Holding that a provision of the TCPA regarding unsolicited fax advertisements was unconstitutional, a federal judge in Missouri effectively held, by extension, that the standards applied to other laws affecting telemarketing must be constitutional.
A federal judge in Missouri recently held that the provision of the TCPA which was the basis of a multi-million dollar judgment against a Hooters restaurant in Georgia for sending unsolicited fax advertisements was unconstitutional.
The judge struck down this provision because he held that Congress had not gathered sufficient evidence when it passed the TCPA that unsolicited faxes caused any real harm - rhetoric, allegory and conjecture about the harm faxes caused were not enough to justify the law’s effect on commercial speech.
The ruling is important because it shows the standards that other laws affecting telemarketing, including state do-not-call list laws and the Federal Trade Commission’s proposed revisions to the Telemarketing Sales Rule, must meet to be constitutional.
The TCPA prohibits faxes containing advertisements in any circumstance except when the recipient has expressly given permission to the sender. Unlike most of the rest of the provisions of the TCPA, this ban on fax advertisements contained no exceptions other than if the recipient expressly invited the fax.
The judge ruled that this ban affected speech, and therefore was governed by the First Amendment. Because the rule only involved advertisements, the judge applied the constitutional test for laws which regulate commercial speech, which is known as the Central Hudson test after the case where it was first applied.
In that case, the United States Supreme Court determined that commercial speech, like advertising a good or service, was not speech protected at the “core” of the First Amendment, like a political candidate’s stump speech or a charitable solicitation for a donation. Laws regulating “core” speech, e.g. campaign finance laws, are only constitutional if they can pass the “strict scrutiny” test. The Central Hudson test applies an “intermediate” level test to laws affecting commercial speech, much less intense than a law which regulates “core” speech but more rigorous than the review applied to laws which don’t affect speech at all.
Laws which don’t affect speech at all are subject to “rational” review only, which basically means that they are constitutional unless there is no conceivable legitimate reason for the Legislature to pass the law.
Not surprisingly, whether a law is constitutional or not depends largely on what test a court applies - laws very rarely pass the strict scrutiny test, almost always pass the “rational” review test, and sometimes pass “intermediate” scrutiny.
The key difference between intermediate or strict scrutiny, and rational review, however, is that if a court applies either of the former tests, the government bears the burden of proving that the law in question furthers a legitimate government interest. For example, fighting fraud has often been upheld as a legitimate government interest with regard to laws affecting commercial speech. If the government advanced fighting fraud as the reason for a given law, a court reviewing the constitutionality of a law would try to determine if the government had considered real evidence that the law was actually related to fighting fraud.
The Federal judge in the Missouri case found that the government did not offer sufficient evidence that a ban on advertising faxes furthered any legitimate goal: “It is obvious for the legislative history that Congress did not consider any studies or empirical data estimating the cost of receiving a fax or the number of unsolicited fax advertisements an average business receives in a day before enacting the TCPA.” He therefore struck down the provision.
But that’s not the end of the matter. Other portions of the TCPA have previously been upheld in other jurisdictions using other tests. As I noted above, which test a court uses often determines the outcome of a constitutional challenge, regardless of the facts of a particular case. This means that there may be a conflict regarding the constitutionality of this law between jurisdictions. Appellate courts exist in part to resolve these potential conflicts, so we will likely see more litigation on the constitutionality of the TCPA. The United States Supreme Court may ultimately resolve this conflict.
The comment period to the proposed revisions to the Telemarketing Sales Rule ended on April 15. Among the thousands of submitted comments was a lengthy joint submission from the Attorneys General of nearly every state which made two notable arguments.
The first was that the proposed national do-not-call list should not affect the operation of state do-not-call lists and that businesses should be required to continue to subscribe to the state lists as well as any national list. The comment argued, in part, that “Maintenance of many state No Call systems in partially offset by modest fees paid by prospective telemarketers seeking access to the No Call lists. If telemarketers no longer have a need for a state list, this source of funding will be impacted, jeopardizing the ability of some states to maintain these systems.”
The explosion of state lists has made these fees anything but modest, however, and has made the compliance burden for legitimate businesses even greater. Rather than focusing on the financial need for the maintenance of state bureaucracy, the FTC should focus on maximizing consumer protection and minimizing adverse effect on legitimate speech and industry. As set forth above, that is what is required by the First Amendment.
The second argument made by the Attorneys General is that charities, as well as commercial telemarketers, should be subject to the provisions of the TSR. The proposed TSR applies restrictions to charitable solicitations only if they are made through a for-profit entity. This argument also runs afoul of the tests described above. Charitable solicitations are subject to strict scrutiny because the Supreme Court has ruled that a charitable solicitation is speech protected at the core of the First Amendment. The FTC, further, does not have jurisdiction over nonprofit entities. The Supreme Court has also held that it makes no difference for the purpose of constitutional review if a charity chooses to deliver its message with the assistance of a for-profit entity.
It is this provision of the proposed TSR, therefore, which is most likely to be subject to the strict scrutiny test if challenged under the First Amendment.