Petition for Writ of Certiorari — Distributel, Inc. v. Alaska

Supreme Court brief1997

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Supreme Court, U.S.

o~ FILED

(1)

“97-8 7 MAY 2 8 1997

OFFICE OF THE CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1997

DISTRIBUTEL, INC.

Petitioner,

vs.

STATE OF ALASKA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE SUPREME COURT OF THE STATE OF

ALASKA

Carl J.D. Bauman

HUGHES THORSNESS POWELL

HUDDLESTON & BAUMAN LLC

550 West 7th Avenue, Suite 1100

Anchorage, Alaska 99501

(907) 274-7522

Attorneys for Petitioner

Distributel, Inc.

28th day of May, 1997.

QUESTIONS PRESENTED FOR REVIEW

1. Whether the Alaska Supreme Court

improperly interpreted Alaska Statute chapter 45.63,

which makes telephonic solicitations to any Alaskan,

without first registering with the State, a felony, without

regard to United States constitutional principles

including commercial free Speech, due process, equal

protection, and the commerce clause.

2. Whether Congress, in the Telemarketing

and Consumer Fraud and Abuse Protection Act, 15

U.S.C. § 6101 et seq., intended to preempt the field of

restrictions on business-to-business _ interstate

telemarketing.

TABLE OF CONTENTS

Questions Presented For Review..............c.cc.cc0c00000- 1

Table Of Cited Authorities .............0000.000 eee 3

Se Fe I occccsscic eh races cat dent ecactesccmioesesuveie 4

Constitutional Provisions, Statutes, And

MO EAD EL SA ONSEN ER EER 4

| Res eS ea i)

PIII sass cicisionssitsscsinactaeslesbe St cute genase: 12

A. Constitutional Issues Should Be Taken into

PIE scisiccscunis RT RE ne ERD 12

1. Commercial Free Speech Is

Entitled to “Some” Protection. ............ 14

SZ The vagueness of AS 43.63.080(14)

Violates Due Process......................... 14

3. The Commerce Clause Protects

Interstate Commerce Unless

Compelling State Interests Are

MOUNT ecinsciasalnasecs ideale atsitonicescce 16

4. AS 45.63 Violates Equal

Protection by Favoring

Alaska-Based Businesses. ................ 17

B. The FTC Rules Preempt State

Regulation of Interstate Mail Order

Catalog Business Between

PD. * cede 19

CII iin nececnstchcancdcsiceocsin eee een 21

TABLE OF CITED AUTHORITIES

CASES

Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 208 (1985) --------------.- 19

Felder v, Casey, 487 U.S. 131, 138 (1988) --20

Gade v, National Solid Wastes Management Association, 505 U.S. 88

(1992) 19, 20

j , -- F.3rd--, 1997 WL 199261 (7th

Cir. 1997) 21

Jones v, Rath Packing Co., 430 U.S. 519, 525 (1977) --- 19

Maine v. Taylor, 477 U.S. 131, 106 S. Ct. 2440, 91 L. Ed. 2d 110

(1986) --17

Malone v. White Motor Corp., 435 U.S. 497 (1978) --- 19

Marks v. City of Anchorage, 500 P.2d 644(Alaska 1972) --------------- 15

j , 897 P.2d 33 (Alaska 1995)16

State v. Christensen, 329 N.W.2d 382 (Wis. 1983) -15

Terminiello v. Chicago, 337 U.S. 1 (1949) --- 14

Williams vy, Zobel, 619 P.2d 422 (Alaska 1980) 18

Zobel v. Williams, 457 U.S. 55 (1982) -------------------------------2----- 1g

TREATISES

Sutherland Statutory Construction----------------------00e-----000-------- 13

CONSTITUTIONAL PROVISIONS

BASIS FOR JURISDICTION

(i) The Alaska Supreme Court issued its

opinion in Distributel, Inc. v. State of Alaska, No. S-

7157, 933 P.2d 1137 (Alaska 1997), on January 3,

1997.

(ii) The Alaska Supreme Court denied

Distributel’s petition for rehearing on February 27,

1997.

(iv) The jurisdiction of this Court is invoked

under 28 U.S.C. § 1257(a).

CONSTITUTIONAL PROVISIONS, STATUTES, AND

REGULATIONS

United Ststen Comatiiilinn:

Article |, § 8, cl. 3 [Commerce Clause]

The Congress shall have power. . . To

regulate commerce with foreign nations,

and among the several States and with

the Indian Tribes.

