Petition for Writ of Certiorari — National Federation of the Blind v. Federal Trade Commission (No. 05-927)

6

casei barre; ilies ve advo Veed-$Lnnenisssingn EDS wow lRAD-

ORL-22JGG (D. Fla., M.D., 2006) (Order Denying Prelim-

inary Injunction).

10. The FTC has promulgated a proposed amendment to

the TSR which would expressly allow prerecorded calls to

persons with whom the caller has an established business

relationship. 69 Fed. Reg. 67287 (Nov. 17, 2004). Under this

proposal, some prerecorded commercial calls (to established

customers) would be allowed if they contain certain dis-

closures. /d. at 67294. This document notes that the FTC will

not enforce its abandonment provision against prerecorded

calls to established customers pending the finality of this

proposed change if the calls comply with the proposed

amendment. /d. at 67290.

11. Both Petitioners submitted affidavits in support of their

Motion for Summary Judgment to the District Court attesting

to the potentially devastating effect the TSR will have on

their fundraising and program services and the reasons their

organizations use compensated agents to raise funds for their

charitable programs.

ARGUMENT

The amended TSR restricts some charitable solicitations

and not others based on whether the charity making the

appeal hires a professional representative. There has been,

however, no empirical finding that those solicitations are in

any way more abusive, annoying or intrusive than exempt

solicitations. This Court has ruled, in fact, the solicitations by

charities using professionals are entitled to the exact same

protections under the First Amendment that “in house”

speech enjoys. These restrictions therefore burden only those

charities which can not afford to conduct solicitations using

employees or volunteers, “necessarily” discriminating against

small or unpopular organizations. Riley v. Nat'l Fed'n of the

Blind of N.C., Inc., 487 U.S. 781, 799 (1988).

7

Petitioners pray this Court issue a writ of certiorari to the

Fourth Circuit Court of Appeals to review and correct its

decision which held this underinciusiveness is permissible

because it is caused by the FTC’s lack of jurisdiction over

non-profit organizations themselves (but not their profes-

sional representatives). The Fourth Circuit’s decision would

uphold an underinclusive regulation in violation of the First

Amendment and is contrary to this Court’s decisions in Riley,

supra, and Cincinnati v. Discovery Network, 507 U.S. 410,

426 (1993).

Because the FTC lacks jurisdiction over many types of

commercial entities, intrastate calls, charities which raise

funds through employees or volunteers (“in house” calling),

and political or religious fundraising, the TSR is under-

inclusive. The Fourth Circuit ruled that this underinclu-

siveness is caused by the FTC’s lack of jurisdiction or agency

interpretations (in the case of political calling) rather than the

explicit terms of the regulation. Thus two statutes acting in

concert, the first limiting an agency’s jurisdiction, and the

second applying to all commercial telemarketing, impose

restrictions solely on those charities which must use pro-

fessionals, and exempts charities large or wealthy enough to

conduct their fundraising “in house”. This opinion, if per-

mitted to stand, would enable Congress to circumvent the

Constitution at will by using two statutes to accomplish ends

forbidden if accomplished by a single law.

The Decision conflicts with the holdings of the Supreme

Court because it ruled that the FTC’s Telemarketing Sales

Rule’s (“TSR”) restrictions on charitable fundraising are

narrowly tailored to further legitimate government goals even

though application of the TSR is underinclusive. FTC regu-

latory action, further, has broadened the TSR’s underin-

clusiveness beyond the scope of the FTC’s jurisdictional

8

limits (thus the TSR is now underinclusive for more reasons

than solely the FTC’s lack of jurisdiction over certain types

of entities).

In effect, the Decision would allow an unconstitutional

regulation to stand because it is the product of two statutes,

instead of just one. It is clear that if this discrimination were

caused by one statute, it would be unconstitutional. Hearing

by this Court is necessary to correct the Decision on this

issue: the protections found in the Constitution are not so

easily evaded.

The Decision conflicts with two lines of Supreme Court

cases: the first bars restrictions applicable only to charities

which use professional representatives as underinclusive

and discriminatory, and the second prohibits indirect as well

as direct attacks on the protections guaranteed by the

Constitution.

First, three Supreme Court cases hold that regulations

applicable solely to charitable appeals delivered by profes-

sionals improperly discriminate against small or unpopular

speakers. Riley v. Nat'l Fed'n of the Blind of N.C., Inc., 487

U.S. 781 (1988); Sec’y of State of Maryland v. Joseph H.

Munson Co., Inc., 467 U.S. 947 (1984); Vill. of Schaumburg

v. Citizens for a Better Env’t, 444 U.S. 620 (1980). This

Court has also held that there is no connection between the

FTC’s restrictions and the prevention of fraud or protection of

residential privacy.

The Decision holds, however, that there is an adequate

basis to assume, without empirical evidence, that profes-

sionals are more likely to engage in fraudulent charitable

solicitations than charity employees or volunteers. Decision,

App. 27a-28a. The dissent notes the FTC admitted at oral

argument that “there is ‘no empirical evidence’ in the

administrative record to support this assumption.” Decision,

App. 36a. In fact, the Decision conflicts with Riley, 487 U.S.

9

at 789-90, Munson, 476 U.S. at 966-967, and Schaumburg,

444 U.S. at 636-37, which all ruled that there is 20 connection

between whether a person is paid to help a charity deliver its

appeal and whether that appeal is fraudulent or not. This is

just the sort of prophylactic assumption banned by the First

Amendment, which requires the government use “sensitive

tools” when regulating speech. Speiser v. Randall, 357 U.S.

513, 525 (1958).

Similarly, the FTC neither presented nor gathered any evi-

dence that its restrictions on the professional representatives

of Appellants are likely to protect residential privacy. Deci-

sion, App. 37a. The Supreme Court has ruled that it is the

burden of the FTC to prove that it makes sense to treat

Appellants differently from other charities with regard to

protection of privacy. Discovery Network, 507 U.S. at 426.

The FTC did not and can not do this and the Fourth Circuit

erred in agreeing with the FTC. Supreme Court review is

necessary to Correct this error.

Second, the Constitution can not permit underinclusiveness

to be cured by two or more laws acting in concert. To allow

unconstitutional statutes to survive scrutiny for this reason

would elevate the dictates of a statute, i.e. the FTC Act

limiting the FTC’s jurisdiction, over the Constitution. This is

contrary to basic principles of constitutional law. Marbury v.

Madison, 5 U.S. 137, 177-8 (1803); U.S. Term Limits v.

