The Legal Status of the Don't-Call Registry:
Sooner or Later, They'll Leave You Alone

Tired of telemarketers calling your home at all hours to push no-fee credit cards, long-distance telephone service, and low-interest car loans? Nearly everyone is. Americans have registered over 50 million phone numbers with the Federal Trade Commission's "do not call" list since the program began in late June.

Tomorrow, October 1, 2003, was supposed to be the deadline for commercial telemarketers to respect the wishes of people who signed up with the FTC.

But a flurry of recent legal activity has placed the program's legal status in doubt.

First, a federal district judge in Oklahoma ruled that the FTC lacked authorization from Congress to establish the no-call registry. Reacting with dizzying speed, Congress overwhelmingly passed and President Bush signed new legislation clearly granting the FTC the necessary authority to maintain and enforce the list.

Before the ink was dry on the new law, however, another federal district judge, this one based in Colorado, ruled that the no-call list violates the First Amendment. If that ruling stands up on appeal, then the only remaining move for Congress would be to propose a constitutional amendment allowing the no-call list. And judging by the speed with which Congress reacted to the Oklahoma ruling, it might do just that.

But the drastic step of amending the Constitution probably won't be necessary. The district court in Colorado misread the First Amendment. Accordingly, the U.S. Court of Appeals for the Tenth Circuit, or failing that, the U.S. Supreme Court, will likely reverse the district court's holding, and allow the no-call-list program to go forward--eventually. Until then, you may have to endure some more annoying phone calls.

How the No-Call Registry Works

The beauty of the no-call registry is its simplicity. You simply point your web browser to donotcall.gov, and type in your email address and up to three phone numbers at a time. (I registered my home, office, and mobile phone numbers.) You'll instantly find a message in your inbox asking you to confirm that you want to sign up. You click the link and you're done. The whole process takes about two minutes.

Three months after you've registered, commercial telemarketers are forbidden from calling you. For a modest fee ($25 per area code, with a maximum fee of $7,375), a telemarketer can receive a list of all the numbers on the no-call list. If a telemarketer makes an unauthorized call, the consumer (that's you!) can just go back to donotcall.gov and file a complaint, which the FTC will then use to prosecute the offending company.

A government program that's user-friendly, convenient, and completely voluntary! To the consumer, it sounded too good to be true. To the telemarketing industry, though, the no-call registry spelled doom. So they filed two lawsuits to try to stop it.

The Oklahoma Case: Did the FTC Have Jurisdiction To Act?

The first federal court decision striking down the no-call registry relied on statutory grounds. In an order issued on September 23, 2003, federal district judge Lee West ruled that the FTC was the wrong federal agency to compile the no-call registry. Congress had authorized a federal agency to create such a list, he said, but the federal agency was the FCC--the Federal Communications Commission--not the FTC--the Federal Trade Commission.

Sure enough, there it is in plain English in the Telephone Consumer Protection Act of 1991: Congress gave the power to the FCC. But arguably, it gave the power to the FTC too--contrary to Judge West's ruling.

In 1994, Congress enacted another statute, the Telemarketing and Consumer Fraud and Abuse Prevention Act, which says that the FTC can prohibit "deceptive or abusive telemarketing practices."

What could be more abusive, the FTC reasoned, than calling people who have expressly indicated that they don't want to be called? The FTC argued that Congress simply gave overlapping power to two federal agencies: Either it or the FCC could have established the no-call registry.

But Judge West didn't buy it. In light of the more specific grant of power to the FCC, he said, the FTC's power to regulate abuse could not be construed to cover all commercial telemarketing calls.

That seems fair enough, until one considers that after the FTC announced its plans to go forward with its no-call registry, Congress specifically ratified the plan--showing that it did indeed intend for the FTC to have jurisdiction. First, in February of this year, Congress appropriated money specifically for the purpose of implementing the FTC's no-call registry. Then, in March, Congress enacted something called the Do-Not-Call Implementation Act.

