreme Court decision yesterday could hurt the exemption from current federal do-not-call statutes that telemarketers enjoy for calls to existing customers.

The court ruled against the Columbus Dispatch newspaper's motion to throw out a consumer's lawsuit on the grounds that the company had an existing business relationship with him. The consumer, Philip Charvat of Westerville, OH, sued the Dispatch in 1998 on charges that the newspaper called him to sell a weekday subscription after he requested that he not be called.

The Dispatch responded that, because Charvat was a subscriber to the newspaper's Sunday edition, it was exempt from the DNC provisions of the federal Telephone Consumer Protection Act. When a trial court sided with the Dispatch, Charvat appealed, and when the ruling was affirmed by the appellate court, he took his case to the highest court in the state.

The state Supreme Court reversed the lower courts' rulings, stating that the Federal Communications Commission, which oversees the TCPA, allows consumers to terminate business relationships with companies at any time they choose. The court also noted that the FCC has stated explicitly that customers may request not to be called by companies with which they have existing business relationships, and that such requests represent a termination of the relationship.

“Telemarketing has become a garish billboard planted firmly in the center of the cultural landscape, and has become the target of professional and water-cooler social commentators throughout the nation,” the court stated in its ruling.

The written ruling went on to describe a scene from the sitcom “Seinfeld” in which the lead character asks a telemarketing rep for a home phone number so he can call back later.

The ruling's implication is that calls to consumers with whom a telemarketer has an existing relationship are treated the same under the TCPA as consumers with no existing relationship, said Marion Little, one of the attorneys representing the Dispatch. If adopted elsewhere, the state Supreme Court's decision would erode an exception to the TCPA that was mandated by Congress.

“We thought one of the cornerstones to the constitutionality of the statute was this congressional mandate that was carved out,” Little said. “With the court's reading now, the exception is meaningless.”

Charvat, who is not an attorney, represented himself throughout the proceedings. He received assistance from Robert Biggerstaff, a privacy activist and TCPA expert but also not an attorney, who gave oral arguments in Charvat's case.

The court's decision will deter telemarketers from using business partners to detour around the TCPA's DNC provisions, Charvat said. For example, a newspaper could partner with a credit card provider and have the credit card company offers newspaper subscriptions to its existing customers, he said.

“It's telling telemarketers that they can't partner up with somebody else to sell their stuff, and they can't keep calling after somebody asks you to stop calling,” Charvat said of the ruling.

Little said the Dispatch has not decided what legal action it will take now. One option is to appeal the state court's decision to the U.S. Supreme Court. Otherwise, the case will return to the original trial court. The Dispatch has other legal avenues it can pursue at the trial level and could raise the issue of First Amendment free speech protection, which was not addressed in the state Supreme Court's ruling, Little said.

According to Tyler Prochnow, state legislative counsel for the American Teleservices Association, the court’s ruling is unsurprising. Consumers terminate relationships with companies when they ask not to be called, but re-establish the relationship when they make another purchase from the same company, he said.

“I don’t think it says anything we don’t advocate,” Prochnow said of the ruling. “The decision is straight out of the information we give our members at our legal compliance seminars.”

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