Overview of Do-Not-Call Registry Litigation

by ReclaimDemocracy.org Staff & Volunteers
Last updated October 4, 2004

Editors’ Note: If you seek detailed legal analysis of the DNCR case, see: Mainstream Marketing Services, et al. v. Federal Trade Commission: Resources and Legal Analysis

Introduction

Beneath the surface of the Do-Not-Call list dispute lie critical constitutional and democratic questions, such as: should corporations have free speech rights? Should courts consider economic impacts in evaluating whether a law is constitutional?

ReclaimDemocracy.org has compiled resources presenting all sides of this dispute and the larger issues of “commercial speech” and corporate claims to the protections of the U.S. Constitution. We do so because we believe it presents a key opportunity to re-examine the judicial creation of constitutional rights for corporations (corporate personhood) and explore how corporations use ill-gotten power to trump bona fide rights of citizens.

Background of the Do-Not-Call Registry (DNCR)

U.S. residents have tried to avoid unwanted phone solicitations with unlisted numbers, caller ID, voice mail, and other devices. Until recently, the burden rested on individuals to stop unwanted solicitations by spending time and money on these technologies and by requesting that they be added to company-specific”do not call” lists (a request telemarketers legally are obliged to honor). Despite these significant expenditures of time and money, many citizens complain they are losing control and are unable to defend their personal space.

In response, the Federal Trade Commission (FTC) created the national Do-Not-Call registry in 2003. The DNCR allows citizens to place their phone numbers on a national list controlled by the federal government. Under the law, it is illegal for commercial telemarketers to call people on the registry (however businesses may solicit recent customers who are on the list).

Citizens may register online at www.donotcall.gov or by phone. Three months after registration, commercial telemarketers are forbidden from calling you. Telemarketing companies are required to cover the costs of the program by purchasing the do-not-call lists from the government at a cost of $25 per area code and a $7,375 maximum annual charge. If a telemarketer makes an unauthorized call, the recipient can file a complaint, which the FTC will compile and use to fine or prosecute repeat offenders.

Telemarketing Corporations Sue to Block the Program

Telemarketing corporations filed two lawsuits attempting to stop implementation of the program. In the first, five telemarketing firms jointly argued that the Federal Trade Commission did not possess the legal authority to create and enforce the registry. On September 24, 2003, U.S. District Judge Lee R. West ruled for the telemarketers and prohibited the FTC from implementing the list and its associated restrictions. In response, the next day Congress approved legislation ratifying the authority of the FTC to enforce the no-call list, which George W. Bush promptly signed into law.

This Congressional save did not last long, however. Another group of telemarketing corporations (Mainstream Media Services, TMG Marketing, and American Teleservices Association) had filed a second lawsuit. On September 25 Denver-based U.S. District Court Judge Edward Nottingham decided that the registry unconstitutionally violates the telemarketing corporations’ “free speech rights.” Nottingham reasoned that no legal basis existed for the FTC to allow citizens to screen for-profit solicitors while not also offering citizens an opportunity to block calls from non-profit groups. So Nottingham prohibited the FTC from implementing the registry on October 1, 2003, the date it was supposed to take effect.

The FTC appealed the decision to the Tenth Circuit Court of Appeals. On October 7, a three-judge panel gave the FTC permission to enforce the registry while it decides whether to uphold or strike down Judge Nottingham’s decision. In doing so, the Tenth Circuit found that the FTC had a substantial chance of success on the merits of its appeal regarding the constitutionality of the DNCR.

The FTC reopened access to the registry on October 10, and it went into full effect on October 17. In addition, the Federal Communications Commission (FCC), which has overlapping jurisdiction with the FTC to protect citizens from telemarketing abuses, passed regulations under which it, too, can enforce the DNCR. The two agencies will coordinate enforcement. While the ultimate constitutionality of the registry hangs in the balance, the FTC already has issued civil fines to enforce the registry (see this pdf file for details).

Getting at the Core Issues

The DNCR dispute provides provocation to examine some extreme arguments made by the telemarketing industry:

1. Corporations enjoy commercial speech rights that are on par with, and may even take precedence over, the rights of people to enjoy peace and privacy in their homes.

2. The government must weigh the financial impacts of speech regulation on an industry as part of evaluating a law’s constitutionality. This is particularly disturbing given that telemarketing corporations voluntarily chose to create an industry based on breaching citizens’ privacy.

The inherent conflict between court-created “corporate rights” and the rights of human beings is growing. Consider this dualism: Corporations have obtained “intellectual property rights” to profit exclusively (with government enforcing their private monopoly) from the creations of employees–even for decades after an employees death. Access to, and use of, this information by others is limited because the government forcibly protects this lucrative proprietary information. Conversely, you have almost no power to protect your own personal information, such as your telephone number, e-mail addresses, home address, and personal financial information; and what little power you possess (excepting the DNCR) has required substantial time and effort to exercise. Courts have created corporate property rights allowing businesses to buy and sell this information without your consent.

The question for citizens is whether to accept corporate usurpation of human rights or to help revoke illegitimately-granted corporate privileges.

Updates: On October 4, 2004, without comment, the U.S. Supreme Court rejected an appeal by commercial telemarketers, which upheld the no-call list as constitutional.

Additional Resources

See our legal analysis of the Do-Not-Call Registry cases, with links to major briefs, court decisions and news coverage.

Learn more about Corporate Personhood