Strategies for Legal Challenges

Interest has risen in recent months about potential legal challenges to certain state laws regulating telemarketers. Whether it is the frustration marketers have found with the 50-state regulatory environment or that they are fed up watching legislators play games to pass legislation that places an undue burden on their industry, telemarketers have discovered a new interest in the court system.

With all this discussion of constitutionality and free speech, it is worthwhile to review the standards that courts most likely will use to determine whether a particular law passes constitutional muster. Though many factors would be equally important in any ruling, in general there are several tests that a court would apply when reviewing an initiative on First Amendment grounds.

Content neutral. The first analysis would be whether the proposal is a “content-neutral restriction” on free speech. Does the proposal limit speech based on the content of the speech as opposed to limiting speech in general? A statute that restricts speech based on content is generally unconstitutional. A recent federal case reiterated the standard by stating, “[T]he ‘principal inquiry’ in content-neutrality cases is ‘whether the government has adopted a regulation of speech because of disagreement with the message it conveys.’ “

Given that most of the legislation the industry faces focuses on calls that offer the sale of goods and services, a likely result is that such a law would be considered a restriction on commercial speech. As a recent federal case in New Jersey noted, “Where a statute draws a distinction between the regulation of commercial calls and noncommercial calls, it is much more likely to be considered content-based.”

Restrictions on commercial speech. “The First Amendment protects both the right to communicate and the right to receive information” – Erwin v. State. “First Amendment protections are not diluted merely because information is sold for profit …” – in a now-familiar four-part test, the court in Central Hudson Gas & Elec. Corp. v. Public Service Commission set forth the factors a court must consider in determining whether a restriction on commercial speech passes constitutional muster.

First, the speech “must concern lawful activity and not be misleading.” Second, the government must assert a “substantial” interest in regulating the speech. Third, the regulation must be one that “directly advances the governmental interest asserted.” Finally, the regulation must not be “more extensive than is necessary to serve that interest.” Given this, the telemarketing industry should consider two primary means of challenging any statutory enactment:

• First, the measure could be considered unconstitutional if it fails the third prong of the Central Hudson test. To demonstrate this, the industry must show that the initiative would not remedy the perceived harm or would provide “only ineffective or remote support for the government’s purpose” [Valley Broadcasting Co. v. United States]. In other words, if the industry can offer evidence that the restriction on telephone solicitations for the sale of goods and services would not significantly alleviate the alleged “invasions of privacy” that formed the basis for the proposed law, it may be unconstitutional.

By demonstrating that calls not designed to sell goods and services, such as those seeking charitable or political donations, and calls made to people with an existing business relationship are as prevalent as the calls the initiative seeks to ban, the industry can show that the proposed remedy does not adequately address the problem. “A city may not distinguish between commercial and noncommercial speech if both are equally responsible for the problems the city seeks to alleviate” [Doucette v. City of Santa Monica].

• The second means mirrors challenges to statutes trying to ban door-to-door solicitors. In Project 80’s v. City of Pocatello, a youth group challenged two city ordinances that restricted door-to-door solicitation, barring from private residences all such “peddlers” who were not “requested or invited” by the individual homeowners. The court held that those restrictions disregarded “far less restrictive and more precise means.” The court said a less restrictive measure to protect residential privacy would be to prohibit solicitation “at households that have posted a sign or listed themselves in a registry.”

Though this question may not succeed in challenging certain types of regulation, like state-run do-not-call lists, it would be relevant when contesting the validity of statutes that seek to ban certain forms of telemarketing. The Project 80’s decision is still good law, and it should support a conclusion that a ban on telemarketing calls cannot withstand constitutional challenge. Such a proposal ignores “far less restrictive and more precise means” of promoting governmental interests in protecting privacy, such as the existing option of do-not-call lists.

These are not one-size-fits-all principles. Each case will be determined by the merits of the particular law being challenged and the perceived harm felt by those making the challenge. The industry should be prepared to challenge certain restrictions by showing that the proposed law would not effectively remedy the alleged problems it was designed to and that it ignores less restrictive alternatives that would not have such a tremendous effect on freedom of speech.

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