Amendment | [Free Speech]

Congress shall make no law respecting

an establishment of _ religion, or

prohibiting the free exercise thereof; or

abridging the freedom of speech, or of

the press; or the right of the people

peaceably to assemble, and to petition

the Government for a_ redress of

grievances.

Amendment V [Due Process]

No person shall be . . . deprived of life,

liberty, or property, without due process

OT law nor sha Private prope Je lake

for public use. without jus! sompensat

Amendment XIV § * Jue Process and ¢&

Protection]

No State shall make or enforce an,

‘aw whicn snali abridge the privileges

anc immunites of citizens of the United

States; nor shall any State deprive any

person of life, liberty, or property, without

due process of law. nor geny to any

person within its jurisdiction the equal

protection of the law

Telemarketing and Consumer Fraud and Abuse

Protection Act:

15 U.S.C. § 6101. Findings

The Congress makes the following findings:

(1) Telemarketing differs from

other sales activities in that it can be

Carried out by sellers across State lines

without direct contact with the consumer.

Telemarketers also can be very mobile,

easily moving from State to State.

(2) Interstate telemarketing

fraud has become a problem of such

magnitude that the resources of the

Federal Trade Commission are not

sufficient to ensure adequate consumer

protection from such fraud.

(3) | Consumers and others are

estimated to lose $40 billion a year in

telemarketing fraud.

(4) Consumers are victimized

by other forms of telemarketing

deception and abuse.

(5) Consequently, Congress

should enact legislation that will offer

consumers necessary protection from

telemarketing deception and abuse.

15 U.S.C. § 6106. Definitions

(4) The term “telemarketing” means a

plan, program, or campaign which is

conducted to induce purchases of goods or

services by use of one or more telephones

and which involves more than one interstate

phone call. The term does not include the

solicitation of sales through the mailing of a

catalog which -

(A) contains a written description, or

illustration of the goods or services

offered for sale,

(B) includes the business address of

the seller,

material or illustrations, and

(D) has been issued not less

frequently than once a year,

where the person making the solicitation

does not solicit customers by telephone but

only receives calls initiated by customers in

response to the catalog and during those

calls takes orders only without further

solicitation.

a “

ioe ee ee a ee

Telemarketing Sales Rule

16 C.F.R. § 310.6. Exemptions

The following acts or practices are

exempt from this Rule:

(9) | Telephone calls between a

telemarketer and any business, except

calls involving the retail sale of

nondurable office or Cleaning supplies:

provided, however, that § 310.5 of this

Rule shall not apply to sellers or

telemarketers of nondurable Office or

cleaning supplies.

Alaska Statute Sec. 45.50.471. Unlawful acts and

practices

(a) Unfair methods of competition and unfair

or deceptive acts or practices in the conduct of trade

or commerce are declared to be unlawful.

(b) The terms "unfair methods _ of

competition" and "unfair or deceptive acts or practices"

include, but are not limited to, the following acts:

(35) violating AS 45.63 (telephonic

solicitations)[.]

Alaska Statute Sec. 45.50.551(b). Civil Penalties.

(b) __... if the court finds that @ person is using

or has used an act or practice declared unlawful by AS

45.50.471, the attorney general, upon petition to the

court, may recover, on behalf of the state, a civil

penalty of not more than $5,000 per violation.

Alaska Statute Sec. 45.63.010. Registration

(a) A person may not sell or attempt to sell

property or services by telephonic means if the person

makes substantially the same offer on substantially the

same terms to two or more persons, unless the

telephonic seller is registered with the Department of

Law at least 30 days before the solicitation campaign.

Alaska Statute Sec. 45.63.060(a). Criminal

penalties

(a) A person who sells or attempts to sell

property or services by telephonic means by making

substantially the same offer on substantially the same

terms to two or more persons without complying with

the registration requirements of AS 45.63.010, or who

solicits, or receives, payment for a purchase before

receiving the written contract required by AS

45.63.020 is guilty of a class C felony.

Alaska Statute Sec. 45.63.070. Remedies not

exclusive

The remedies in this chapter are in addition to other

remedies available to a buyer or the department.

Alaska Statute Sec. 45.63.080. Exemptions

This chapter does not apply to a sale or

attempted sale

(14) of property from a mail order catalog that

is published on a regular, periodic basis and that

describes or pictures the items for sale and

prominently provides the specific price of each item;

(17) by a person who solicits a sale by a

contact by telephonic means without intending to

complete the sales presentation during the contact,

seen iain aia

who does not complete the sales presentation during

the contact, and who only completes the sales

presentation at a later meeting in person, unless at the

later meeting the solicitor attempts to collect payment

for property or services delivered before the later

meeting[.]

