10th Circuit Stays District Court Injunction of Implementation of Do Not Call Registry

October 7, 2003. The U.S. Court of Appeals (10thCir) issued an order [24 pages in PDF] staying the September 25 order of the U.S. District Court (DColo) that barred the Federal Trade Commission (FTC) from implementing its national telemarketing do not call registry. The FTC and FCC may now proceed to implement and enforce their rules pertaining to the do not call registry.

While this order issues a stay only, and at least nominally, does not address the merits of the appeal, to find cause for issuing the stay, the Appeals Court first had to find the FTC had demonstrated a substantial likelihood of success on the merits. That is, the Appeals Court found that there is a substantial likelihood that the District Court erred in its constitutional analysis. This may foretell how the Court of Appeals will ultimately rule on the merits.

On September 25, the District Court in Denver, Colorado issued its Memorandum Opinion and Order [34 pages in PDF] holding that FTC's do not call registry violates the First Amendment free speech rights of telemarketers.

The District Court case is Mainstream Marketing Service, TMG Marketing Inc., and American Teleservices Association v. Federal Trade Commission, et al., D.C. No. 03-N-0184, U.S. District Court for the District of Colorado, Judge Edward Nottingham presiding.

The FTC appealed. The Appeals Court case is Federal Trade Commission, et al. v. Mainstream Marketing Service, TMG Marketing Inc., and American Teleservices Association, Appeals Court No. 03-1429. Judges  Seymour, Ebel and Henry issued the per curiam order staying the District Court.

See also, stories titled "Colorado District Court Holds That Do Not Call Registry Violates 1st Amendment" in TLJ Daily E-Mail Alert No. 747, September 26, 2003, "FTC Appeals District Court Ruling That Do No Call Registry Violates 1st Amendment" in TLJ Daily E-Mail Alert No. 748, September 29, 2003; "Do Not Call Registry Developments" in TLJ Daily E-Mail Alert No. 749, September 30, 2003; and "Senate Commerce Committee Holds Hearing on Do Not Call Registry" in TLJ Daily E-Mail Alert No. 750, October 1, 2003.

The Appeals Court wrote that "To obtain a stay under these rules, the FTC must address the following factors: (1) the likelihood of success on appeal; (2) the threat of irreparable harm if the stay or injunction is not granted; (3) the absence of harm to opposing parties if the stay or injunction is granted; and (4) any risk of harm to the public interest."

With respect to likelihood of success on the merits, the Court wrote that "Regulation of such commercial speech passes constitutional muster if (1) the government asserts a substantial interest to be achieved by the restrictions; (2) the restriction directly advances that governmental interest; and (3) the restriction is narrowly tailored to meet that interest." The Appeals Court, like the District Court, cited the Supreme Court case of Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980) as the controlling precedent.

The Appeals Court applied Central Hudson to the facts of this case and concluded that "there is a substantial likelihood that the FTC will be able to show a reasonable fit between the substantial governmental interests it asserted and the national do-not-call list or, in other words, that the list directly advances the government’s substantial interests and is narrowly tailored." And consequently, the Appeals Court found that "After reviewing the record and the parties’ submissions, we are satisfied the FTC has met its burden."

The Appeals Court opinion also contains the following order. "We ORDER the district court’s permanent injunction preventing implementation of the FTC’s national do-not-call list stayed pending final resolution of this appeal on the merits. We further ORDER that the petition for review on the merits be expedited. The FTC shall file its opening brief on October 17. Mainstream Marketing shall file its responsive brief on October 31. The FTC shall file any reply on November 7. Oral argument will be held in Tulsa, Oklahoma, on November 10, 2003."

FTC Chairman Timothy Muris (at right) issued a statement: "I am heartened that the court of appeals has granted our request to stay the order of the U.S. District Court for the District of Colorado enjoining enforcement of the FTC's Do-Not-Call Rule. This is an important victory for American consumers. We believe the Rule fully satisfies the requirements of the U.S. Constitution, and we will now proceed to implement and enforce the Do Not Call Registry."

FCC Chairman Michael Powell stated in a release [PDF] that "We're pleased that the FTC will now be allowed to move forward with their Do Not Call registry.  The ability to cooperate with the FTC will make our enforcement efforts more efficient and more effective. This means better protection from unwanted calls for the tens of millions of Americans who asked not to be bothered."

Rep. Billy Tauzin (R-LA), the Chairman of the House Commerce Committee also issued a release. He stated that "This decision is great news for consumers and families. In effect it says ‘hello’ to common sense. Finally, a federal court has recognized that Americans have a right to say ‘goodbye’ to unwanted calls from pesky telemarketers. I’m confident that the constitutionality of the do-not-call registry will ultimately be upheld by the courts."

President Bush also released a statement: "Today's decision by the U.S. Court of Appeals for the 10th Circuit to allow the FTC to enforce the Do Not Call Registry is a victory for Americans who want to reduce the nuisance of unwanted telephone solicitations. The American people have the right to limit annoying telemarketing calls, and I am pleased that both the Federal Trade Commission and the Federal Communications Commission will now be able to ensure that Americans have that choice while the courts continue to consider the issues."