It's hard to imagine how Congress could have been more specific than that, but even this wasn't good enough for Judge West. He said that the Implementation Act did not "unequivocally grant the authority [to the FTC] to promulgate a do-not-call registry. It merely recognize[d] that the FTC ha[d] done so." This is what lawyers call a fine distinction, and what other people call ridiculous.

In any event, Judge West didn't have to wait to get reversed by the U.S. Court of Appeals for the Tenth Circuit, because within two days, Congress overwhelmingly gave the FTC the authority it needed in unequivocal terms. Louisiana Congressman Billy Tauzin joked that the latest law should be called the "This Time We Really Mean It Act."

The Colorado Case: Did the Registry Violate the First Amendment?

Within hours of Congress's response to Judge West, Judge Edward Nottingham issued a ruling invalidating the no-call registry on free speech grounds. Because this ruling is rooted in the Constitution, while a higher court may overrule it, Congress cannot override it with a mere statute. When a constitutional ruling and a regulation or statute clash, the constitutional ruling prevails.

Do telemarketers really have a free speech right to call you at home even when you have said you don't want them to? Not at all. Indeed, in the 1970 case of Rowan v. United States Post Office Dep't, the U.S. Supreme Court upheld a federal statute enabling postal customers to enlist the aid of the Postmaster General in preventing mail deliveries of advertisements "which the addressee in his sole discretion believe[d] to be erotically arousing or sexually provocative." There, the Court reasoned that there is no constitutional right to speak to an unwilling listener in his or her home, and that the law did not constitute censorship because the recipient, not the government, decided what material to exclude.

This logic directly applies to the no-call list, of course. But Judge Nottingham thought that the Rowan case was not controlling, because the FTC's no-call list vests too much power in the hands of the government. Someone who signs up for the no-call list bars calls from all commercial telemarketers, but not, crucially, from charitable organizations or companies with which the phone customer has a prior business relationship. Judge Nottingham said that this distinction--between, on the one hand, cold-calling commercial enterprises and, on the other hand, charities and companies with prior relationships--constitutes "content discrimination" on the part of the government.

But under the Constitution, isn't the government entitled to treat commercial speech differently from charitable speech?

Yes, said Judge Nottingham, insofar as the different treatment is relevant to the government's regulatory purpose. However, unsolicited calls from a charitable organization can be every bit as annoying as unsolicited calls from commercial salespersons--so here, he argued, the discrepancy in treatment is unjustified.

In support of this point, Judge Nottingham relied on the 1993 Supreme Court decision in Cincinnati v. Discovery Network, Inc. There, the high court invalidated a Cincinnati municipal rule that prohibited the distribution of free advertising circulars from newsracks, while permitting conventional newspapers to be distributed that way. Judge Nottingham held that, similarly, the government could not, with the no-call list, prohibit commercial, but not charitable calls: It had to prohibit both or neither.

That might be a plausible reading of Discovery Network alone. But it's not a plausible reading of that precedent in conjunction with Rowan. After all, Rowan specifically approved a "do not mail" program that was limited to commercial advertising--just like the current don't call registry

Here is what the conjunction of Discovery Network and Rowan means: Under Discovery Network, the government may not itself make certain distinctions between commercial and non-commercial speech. But under Rowan, the government can provide individuals with special assistance in rejecting commercial speech in particular. Because Judge Nottingham did not give enough weight to Rowan, there is a fair chance that his ruling will be reversed on appeal.

How soon is anybody's guess. As this column goes to press, the FTC's motion for an emergency stay of Judge Nottingham's ruling remains pending. Moreover, FCC Chairman Michael Powell issued a statement on Monday, September 29, saying that his agency would begin enforcing its own no-call rules as scheduled on October 1. Powell opined that the FCC is not bound by Judge Nottingham's ruling.

The FCC announcement could, in turn, spur another furious round of court hearings. But given the alacrity of our elected representatives' actions on this issue, it's entirely possible that the states will have ratified a "Do Not Call Amendment" to the Constitution by the end of the week.