STATEMENT OF THE CASE

Petitioner Distributel, Inc., is incorporated under

the laws of the State of California, with its principal

place of business in San Diego, California. Distribute!

designs, manufactures, markets, and distributes from

San Diego advertising specialty products to small

businesses throughout the United States. It specializes

in items such as pens, key holders, and magnetized

cards, manufactured on a bulk basis and imprinted with

the logo, name, and address of the particular business

customer. Distributel depends on repeat business,

generated generally by mailing out a several page color

Catalog that pictures and prices the products. In

addition to employing design, manufacturing, handling,

and shipping personnel, Distribute! has in-house

telemarketers who make cold calls (“lead generation

calls") to catalog recipients (businesses) to solicit

orders.

Distributel established a customer base in

Alaska prior to 1993 when Alaska Statute (“AS”)

chapter 45.63 was enacted. AS 45.63 prohibits

Solicitations by telephonic means unless the person

registers with the Alaska Department of Law or falls

within one of the 18 exemptions provided by the Alaska

Legislature. AS 45.63.060 makes a person who sells or

attempts to sell property by telephonic means, without

first registering, guilty of a Class C felony. AS

45.63.080(14) exempts a sale or attempted sale

(14) of property from a mail order

catalog that is published on a regular,

periodic basis and that describes or

pictures the items for sale and

prominently provides for the specific price

of each item.

Distributel was unaware of Alaska’s telephonic

registration law in 1993 and continued to do business in

Alaska and elsewhere just as it had done prior to 1993.

Litigation ensued. State of Alaska v. Distributel, Inc.,

Complaint for Injunction and Civil Penalties, Civ. No.

3AN-94-7353, filed on August 16, 1994. Alaska sought

to impose a $5,000 fine pursuant to AS 45.50.551(b) for

each telephonic solicitation call by Distributel to anyone

in Alaska. Complaint at J 24. Distributel raised state

and federal constitutional issues (equal protection, due

process, commerce clause, unlawful restraint of trade)

in its September 12, 1994 Answer to Complaint.

Distribute! claimed that it came within the mail order

catalog exemption, and therefore need not register.

Alaska sought a temporary restraining order

(granted the same day it was filed) and a preliminary

injunction. Distributel argued that constitutional issues

should be considered. Sept. 16, 1994, Opposition to

Motion for Preliminary Injunction, at pages 13-17

(restraint of trade, equal protection, due process, and

commerce clause). A _ preliminary injunction was

entered on October 11, 1994, without reference to the

constitutional issues, other than the following comment

from the bench:

...80 what we have is a telemarketing

company operating in Alaska that has not

complied with Alaska’s telemarketing

regulations. The registration law must be

complied with. | see no constitutional or

improper burden on Distributel in the

registration requirements and find that

they are entirely proper.

Distributel thereafter negotiated a dismissal of

the $5,000 civil penalty per call enforcement action in

exchange for a permanent injunction precluding

Distributel from telephonic solicitations in Alaska until it

registers’ or obtains approval to operate under the mail

order catalog exemption. Distributel sought approval,

but was denied by the trial judge. A timely appeal was

taken to the Alaska Supreme Court. ¢

On appeal, ODistributel raised several

constitutional issues bearing upon the proper

interpretation of AS 45.63. Opening Brief of Appeliant

at pp. 29-38; Reply Brief at pp. 16-19. The court ruled

that Distribute! waived all constitutional issues by virtue

of having entered the stipulated permanent injunction.

istri , 933 P.2d 1137,

1138-39 (Alaska 1997). The court interpreted the

; Registration is not a viable alternative for Distributel.

The concern is not that the Alaska Attorney General will

learn Distributel’s name and address or that of its principals

-- those are already known. The problem is that Alaska has

legislated a body of detailed restrictions that accompany

registration. Once registered, any compliance violation is a

Class A Misdemeanor punishable by imprisonment of up to

one year. AS 45.63.060. Compliance requirements include

a “signed, wiitten contract” which contains particular

provisions. AS 45.63.020. Distributel’s business is built on

trusting its business customers to honor an oral order and

by prompt turn around time between receiving an order and

shipping the goods. The Alaska laws would inhibit that

crucial service time and require that different, unwieldy

business practices be employed in dealing with its Alaska-

based businesses.

Alaska mail order catalog exemption without regard to

constitutional constraints. Distributel’s petition for

rehearing on the constitutional issues was denied.