Thornton, 514 U.S. 779, 829 (1995); In re NVR L.P. et al.,

206 B.R. 831, 839 (Bankr. D. Va. 1997) citing Aguayo v.

Christopher, 865 F. Supp. 479, 487 (D. Ill. 1994):

[O]ne of the oldest principles of constitutional law helds

that the judiciary’s powers are qualitatively different

when a controversy requires a judge to interpret and give

effect to the Constitution. Courts do not allow “statutory

limitations” to block enforcement of the Constitution.

(Citation omitted).

Id.

10

The majority decision has held that “any underinclusive-

ness that appellants have identified is not the result of the

FTC attempting to favor one side of the public debate over

another . . . [citation omitted].” Decision, App. 28a. This

Court, however, has ruled that the application of restrictions

solely to that charitable speech delivered through profes-

sionals “necessarily” discriminates against small or unpopular

groups, Riley, 487 U.S. at 799, i.e. those most at need of

Constitutional protection.

Congress is not without power to address this issue, but it

can not be permitted to do so in a “necessarily” discrim-

inatory way. This Court should issue a writ to address

whether Congress can accomplish through two statutes what

is forbidden using one statute.

A. Underinclusiveness is not Cured by the FTC’s

Lack of Jurisdiction over Charities.

The challenged provisions of the TSR affect only charities

which use professional “telefunders” to deliver their appeals.

Charities fundraising using individuals employed directly by

them are not subject to the FTC’s jurisdiction and therefore

not subject to the challenged rules. The only difference being

the payor on the caller’s paycheck. Decision, App. 36a. The

majority ruled that this underinclusiveness is permissible

because it is based on the lack of jurisdiction by the FTC over

charities rather than overt hostility to Appellants and others

similarly situated. Decision, App. 26a-27a. j

1. The Decision “necessarily” discriminates against

small or unpopular charities in violation of this

court’s rulings.

This is in direct conflict with the Supreme Court’s holdings

that restrictions which apply only to appeals delivered by

professionals are content-based and unconstitutional because

they “necessarily” discriminate against small or unpopular

1]

charities, and government may not evade the protections of

the Constitution through indirect action. The Constitution

protects speakers from both sophisticated and simple-minded

infringements:

As we have often noted, “‘[cJonstitutional rights would

be of little value if they could be . . . indirectly denied.’”

Harman v. Forssenius, 380 U.S. 528, 540 (1965),

quoting Smith v. Allwright, 321 U.S. 649, 664 (1944).

The Constitution “nullifies sophisticated as well as

simple-minded modes” of infringing on Constitutional

protections. Lane v. Wilson, 307 U.S. 268, 275 (1939);

Harman v. Forssenius, 380 U.S. at 540-541.

Thornton, 514 U.S. at 829.

In Thornton, the Supreme Court considered an Arkansas

restriction on the number of terms an Arkansas representative

could serve in the U.S. Congress. 514 U.S. at 783. The Court

invalidated the restriction because the U.S. Constitution

specifically states the required qualifications of represen-

tatives to Congress and does not provide for term limits. “In

our view, Amendment 73 is an indirect attempt to accomplish

what the Constitution prohibits Arkansas from accomplishing

directly”. Jd. at 829, citing U.S. Const. Article I, § 3, cl. 3.

Further, “statutory limitations” do not eclipse the protections

of the Constitution. Jn re NVR L.P., 206 B.R. at 839; Aguayo,

865 F. Supp. at 487. The Aguayo court specifically

considered an underinclusive federal immigration law. /d. at

487. That scheme allowed aliens to seek citizenship only

based on paternal citizenship. The plaintiff's mother was an

American citizen, and the statute was therefore underin-

clusive. The Court held there was no legitimate reason to

exclude or deny her citizenship. /d. at 491. The Court held

the statute could not eclipse Constitutional equal protection

guarantees against underinclusive laws:

Quoting Justice Brandeis, the Heckler Court explained

that “when the ‘right invoked is that to equal treatment,’

12

the appropriate remedy is a mandate of equal treatment,

a result that can be accomplished by withdrawal of

benefits from the favored class as well as by extension of

benefits to the excluded class.” Heckler, 465 U.S. at 740.

Id. at 487.

Here, Congress is forbidden from passing a disclosure and

other restrictions applicable solely to charities which use

professional assistance because these restrictions are under-

inclusive. Riley, 487 U.S. at 789-90, Munson, 476 U.S. at

966-967, and Schaumburg, 444 U.S. at 636-37. It can not

indirectly accomplish this unconstitutional end, by design or

not, by assigning enforcement to the FTC, an agency of

limited jurisdiction.

Congress would not be without power to regulate these

activities using the enforcement powers of the FTC and other

agencies despite the arguments of the majority. Decision,

App. 28a. The lack of jurisdiction over some entities,

however, must relate to the purposes purportedly furthered by

the restriction. Discovery Network, 507 U.S. at 426. This is

not a matter of addressing a problem “one step at a time.”

Decision, App. 30a. Congress could easily have assigned

enforcement of this rule to an agency of general jurisdiction

or multiple agencies when it passed the PATRIOT Act.

The Supreme Court has been clear that prevention of fraud

does not justify disclosure and other restrictions applicable to

appeals delivered by professionals while exempting those

delivered “in-house” by paid employees of charities. There is

no “nexus” between whether or by whom a person is paid and

whether the call is fraudulent. Riley, 487 U.S. at 789-90,

Munson, 476 U.S. at 966-67, and Schaumburg, 444 U.S. at

636-37. Protection of privacy is not sufficient, either, as the

FTC has not gathered any empirical evidence supporting the

connection between the TSR and privacy nor is there any

qualitative difference between an identically-scripted call

delivered by a charity’s employee versus a paid professional.

13

Unlike the FTC, the FCC held hearings, and concluded that

Appellants’ calls should not be regulated as commercial

telemarketing:

. calls made by a for-profit telemarketer hired to

solicit the purchase of goods or services or donations on

behalf of a tax-exempt non-profit organization are

exempted from the rules on telephone solicitation. .. . In

light of the record before us, the Commission believes

that there has been no change in circumstances that

warrant distinguishing those calls made by a profes-

sional telemarketer on behalf of a tax-exempt non-profit

organization from those made by the tax-exempt non-

profit itself. The Commission recognizes that charitable

and other non-profit entities with limited expertise,

resources and infrastructure, might find it advantageous

to contract out its fundraising efforts.

