Tenth Circuit Upholds Constitutionality of Do-Not-Call Registry

Date: Feb 18, 2004

On February 17, 2004, the U.S. Court of Appeals for the Tenth Circuit upheld the constitutionality of the national do-not-call registry established by the Federal Trade Commission ("FTC") and Federal Communications Commission ("FCC"). This decision squarely addresses the delicate constitutional balance between privacy rights on the one hand, and commercial speech right on the other. In brief, the court found that the registry "directly advances the government's important interests in safeguarding personal privacy and reducing the danger of telemarketing abuse without burdening an excessive amount of speech." Thus, the court found a reasonable fit between the government's interests and the regulations. The court also dismissed challenges to registry fees, the "established business relationship" exception adopted by the FCC, and the FTC's authority to enact do-not-call rules. The Tenth Circuit's decision addresses four challenges to various aspects of the do-not-call registry, which were consolidated. One case came on appeal from a Colorado district court, another came on appeal from an Oklahoma district court, and two challenges involved petitions for review of the FCC's Order establishing the agency's do-not-call rules. The Tenth Circuit determined that all the challenges lacked merit and upheld the do-not-call list in its entirety. According to the Tenth Circuit, the do-not-call registry does not violate First Amendment rights of telemarketers because (1) the list only restricts "core commercial speech," namely, commercial sales calls, which are demonstrably more intrusive to privacy than political or charitable calls, (2) the registry targets speech that invades the privacy of the home and an individual's right to be left alone, which is afforded special constitutional protection, (3) the opt-in nature of the do not call registry allows consumers to choose whether to receive commercial calls, and (4) the registry furthers the government's interests in preventing abusive telemarketing and invasion of privacy. The court also found persuasive the fact that businesses are not prohibited from contacting consumers via direct mail or other forms of advertising, and consumers have a choice of restricting certain calls and not others by making company-specific do-not-call requests or by registering on the national registry while giving certain businesses their express consent to receive calls. The court also specifically noted that its definition of "commercial sales calls" included "sales calls made to induce purchases of goods or services," and excluded charitable or political fundraising.The direct marketing industry continues to have concerns about inconsistencies between the FTC and FCC rules, as well as the potential for the do not call list to be abused by both hackers and by companies seeking to prevent their competitors from contacting their customers. Litigation over the telemarketing rules raises important general questions about the scope of the right to privacy versus the right to market in the U.S. The decision, however, does not resolve legal questions about the FCC's amended rules on unsolicited fax advertisements (the effective date has been stayed until January 1, 2005). The elimination of the "established business relationship" exemption in the do not fax rules, the failure to exempt business to business faxes, and the blanket nature of the ban on unsolicited faxing, remain key issues for many businesses. Whether those restrictions are constitutional and consistent with administrative law principles may be the subject of potential future litigation. For more information on telemarketing, Do-Not-Call, Do-Not-Fax and spam laws, contact Sheila A. Millar at (202) 434-4143, or by e-mail at millar@khlaw.com, Vanessa R. Hamilton at (202) 434-4111, or by e-mail at hamilton@khlaw.com, or Tracy P. Marshall at (202) 434-4234, or by e-mail at marshall@khlaw.com.