ARGUMENT

A. Constitutional Issues Should Be Taken

into Account. The Alaska courts’ interpretation of

AS 45.63.080(14) to prevent Distribute! from conducting

interstate, business-to-business mail order catalog

commerce in Alaska, with lead generation calls to its

business customers, is unconstitutional as

(a) an undue infringement upon

Distributel’s rights, including its rights to

liberty, the pursuit of happiness, the rewards

of its own industry, freedom of speech, and

the right to conduct interstate commerce with

its Alaska businesses;

(b) a violation of due process by

virtue of the overly broad and vague

language of AS45.63 which makes

compliance and even-handed enforcement

unduly difficult;

under the federal and state constitution;

and/or

(d) a violation of the Commerce

Clause, Art. |, sec. 8, cl. 3 of the United

States Constitution.

When it addressed telemarketing in 1993, the

Alaska Legislature was concerned about telephone

fraud whereby innocent Alaskans are induced by false

or misleading promises of prizes to make credit card

payments over the phone. Many exemptions were

provided so as not to interfere with legitimate

businesses. AS 45.63.080(1)-(18). The Alaska

Department of Law was to adopt regulations to

implement AS 45.63. AS 45.63.090. The Department

adopted regulations in March 1994 on registration of

telephonic sellers, the information required, confirmation

thereof, changes thereto, and certain definitions.

9 AAC 14.010-.900. The Department's regulations do

not address the mail order catalog or other statutory

exemptions.

Distribute! does not offer phony prize awards or

engage in other types of telephone fraud. Distribute!

delivers products to its customers COD, and does not

accept payment before the products are made and

delivered. Typographical errors in the logo, business

name, or address, and other complaints, which are few.

are resolved on a case-by-case basis.

AS 45.63 should have been interpreted to avoid

implicating its constitutionality. Sutherland Statutory

Construction explains at § 57.24:

When the constitutionality of a statute is

in question, and under one construction it

can be upheld, while under the other it

cannot, the court will adopt the construction

supporting constitutionality. Also, if there

are two possible interpretations of a statute,

one which would raise a question of

constitutionality, and another which would

not, then the latter will be used.

AS 45.63 could have been construed so that

Distributel comes within the mail order catalog

exemption. Although it is in the public interest to be

protected from fraud, that policy is not sufficient by

itself to convert legitimate businessmen into criminals

because they happen to use the phone in the course

of what is otherwise conceded to be a legitimate

business. Several time honored reasons and policies

fundamental to a free democratic society militate

strongly in favor of Distributel and others similarly

situated.

1. Commercial Free Speech is Entitled to

3 “ ion. Terminiello v. Chicago, 337 U.S.

1, 4 (1949), held that speech, over the phone lines to

private individuals, is constitutionally protected against

censorship and punishment “unless shown likely to

produce a clear and present danger of a serious

substantive evil that rises far above public

inconvenience, annoyance, or unrest.”

That holding does not square with the effect of

the Alaska court's ruling that a call from Distributel,

inquiring whether a business that received a Distributel

catalog might want to buy one or more items, can be

prosecuted as a felony. Unless AS 45.63.080(14) is

construed to include the business-to-business

exception permitted by the Federal Trade

Commissioner, see infra, AS 45.63 will chill the first

amendment rights of mail order catalog marketers

such as Distributel.

2. The vagueness of AS 43.63.080(14) Violates

Due Process. Due process of law includes freedom

from overly broad, unduly vague penal laws. Here the

exemption in AS 45.63.080(14) is vague and

ambiguous as to what activity qualifies for the mail

order catalog exemption. A vague statute violates due

process when its indefinite contours confer unbridled

discretion upon government officials, which raises the

prospect of uneven and discriminatory enforcement.

When the language of a penal statute is

embellished by a state judiciary, as was done to

AS 45.63.080(14), the statute should be overturned as

———

—

vague and overbroad. In Marks v. City of Anchorage,

500 P.2d 644, 646 (Alaska 1972), the Alaska Supreme

Court held:

A vague statute violates the due process

clause both because it fails to give

adequate notice to the ordinary citizen of

what is prohibited and because its indefinite

contours confer unbridled discretion on

government officials and thereby raise the

possibility of uneven and discriminatory

enforcement. As appellants point out, the

ordinance now before this court raises the

spectre of all of these abuses: it prohibits

conduct which is protected by the United

States and Alaska constitutions, it fails to

give adequate notice of what conduct is

prohibited, and it gives enforcement

Officials excessive discretion.