68 Fed. Reg. 44144, 44160-61 (July 24, 2003) (emphasis

added).

Charities, more than any other sector in our society, rely

upon their goodwill to succeed. It would be counter pro-

ductive for any charity engaged in a telemarketing grassroots

campaign to ignore the bias which some consumers have

against receiving unwanted telephone calls. In order to

maintain a successful grassroots telemarketing campaign,

charities and their telefunders long ago incorporated, on a

voluntary basis, practices that would result in their calls being

accepted rather than refused. In other instances, the laws of

the various states require certain practices of telefunders that

are separate and distinct from those required ‘or other forms

of telemarketing.

There is no legitimate distinction between Appellants and

other charities. Discovery Network, 507 U.S. at 426. Riley

held:

it does not suffice to argue, . . . that [a] statute is valid

because the fundraiser, not the charity, is the object of

14

the regulation. Fining [a] fundraiser based upon its

speech for the charity has an obvious and direct relation

to the charity’s speech.

Riley, 487 U.S. at 794.

Further, there are at least two examples of underinclusive

application of the TSR which are not solely the result of lack

of FTC jurisdiction over certain entities. These examples

show the agency is trying to “favor one side of a public

debate” through selective application of the TSR.

First, the FTC has admitted it does not intend to enforce the

TSR’s restrictions against political fundraising. It is not at all

clear from the text of the regulation or the FTC’s jurisdiction

that political solicitations are exempt from the TSR, however

the FTC has explicitly stated its intention to exempt this

activity from the TSR as not “charitable in nature”. 68 Fed.

Reg. 4580, 4589 n.106 (Jan. 29, 2003). No matter if political

fundraising is “charitable” or not, without question political

fundraising, by an entity hired by a political party but within

the jurisdiction of the FTC, constitutes a request for “any

other thing of value” such that the TSR would apply but for

the FTC’s conscious effort to exclude this speech from TSR

coverage. This is not a “neutral” exclusion and violates this

Court’s holding in Discovery Network. 7 U.S, at 429.

Second, the FTC has since issued a proposed revision to

the TSR allowing prerecorded calls to consumers with whom

the caller has an “established business relationship”. State-

ment of Facts, supra, p. 9, 410. Thus, the FTC considers

prerecorded calls by a charity, through a professional to pro-

spective donors, to be “abandoned” but allows other charities

to place prerecorded calls, through a professional, to past

donors, if the call contains a certain disclosure. 69 Fed. Reg.

at 67294. Without reference to the restrict on itself, this

action shows the FTC’s application of the TSR is not “neu-

tral” in its application but based on the FTC’s opinion of the

value of the speech or speaker in question.

15

2. This Court can not allow two statutes to

achieve an unconstitutional end, which would

be clearly banned if affected by a single law.

Thus the sole remaining justification used by the majority

to allow the FTC to apply restrictions which “necessarily

discriminate” against small or unpopular charities is the

FTC’s lack of jurisdiction over charities. Decision, App.

26a-27a. The majority bases this decision on the FTC Act

and the PATRIOT Act. /d. at 27a. This is not constitutionally

sufficient.

First, the protections of the ‘onstitution can not be

superseded by laws passed by Congress. It is the role of the

independent judiciary to monitor the Acts of Congress ‘to

ensure compliance with the Constitution. ‘““The Constitution is

either a superior, paramount law, unchangeable by ordinary

means, or it is on a level with ordinary legislative acts, and

like other acts, is alterable when the legislature shall please to

alter it.” Marbury, 5 U.S. at 177-8. The dissent notes that

constitutional protections would be of little value if Congress

could evade them in two steps by creating an agency with

limited jurisdiction then passing a law only enforced by that

agency. Decision, App. 38a-39a. Marbury ruled that the

Constitution is supreme, and contrary laws are void. 5 U.S. at

177-8. Marbury does not rule that the Constitution is supreme

over any one law, but that two or more laws acting in concert

cannot evade its protections.

The potential harm created by the Decision is described by

the dissent. Decision, App. 39a-40a. In a simplistic example,

should Congress wish to ban advertisements by banks, it

could simply pass a general ban on all commercial adver-

tising and assign enforcement to the FDIC. While it clearly

would be unconstitutional for Congress to ban bank adver-

tising alone based on underinclusiveness, and other argu-

ments, the Decision would permit Congress to permanently

avoid this protection through legislative device.

16

Second, the discriminatory effect of the TSR has no

justification in the goals the FTC purportedly aimed to

achieve. Congress was well-empowered to regulate fund-

raising, in accordance with the Constitution, of course, by

assigning jurisdiction to an agency of general jurisdiction or

multiple agencies. Indeed, the dissent would concur with the

majority absent this underinclusiveness. Decision, App. 34a.

Government has the ability to regulate the content of

protected speech to further a compelling interest only if “it

chooses the least restrictive means to further the articulated

interest.” Sable Communications of Cal., Inc. v. F.C.C., 492

U.S. 115, 126 (1989). Assigning enforcement of a regulation

to an agency of limited jurisdiction is not the least restrictive

means, as it infringes on the rights of those discriminated

against, when Congress had power to do otherwise.

B. The Burdens Imposed by the Act are Substantial.

The Panel found that the regulations imposed by the

Telemarketing Sales Rule on charitable calling are “modest

restrictions on speech—particularly compared to the ones

invalidated in Schaumburg, Munson, and Riley . . .” Decision,

App. 15a. The Decision therefore conflicts with the Supreme

Court which has held that the disparate impact of these

restrictions makes them substantial burdens on protected

speech. Appellants argued that the following five restrictions

constituted an unequal and substantial burden:

1. Prohibition of “abandoned calls”. 16 C.F.R.

§ 310.4(b)(1)(iv), App. 101a.

2. A curfew provision between 8:00 a.m. and 9:00

p.m. 16 C.F.R. § 310.4(c), App. 103a.

3. The entity specific “do-not-call” list. 16 C.F.R.

§ 310.4(b)(1)(iii)(A), App. 100a.

4. Transmission of caller ID information. 16 C.F.R

§ 310.4(a)(7), App. 99a.

17

5. Disclosure provision requiring a prompt explana-

tion that the caller is seeking donations on behalf of a

specific charity. 16 C.F.R. § 310.4(e), App. 104a.