Citizens of the United States are entitled to protection

against arbitrary discretion by state prosecutors. See

State v. Christensen, 329 N.W.2d 382 (Wis. 1983). In

Christensen, the Wisconsin Supreme Court held

Since the power to declare what conduct

is subject to penal sanctions is legislative

rather than judicial, it would risk judicial

usurpation of the legislative function for a

court to enforce a penalty where the

legislature had not clearly and

unequivocally prescribed it.

AS 45.63.080(14) appears to exempt mail order

catalog sales activity, but does not give adequate

notice to businesses such as Distributel that their mail

order catalog practices may not be exempt in the eyes

of the state prosecutor or the Alaska courts.

AS 45.63.080(14) leaves too much enforcement

discretion. Distributel has Alaska-based competitors

and 24 to 36 competitors in the San Diego area, who

compete in Alaska, none of whom have registered

under AS 45.63. Only Distributel was singled out for

enforcement action. Distributel’s competitors now

serve the business customers that Distribute!

developed prior to enactment of AS 45.63.

3. The Commerce Clause Protects Interstate

Commerce Unless Compelling State Interests Are

Involved. Distributel does not make calls to

residential citizens, and does not make calls at

irregular hours (that is, outside the hours of 8 a.m. to 5

p.m.). No compelling public policy argument can fairly

be made in the context of businesses dealing at arms

length with one another. See AS 45.02.104(c)

(“Between merchants”); 16 C.F.R. § 310.6(g)

(telemarketing law exemption for business to business

solicitations).

The very fact that the Alaska Legislature

exempted so many businesses from AS 45.63,

including mail order catalog businesses, shows that

the state interest involved in AS 45.63 is not

compelling. AS 45.63 as interpreted and applied by

Alaska constitutes a violation of the Commerce Clause

of the Constitution of the United States. In Shepherd

v. State, Dept. of Fish and Game, 897 P.2d 33 (Alaska

1995), the following is found at page 41:

The Commerce Clause of the United States

Constitution grants to Congress the power

o "regulate commerce . . . among the

several states." U.S. Const. art. |, Sec. 8.

In addition to granting regulatory power to

Congress, the Commerce Clause also

restricts the power of the states to erect

ot ohne lee |

barriers to interstate commerce. See, e.g.,

Maine v. Taylor, 477 U.S. 131, 137, 106 S.

Ct. 2440, 2446-47, 91 L. Ed. 2d 110 (1986).

AS 45.63 as_ interpreted and applied to

Distributel constitutes a barrier to interstate commerce.

AS 45.63 makes it unlawful for Distributel to make,

deliver, and be paid by a customer for goods in the

absence of a signed, written contract. AS 45.63.020.

Distributel manufactures its products in California and

sells them to customers throughout the United States,

including Alaska, without “signed, written contracts.”

This is a classic example of interstate commerce, and

a Classic example of a state law impermissibly erecting

a barrier to that commerce.

4. AS _ 45.63 Violates Equal Protection by

Favoring Alaska-Based Businesses. It is no

defense to the restraint of trade barrier to say that

Alaska-based companies might be similarly treated.

AS 45.63.080(17) renders any such argument

untenable. AS 45.63.080(17) favors Alaska-based

companies because it exempts telemarketers based in

Alaska by providing an exemption where there is “a

later meeting in person.” The exemption in .080(17)

permits cold sales calls so long as the sales person

does not intend “to complete the sales presentation

during the contact[.]”

Alaska-based competitors of Distributel have an

advantage because they can meet the .080(17)

exemption, which Distributel, as a California-based

company, can not. More directly, however, is the fact

that Alaska-based competitors of Distributel can open

their doors to the Alaska public, do not have to deliver

their products through the mail or handle orders at a

distance, and therefore are not restricted by AS 45.63.

Were Distributel to register under AS 45.63,

Alaska-based competitors would enjoy a_ distinct

advantage over Distributel because of the requirement

of AS 45.63.020 that a signed, written contract must

be received from a customer before the customer can

be charged. One of the factors which enables

Distributel to compete is its short turn around time

between receipt of an order and deliver of the

customized products to the customer. If Distributel

were constrained by .020, given the time lag involved

for interstate mail service, it would either have to delay

production and delivery of its goods to Alaska

customers or proceed to deliver and simply hope that

it would eventually receive a written contract so that it

could charge the customer. Neither alternative is

acceptable.

The Equal Protection Clause of the Fourteenth

Amendment of the United States Constitution protects

against arbitrary and unreasonable classifications.