Simply because these restrictions are not identical to those

set forth in Riley, Munson and Schaumburg, does not mean

that as a whole they do not constitute a “substantial” burden

on Appellants’ speech. The cumulative effect is to make the

appeals of some charities seem less legitimate than others

based solely on the employment status of the calier. This

effect, i.e. to be made to appear “less worthy” in donors’

eyes, is a substantial effect on speech. Appellants’ affidavits

showed the increased cost of fundraising created by these

restrictions, costs which are not incurred by charities

delivering identical messages through their own employees.

It is well-settled that the First Amendment protects a

speaker’s decision of what to say, how to say it, when to say

it, and when to remain silent. Riley, 487 U.S. at 795; Hurley

v. Lrish-American Gay, Lesbian, and Bisexual Group of

Boston, 515 U.S. 557, 573 (1995); and Miami Herald Publ’ g

Co. v. Tornillo, 418 U.S. 241, 256 (1974). The Supreme

Court has also stated that the government has the ability to

regulate the content of protected speech only if “it chooses

the least restrictive means to further the articulated interest.”

Sable Communications, 492 U.S. at 126.

The disclosure requirement at issue here is similar in effect

to that invalidated by Riley which considered a state law

requiring a fundraiser to disclose the average percentage of

gross receipts actually turned over to charities by the fund-

raiser for all charitable solicitations conducted in the state

within the previous 12 months. 487 U.S. at 786. The Court

rejected this disclosure because an identical message deliv-

ered by an employee of a charity was exempt with “the pre-

dictable result is that professional fundraisers will be

encouraged to quit {fundraising] .. .” /d. at 800. When a

telephone call has a matter of seconds to succeed or fail, /d. at

ore 18

800, an interruption to deliver any, forced speech is a

substantial burden.

Appellants’ speech is substantially burdened by these re-

quirements, considered as a whole, because they disrupt

Appellants’ speech and not identical speech delivered by

exempt entities. The Decision conflicts with the Supreme

Court on this issue.

C. The Decision was Incorrect Because the FTC’s

Restrictions are Unrelated to Prevention of Fraud.

Finally, the Decision conflicted with three Supreme Court

decisions when it accepted the FTC’s assertion that the TSR

was justified because it was related to the prevention of fraud.

Decision, App. 17a-19a.

The dissenting Opinion points out that the FTC admitted at

oral argument that “there is ‘no empirical evidence’ in the

record to support this assumption.” Decision, App. 36a. In

fact, the Decision conflicts with Riley, 487 U.S. at 789-90,

Munson, 476 U.S. at 966-67, and Schaumburg, 444 U.S. at

636-37, which all ruled that there is no connection between

whether a person is paid to help a charity deliver its appeal

and whether that appeal is fraudulent or not and that it is

improper to rely on this justification to support a finding that

the TSR is narrowly drawn.

Several examples demonstrate that there is no reasonable,

rational or other connection between the TSR’s restrictions

and protection of residential privacy. A call made by a

telefunder hired by the American Red Cross may come

during the dinner hour and disturb the tranquility of the home.

This call, however, is in compliance with the rules if the call

contains no actual request for a contribution. The same call,

at the same time, by the same individual, with the same

content that ends with a request for a contribution, is

restricted. There is no distinction that justifies the separate

19

treatment. Taking this example further, if the second call had

been made by an employee of the Red Cross, then regardless

of how much the consumer’s privacy was disturbed, the call

would not be subject to the TSR restrictions.

These issues show the Decision violates the Supreme

Court’s holding in Discovery Network, 507 U.S. at 426. The

challenged regulation is a prophylactic measure and is not the

least restrictive means to prevent fraud or protect privacy and

the Decision therefore conflicts with established Supreme

Court precedent.

CONCLUSION

The petition for a writ of certiorari should de granted. ,

Respectfully submitted,

ERROL COPILEVITZ *

WILLIAM RANEY

COPILEVITZ & CANTER, LLC

423 W. 8th Street, Suite 400

Kansas City, Missouri 64105

816-472-9000

* Counsel of Record Attorneys for Petitioners

APPENDIX

la

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

[Filed October 25, 2005}

No. 04-1378

CA-03-963-JFM

NATIONAL FEDERATION OF THE BLIND;

SPECIAL OLYMPICS M/.RYLAND, INCORPORATED,

Plaintiffs-Appellants,

Vv.

FEDERAL TRADE COMMISSION,

Defendant-Appellee.

On Petition for Rehearing and Rehearing En Banc

The appellants’ petition for rehearing and rehearing en banc

was submitted to this Court. As no member of this Court or

the panel requested a poll on the petition for rehearing en

banc, and

As the panel considered the petition for rehearing and is of

the opinion that it should be denied,

IT IS ORDERED that the petition for rehearing anc rehear-

ing en banc is denied.

Entered for a panel composed of Judge Wilkinson, Judge

Traxler, and Judge Duncan.

For the Court,

/s/ Patricia S. Connor

Clerk

2a

APPENDIX B

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 04-1378

NATIONAL FEDERATION OF THE BLIND; SPEC’AL OLYMPICS

MARYLAND, INCORPORATED,

Plaintiffs-/,ppellants,

¥,

FEDERAL TRADE COMMISSION,

Defendani-Appellee.

Appeal from the United States District Court

ior the District of Maryland, at Baltimore.

J. Frederick Motz, District Judge.

(CA-03-963-JFM)

Argued: December 1, 2004

Decided: August 26, 2005

OPINION

Before WILKINSON, TRAXLER, and DUNCAN, Circuit

Judges.

WILKINSON, Circuit Judge:

This case presents a challenge to the Federal Trade Com-

mission’s regulation restricting telemarketing practices as

they apply to charitable fundraising. The regulation requires

callers to make certain disclosures, refrain from making late-

night, early-morning, and “abandoned calls” (calls followed

3a

by silence), and comply with a charity-specific “do-not-call

list.” Since the FTC has no jurisdiction over non-profit

organizations, the new rule does not apply to calls made by

“in house” charity staff or volunteers, It does, however, apply

o “telefunders”—that is, professional fundraisers from for-

profit companies whe solicit donations on behalf of charities.

The appellants, two charities who contract with these

companies, argue that the regulation is beyond the FTC’s

authority and violates the First Amendment.

We think Congress clearly authorized the FTC to promul-

gate this new rule. Because we are further convinced that

it constitutes a “reasonable regulation,” that is, “narrowly

drawn” to serve a “sufficiently strong subordinating interest

that the {government] is entitled to protect,” we find it to be

constitutional. Sec. of State of Maryland v. Munson, 467 U.S.