The Alaska Legislature may not arbitrarily or

irrationally subject a special group to treatment not

accorded citizens at large. In considering an equal

protection challenge, the court is to look to the

purpose of the statute, determine whether the purpose

is legitimate and whether the means chosen have “a

fair and substantial” relationship to the goals of the

enactment, and, if so, to balance the state interest in

the means against the constitutional rights of those

affected. See Williams v. Zobel, 619 P.2d 422, 427 &

431 n.1 (Alaska 1980). The federal test is similar,

though less __ stringent. It asks whether the

classification is “rationally” related to a legitimate

purpose the legislature could have had. Zobel v.

Williams, 457 U.S. 55, 60 (1982).

The purpose underlying AS 45.63 is to protect

Alaska citizens from telephonic fraud. The means

chosen, however, including the requirements of

awaiting a signed, written contract, and the special

warranties, guarantees, and refund policies required

by Alaska law, are questionable. The construction

which the State has given the mail order catalog

exemption is discriminatory as between Distributel and

its competitors, particularly its Alaska-based

competitors.

An Alaska-based competitor can offer the same

or similar line of customized products to walk-in or

phone-order business customers, without having to

catalog or not. It can make cold sales calls under

-080(17) by simply asking the potential customer to

“meet later in person” at the store to close the deal.

That sort of discrimination in favor of Alaska-based

competitors should be unlawful.

In ; .

Association, 505 U.S. 88 (1992), this Court held, “[T]he

question whether a certain state action is pre-empted

by federal law is one of congressional intent. ‘The

purpose of Congress is the ultimate touchstone.”

Gade, 505 U.S. at 96, quoting Allis-Chalmers Corp. v.

Lueck, 471 U.S. 202, 208 (1985) quoting Malone v.

White Motor Corp., 435 U.S. 497 (1978). “Pre-emption

may be either expressed or implied, and ‘is compelled

whether Congress’ command is explicitly stated in the

Statute’s language or implicitly contained in its structure

and purpose.” Gade, 505 U.S. at 98, quoting Jones v.

Rath Packing Co., 430 U.S. 519, 525 (1977). “[Ajny

state law, however clearly within a _ State's

acknowledged power, which interferes with or is

contrary to federal law, must yield.” Gade, 505 U.S. at

108, quoting Felder v. Casey, 487 U.S. 131, 138 (1988)

Congress provided an exemption for the

solicitation of sales through the mailing of a catalog, so

long as lead generation calls to customers are not

made. 15 U.S.C. § 6106(4). 15 U.S.C. § 6102(a)(1)

provides that the Federal Trade Commission “shall”

prescribe rules regarding deceptive and other abusive

telemarketing acts or practices. After considering

competing views on the subject of a blanket business-

to-business exemption from the telemarketing laws,

the Commission promulgated a final regulation that

provided seven exemptions, including,

(g) Telephone calls between a telemarketer

and any business{[.]

16 C.F.R. § 310.6(g); see 60 Fed. Reg. 43842 (1995).

The Commission thereby expanded the mail order

catalog exemption to permit lead generation calls to

businesses.

The House Report provides that “[rjegulating

legitimate, mutually-beneficial activities is not the

purpose of this legislation. Instead, the Committee

has focused the legislation on unscrupulous activities

from which no one benefits but the perpetrator.”

House Report No. 103-20, 103rd Cong., 1st Sess.

(1993). The Report notes that the “FTC has been the

lead regulatory agency in dealing with interstate

telemarketing fraud.” Id. The Report adds that the

“Committee is not interested in further regulating the

legitimate telemarketing industry through this

legislation.” Id. The Committee directed the FTC to

“make clear that intent to defraud is a requisite part of

any fraudulent telemarketing activities.” Id.

Read together, Congress and the Commission

have occupied the entire field regarding telemarketing

by mail order catalog marketers to business customers

so as to pre-empt contrary state laws on the subject.

See Gracia v. Volvo Europa Truck, N.V., -- F.3rd--,

1997 WL 199261 (7th Cir. 1997), at 2 (field

preemption). Because such calls are lawful under

federal law, Alaska should not be permitted to make

felons out of legitimate interstate businessmen who

market their catalog products by phone to business

customers. See, @.g., id., at 2 (conflict preemption).

CONCLUSION

For the foregoing reasons, this Court should

grant certiorari to review the construction that the

Alaska Supreme Court has given, without regard to

constitutional issues, the mail order catalog exemption

under AS 45.63.080(14).