947, 960-961 (1984) (quotation omitted). The regulation

preserves the important right of charities to make telephone

solicitations. To strike down the rule, however, would disable

the democratic branches from taking even the most modest

steps necessary to protect the home environment from

intrusive phone calls.

I.

In 1994, Congress passed the Telemarketing Consumer

Fraud and Abuse Prevention Act (“Telemarketing Act’’). Pub.

L. No. 103-297, 108 Stat. 1545 (codified as amended at 15

U.S.C. §§ 601 et seq. (2000)). That legislation instructed

the FTC to “prescribe rules prohibiting deceptive . . . and

other abusive telemarketing acts or practices.” 15 U.S.C.

§ 6102(a)(1) (2000). Specifically, Congress directed the FTC

to forbid “unsolicited telephone calls which the reasonable

consumer would consider coercive or abusive of such

consumer’s right to privacy,” to restrict “the hours of the day

and night when unsolicited telephone calls can be made,” and

to require that callers disclose information about the nature

and purpose of the call. Id. § 6102(a)(3).

4a

Two further provisions of the 1994 Telemarketing Act are

particularly relevant to this case. First, Congress defined

“telemarketing” to only cover calls “conducted to induce

purchases of goods or services.” Id. § 6106(4). Phone calls

seeking charitable donations were thus outside the scope of

the Telemarketing Act as it existed in 1994.

Second, Congress explained that the Telemarketing Act did

nothing to affect activity beyond the FTC’s jurisdiction. /d.

§ 6105(a). In this regard, Congress cross-referenced the

jurisdictional provisions of the Federal Trade Commission

Act (“FTCA”). The FTCA gives the FTC jurisdiction over

“persons, partnerships, or corporations,” with some excep-

tions not relevant here. Jd. § 45(a)(2). An entity is only a

“corporation,” for FTCA purposes, if it is “organized to carry

on business for its own profit or that of its members.” /d.

§ 44. Thus, according to the FTC’s organic statute, non-profit

organizations fall outside the scope of the agency’s juris-

diction. And, as Congress made clear, the Telemarketing Act

did nothing to change that fact. Jd. § 6105(a).

In 1995, the FTC implemented Congress’ directives by

promulgating the original Telemarketing Sales Rule (“TSR”).

16 C.F.R. § 310 et seq. (1995). The TSR imposed several

restrictions on telemarketers—trequiring them, inter alia, to

make certain disclosures, obey time restrictions, and refrain

from calling consumers who have asked not to be called by

that particular seller. Before the 1995 TSR became effective,

the FTC issued an advisory statement clarifying that the TSR

did not regulate professional telemarketers calling on behalf

of non-profit organizations (these professionals are often

referred to as “telefunders’”). The agency justified this deci-

sion by explaining that soliciting donations did not qualify as

“telemarketing” under the Telemarketing Act.

Following new congressional instructions, however, the

FTC’s position towards telefunders has changed. In October

2001, Congress enacted the USA PATRIOT Act, which

Sa

contained a section (section 1011) entitled “Crimes Against

Charitable Americans.” Pub. L. No. 107-56, 115 Stat.

396 (2001).

This section amended the Telemarketing Act in three

significant ways. First, Congress inserted the phrase “‘fraud-

ulent charitable solicitations” in its general description of

what “deceptive telemarketing acts or practices” the FTC

should regulate. 15 U.S.C.A. § 6102(a)(2) (West Supp. 2004).

Second, Congress added a new subsection specifically

directing the FTC to include:

a requirement that any person engaged in telemarketing

for the solicitation of charitable contributions, donations,

or gifts of money or any other thing of value, shall

promptly and clearly disclose to the person receiving the

call that the purpose of the call is to solicit charitable

contributions, donations, or gifts, and make such other

disclosures as the Commission considers appropriate. . . .

Id. § 6102(a)(3)(D). And third, Congress altered the Act’s

definition of “telemarketing” to include a reference to

charitable solicitations.’ Id. § 6106(4).

One crucial part of the Telemarketing Act, however,

remained unchanged by the PATRIOT Act. The PATRIOT

Act did not purport to alter the FTC’s jurisdiction, which is

still governed by the jurisdictional provisions in the FTCA.

As explained above, those provisions do not cover non-profit

organizations. The PATRIOT Act, therefore, expanded what

“acts and practices” could be regulated by the FTC under the

Telemarketing Act, but it did not change what type of entity

was subject to the FTC’s control.

' “Telemarketing” is now defined in the Act to be “a plan, program, or

campaign which is conducted to induce purchases of goods or services, or

a charitable contribution, donation, or gift of money or any other thing of

value, by use of one or more telephones and which involves more than

one interstate telephone call.” /d.

6a

In January 2002, the FTC issued a notice of proposed

rulemaking to adjust the TSR after the changes Congress had

made to the Telemarketing Act. It received approximately

64,000 comments, some calling for more regulation and some

asking for less. It then conducted a three-day public forum. In

reviewing the feedback it received, the FTC concluded that

“consumers are disturbed by unwanted calls regardless of

whether the caller is seeking to make a sale or to ask for a

charitable contribution.” 68 Fed. Reg. 4637.

On January 29, 2003, the FTC promulgated a new TSR. 68

Fed. Reg. 4580 (Jan. 29, 2003) (codified at 16 C.F.R. § 310

(2005)). Attempting to formulate this new rule in accordance

with Congress’ directions, the FTC faced a quandary.

Congress had not altered the jurisdictional provisions in the

Telemarketing Act, thus leaving the FTC without jurisdiction

over non-profit organizations. But, at the same time, Con-

gress did amend the definition of “telemarketing” to cover

charitable solicitations. To reconcile those two congressional

mandates, the agency articulated the distinction which is now

being challenged. It stated:

Reading the amendments to the Telemarketing Act

effectuated by § 1011 of the USA PATRIOT Act to-

gether with the unchanged sections of the Telemarketing

Act compels the conclusion that for-profit entities that

solicit charitable donations now must comply with the

TSR, although the Rule’s applicability to charitable

organizations themselves is unaffected.

Id. at 4585. Thus, professional telefunders calling on behalf

of charities are subject to the new TSR, while “in house”

callers from the charities themselves are not. It is this dis-

tinction that lies at the heart of the instant dispute.

Ta

The new TSR imposed several new restrictions on tele-

marketers generally, but only some of those restrictions apply

to telefunders. Five such provisions are being challenged

here:

(1) prohibitions on placing calls before 8:00 a.m. or

after 9:00 p.m., 16 C.F.R. § 310.4(c);

(2) prohibitions on “abandoned calls” (a call is aban-

doned when a person at home answers the phone and is

not connected to a telemarketer within two seconds), 16

C.F.R. § 310.4(b)(1)(iv);

(3) a requirement that callers promptly explain that they

are seeking donations, and identify the charity on be-

half of which the request is being made, 16 C.F.R.

§ 310.4(e);

(4) a requirement that telemarketers transmit their name

and phone number to caller identification services (“cal-

ler ID’), 16 C.F.R. § 310.4(a)(7); and

(5) an obligation that telemarketers refrain from calling

a person who has previously asked not to be called by a

specific charity, 16 C.F.R. § 310.4(b)(1)(iii)(A).

Similar to this last restriction, the TSR also included a

national donot-call registry (one that is not entity-specific)

which telemarketers are required to respect. However, the

rule does not require that telefunders adhere to the national

do-not-call list—instead requiring only their adherence to a

more modest charity-specific list. 16 C.F.R. § 310.6(a).

Appellants National Federation of the Blind and Spe-

cial Olympics Maryland, Inc. (“the charities”) are nonprofit

organizations that qualify for tax-exempt status under section

501(c)(3) of the Internal Revenue Code. Both charities

require donations to carry out their important work. To solicit

donations, these charities rely on professional telefunders.

Because the telefunders are restricted by the new TSR, the

8a

charities say that their fund-raising efforts have been ad-

versely affected.

The two charities filed suit against the FTC in the United

States District Court for the District of Maryland. They

challenged the amended TSR on the grounds that the rule

exceeded the statutory authority of the FTC and, in the

alternative, violated the First and Fourteenth Amendments to

the Constitution.

Both parties filed cross-motions for summary judgment,

and on February 24, 2004, the district court entered judgment

for the FTC. Nat'l Fed. of the Blind v. FTC, 303 F. Supp. 2d

707 (D. Md. 2004). The charities now appeal. We review

these questions of law de novo. United States v. Deaton, 332

F.3d 698, 703-04 (4th Cir. 2003).

Il.

The charities first claim that the new TSR is beyond the

FTC’s statutory authority. Plaintiffs contend that when Con-

gress amended the Telemarketing Act in 2001 it. only in-

tended for the FITC to regulate fraudulent charitable

solicitations, not calls made in the normal course of charitable

fundraising. According to the charities, since time restrictions

and prohibitions on abandoned calls, for instance, are not

rules aimed at preventing fraud, they are beyond the agency’s

statutory mandate.

When an agency’s construction of a statute is challenged,

we turn to the familiar framework set forth in Chevron USA,

Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43

(1984). Chevron instructs that we first review the statute to

see if the intent of Congress is clear. If Congress has not

answered the question at hand, then we defer to the agency’s

interpretation of the statute, so long as it is a reasonable one.

Id. See also Sigma-Tau Pharm. Inc. v. Schwetz, 288 F.3d 141,

144 (4th Cir. 2002).

9a

Here, we need not go past the first step. For it is

appropriate to “apply canons of statutory construction at step

one of the Chevron inquiry.” E.E.0.C. v. Seafarers Int'l

Union, 394 F.3d 197, 203 (4th Cir. 2005). And a traditional

canon of statutory interpretation leads us to conclude that

Congress has answered the current question. It is well-

established that:

Congress is presumed to enact legislation with knowl-

edge of the law. The upshot of this canon of statutory

interpretation is that absent a clear manifestation of

contrary intent, a newly-enacted or revised statute is

presumed to be harmonious with existing law.

In re Witt, 113 F.3d 508, 513 (4th Cir. 1997) (internal

citations and quotations omitted). See also United States v.

Langley, 62 F.3d 602, 605 (4th Cir. 1995).

As the district court noted, the 1994 Telemarketing Act

instructed the FTC to regulate telemarketers both to prevent

fraud and to protect the privacy of the home. Not sur-

prisingly, the original TSR addressed both concerns—prom-

ulgating regulations which included time restrictions (to pro-

tect privacy) and disclosure requirements (te prevent fraud).

Congress amended the Telemarketing Act in 200! to

include charitable solicitations, but it did not enact a full-scale

overhaul of the statute and suddenly render abusive or intru-

sive calls beyond the FTC’s purview. Thus, when Congress

altered the Act’s definition of “telemarketing” to encompass

calls soliciting charitable donations, it surely knew that it was

making those calls subject to the same restrictions that other

telemarketing calls were subject to under the original version

of the Act. If Congress had intended the opposite result, it

would have said so. See North Haven Bd. of Educ. v. Bell,

456 U.S. 512, 535 (1982) (“Where an agency’s statutory

construction has been fully brought to the attention of the

public and the Congress, and the latter has not sought to alter

10a

that interpretation although it has amended the statute in other

respects, then presumably the legislative intent has been

correctly discemned.”) (internal quotation omitted).

The charities point to the fact that when Section 1101 of

the PATRIOT Act was passed, Senator Mitch McConnell

expressed the hope that it would target fraudulent charities

who were preying on sympathetic Americans following the

attacks of September 11, 2001. See 104 Cong. Rec. $10059,

10065 (Oct. 2, 2001). While this is true, it does not change

the plain text of the statute. The PATRIOT Act expanded the

definition of “telemarketing” to include “a charitable con-

tribution, donation, or gift of money or any other thing of

value.” 15 U.S.C.A. § 6106(4) (West Supp. 2004). This is a

general reference to charitable solicitations. Nothing in the

definition suggests that only fraudulent charitable calls are

proper subjects for regulation, or that abusive or intrusive

solicitations are exempt from regulation.

In addition, the charities point to the amendment that

changes the preamble to the Telemarketing Act. Currently the

general directive to the FTC reads:

The Commission shall include in such rules respecting

deceptive telemarketing acts or practices a definition ‘of

deceptive telemarketing acts or practices which shall

include fraudulent charitable solicitations, and which

may include acts or practices of entities or individuals

that assist or facilitate deceptive telemarketing.

Id. § 6102(a)(2) (emphasis added to indicate the new lan-

guage). This language is not exhaustive; it merely explains

that the FTC “shall include,” among others, regulations to

target fraudulent charitable solicitations. Any confusion re-

garding the scope of this directive is clarified by the more

technical section of the Act which defines the relevant terms.

The definition of “telemarketing,” as explained above, was

amended to include calls for “charitable contribution[s]” gen-

lla

erally, and does not limit the Act’s coverage to only those

calls which are likely to be fraudulent. /d. § 6106(4).

We therefore conclude that Congress iniended for all

conduct now encompassed under the broadened definition of

“telemarketing” to be subject to FTC regulations passed for

the purpose of preventing fraud and protecting the home. The

FTC enacted the TSR pursuant to these directions, and we

find it was well within its statutory authority to do so.

Il.

We thus turn to the plaintiffs’ claim that the TSR violates

the First Amendment. Three Supreme Court cases address

First Amendment challenges to regulations on professional

charitable fundraising. See Village of Schaumburg v. Citizens

for a Better En,’t, 444 U.S. 620 (1980); Sec. of State of

Maryland v. Joseph Munson Co., 467 U.S. 947 (1984); Riley

v. Nat'l Fed. of the Blind, 487 U.S. 781 (1988).

From this trilogy we learn that “charitable solicitations”

have “not been dealt with as purely commercial speech.”

Riley, 487 U.S. at 788. This is so because they “involve a

variety of speech interests that are within the protection of the

First Amendment.” /d. (quotation omitted). We also know,

however, that the protection accorded to charitable solici-

tations is not absolute. For “[sJoliciting financial support is

undoubtedly subject to reasonable regulation” so long as the

regulation is “undertaken with due regard for the reality that

solicitation is characteristically intertwined with informa-

tive and perhaps persuasive speech.” Schaumburg, 444 U.S.

at 632.

Thus a balance rmiust be struck. A regulation will be

sustained if (1) it “serves a sufficiently strong, subordinating

interest that the [government] is entitled to protect” and (2)

it is “narrowly drawn . .. to serve the interest without

unnecessarily interfering with First Amendment freedoms.”

Munson, 467 U.S. at 960-61 (quoting Schaumburg, 444 U.S.

12a

at 636-37). We hold that the FTC’s new rule meets these two

requirements.”

IV.

The FTC has identified two government interests that the

TSR was designed to advance—the prevention of fraud and

the protection of privacy in the home. Our initial task is to ask

whether these interests qualify as “sufficiently strong, sub-

ordinating interest{s] that the [government] is entitled to

protect.” Munson, 467 U.S. at 960-61 (quoting Schaumburg,

444 U.S. at 636). For the following reasons, we conclude

they do.

A.

First, we address the FTC’s desire to protect consumers

from fraud, At least one of the challenged regulations—the

requirement that solicitors promptly disclose the nature and

purpose of their call—aims to prevent fraud.

Our evaluation of this proffered government interest is not

difficult. For although the Court in Schaumburg, Munson, and

Riley ultimately concluded that the specific restrictions in

each case were not narrowly tailored to prevent fraud, it was

beyond dispute in all three cases that “[t]he interest in

? It is unclear whether this standard amounts to “strict scrutiny” (as the

charities allege) or to the less stringent “intermediate scrutiny” (as the

FTC urges). The district court believed it was applying intermediate

scrutiny since the present regulations were reminiscent of ones upheld as

time, place, and manner restrictions. See. Nat’! Fed. of the Blind of

Arkansas v. Pryor, 258 F.3d 851, 855 (8th Cir. 2001) (“The Munson /

Village of Schaumburg standard and the time-place-and-manner standard

are obviously very similar.”); Am. Target Adver., Inc. v. Giani, 199 F.3d

1241, 1247 (10th Cir. 2000) (holding that content-neutral regulations of

charitable solicitations are subject to “an intermediate level of scrutiny”’).

Regardless of the label, the substance of the test is clear. And the TSR

passes it because it is “narrowly drawn” to serve a “sufficiently strong

subordinating interest.”” Munson, 467 U.S. at 960-61 (quotation omitted).

13a

protecting charities (and the public) from fraud is, of course, a

sufficiently substantial interest to justify a narrowly tailored

regulation.” Riley, 487 U.S. at 792. See also Munson, 467

U.S. at 961; Schaumburg, 444 U.S. at 836.

B.

The FTC defends its other regulations on the basis of an

interest that the Court in Schaumburg, Munson, and Riley did

not address—namely, an interest in safeguarding residential

privacy.” See Illinois, ex rel. Madigan v. Telemarketing

Assocs., Inc., 538 U.S. 600, 619-20 (2003) (characterizing

laws invalidated in Schaumburg, Munson, and Riley as ones

involving fraud prevention). The goal behind the time

restraints, for example, is not to prevent fraud, but to allow

family life to proceed undisturbed by phone calls in the

evening and early morning hours.

It is hard to argue, as plaintiffs must, that the protection of

residential privacy does not qualify as a “sufficiently strong

subordinating interest that the [government] is entitled to

protect.” Munson, 467 U.S. at 960-61 (quotation omitted).

For the Supreme Court has explained that “‘[t]he State’s

interest in protecting the well-being, tranquility, and privacy

of the home is certainly of the highest order in a free and

civilized society.”” Frisby v. Schultz, 487 U.S. 474, 484

(1988) (quoting Carey v. Brown, 447 U.S. 455, 471 (1980)).

Indeed, the Court’s First Amendment jurisprudence has

long “recognized that ‘[p]reserving the sanctity of the home,

the one retreat to which men and women can repair to escape

from the tribulations of their daily pursuits, is surely an

* Although preventing “undue annoyance” was mentioned as a poten-

tial state interest in the Schaumburg case, 444 U.S. at 636, the Court

subsequently explained that the “primary interest” proffered in Schaum-

burg was actually an interest “in preventing fraud.” Munson, 467 U.S. at

961. See also Riley, 487 U.S. at 788.

14a

important value.’” /d. (quoting Carey, 447 U.S. at 471). From

this principle, it follows that:

One important aspect of residential privacy is protection

of the unwilling listener. Although in many locations, we

expect individuals simply to avoid speech they do not

want to hear, the home is different.

. . » [A] special benefit of the privacy all citizens enjoy

within their own walls, which the State may legislate to

protect, is an ability to avoid intrusions. Thus, we have

repeatedly held that individuals are not required to

welcome unwanted speech into their own homes and that

the government may protect this freedom.

Id. (internal citations omitted). See also Hill v. Colorado, 530

U.S. 703, 716-17 (2000); FCC v. Pacifica Found., 438 U.S.

726, 748 (1978); Rowan v. U.S. Post Office Dep't, 397

U.S. 728, 738 (1970) (“That we are often captives outside

the sanctuary of the home and subject to objectionable

speech and other sound does not mean we must be cap-

tives everywhere.”’)

The significance that the Court places on residential priv-

acy should not be surprising. Protecting the sanctity of the

family environment is important enough to actually serve as

the basis for a constitutional right in many different contexts.

See, e.g., Kyllo v. United States, 533 U.S. 27, 31 (200!) (right

to be secure from warrantless search in one’s home); Stanley

v. Georgia, 394 U.S. 557, 565 (1969) (right to read material

of choice in one’s home).

Admittedly, these cases guard against intrusions by a state

agent, as opposed to the private interruptions in the present

case. But if protecting the home is something that serves as

the basis for a constitutional right, then it surely must also

serve as a substantiai government interest that the democratic

process is entitled to protect. Or, put differently, if the state is

constrained from breaching the sanctity of the home en-

15a

vironment, then the state is allowed to protect what it cannot

casually breach. A contrary conclusion would turn the

Constitution into a house divided—a document at war within

itself. See Burson v. Freeman, 504 U.S. 191, 198 (1992) (a

proffered government interest in regulating speech is more

compelling when the interest itself is the basis of a

constitutional right).

In short, the judicial branch and the democratic branches of

our government are hardly compelled to work at cross-

purposes. And the democratic process is not compelled to

leave families prey to unwanted solicitations and hang-ups at

all hours and against their wishes. We are thus convinced that

the FTC’s second proffered justification for the TSR con-

stitutes a “sufficiently strong subordinating interest that the

[government] is entitled to protect.” Munson, 467 U.S. at

960-61 (quotation omitted).‘

V.

Our next inquiry is whether the challenged provisions of

the TSR are “narrowly drawn . . . to serve the interest[s]

without unnecessarily interfering with First Amendment

freedoms.” Munson, 467 U.S. at 961 (quotation omitted).

Because these regulations are modest restrictions on speech—

particularly compared to the ones invalidated in Schaumburg,

* Like the district court, we find no merit to plaintiffs’ argument that

the FTC cannot assert an interest in protecting residential privacy because

people do not generally feel imposed on by charitable solicitations. The

agency explicitly rejected this possibility, relying on the fact that it

received relatively few answers in response to a survey question asking

whether charitable fundraisers and commercial telemarketers should be

treated differently. 68 Fed. Reg. at 4637 n.685. We think the agency’s

interpretation of the record is a reasonable one. As the district court

explained, “[ijndeed, if more people distinguished charitable and com-

mercial calls with respect to the privacy intrusion involved, they pre-

sumably would have responded to the question.” Nat'l Fed. of Blind, 303

F. Supp. 2d at 720 n.11.

l6a

Munson, and Riley—and because they are not impermissibly

“underinclusive,” we find that they satisfy the requirement

that they be narrowly tailored.

A.

The charities argue that the five provisions of the TSR

challenged here are substantial burdens on speech. The FTC

claims them to be only minor restrictions that actually permit

a significant amount of speech to occur. We shall take up the

provisions in turn.

First, we address the prohibition of “abandoned calls.” 16

C.F.R. § 310.4(b)(1)(iv). A call “is ‘abandoned’ under this

section if a person answers it and the telemarketer does not

connect the call to a sales representative within two seconds

of the person’s completed greeting.” /d. To label this re-

striction a restraint of speech at all is a generous charac-

terization. For “abandoned calls,” by definition, involve no

speech—they leave the recipient of the call frustrated by

silence on the other end of the line. A perfectly reasonabie

person can find silence or repeated silences at the other end of

a phone unnerving. Particularly if one is elderly or lives

alone, such silences can stoke fears and be unsettling. We

think this restriction on speech (if one can call it that) is

modest at best and is surely narrowly tailored to protect

“the sanctity of the home.” Frisby, 487 U.S. at 484 (quo-

tation omitted).

Second, the charities challenge the time restriction provi-

sion of the TSR which prohibits solicitors from placing calls

before 8:00 a.m. or after 9:00 p.m. See 16 C.F.R. § 310.4(c).

We note that this rule leaves a significant amount of time—13

hours a day—when calls are permitted. In fact, the window

for permissible calling includes the dinner hour, a time when

families are quite likely to be home. At bottom, what the

plaintiffs seek is a constitutional right for telefunders to call a

17a

potential donor even in the wee hours of the morning. Merely

to state such a proposition is to acknowledge its untenability.

Indeed, these regulations are narrowly drawn to protect

only the most private aspects of a family’s time. After 9:00

p.m., family members might, for example, be cleaning house

for the night, bathing, paying bills, discussing homework,

planning this or that, reading, watching TV, or simply getting

ready to turn in. Before 8:00 a.m., they might be eating

breakfast, dressing, shaving, or fixing lunch for spouses or

kids. The First Amendment does not require us to interrupt

these family moments, and the only burdens on speech

imposed by the TSR time restrictions protect just the most

personal hours of a family’s day.

Third, the charities take issue with the entity-specific “do

not call list.” This regulation forbids telefunders from calling

a person on behalf of a specific charity when the recipient has

previously requested not to be called by that charity. 16

C.F.R. § 310.4(b)(1)(iii)(A). Telefunders are noi, however,

subject to the more restrictive national “do not call list” which

forbids calls to people who have put their names on a general

nation-wide opt-out registry. That provision (which commer-

cial telemarketers must obey) was recently upheld by the

Tenth Circuit in Mainstream Marketing Services, Inc. v. FTC,

358 F.3d 1228 (10th Cir.), cert. denied, 125 S. Ct. 47 (2004).

In addressing the “narrowly tailored” question, the Tenth

Circuit remarked:

[T]he national do-not-call registry is narrowly tailored

because it does not over-regulate speech; rather, it re-

stricts only calls that are targeted at unwilling recipients.

Cf. Frisby v. Schulicz, 487 U.S. 474, 485 (1988) (“There

simply is no right to force speech into the home of an

unwilling listener.”) .. .

. .. The Supreme Court has repeatedly held that speech

restrictions based on private choice (i.e. an opt-in fea-

18a

ture) are less restrictive than laws that prohibit speech

directly.

Id. at 1242.

We are persuaded by the Tenth Circuit’s reasoning in

Mainstream Marketing, and we likewise agree with the

analogy it drew to Rowan v. U.S. Post Office Dep’ t, 397 U.S.

728 (1970). In Rowan, the Court upheld a law permitting a

resident to stop cormpanies from inailing advertisements that

the resident believed to be provocative. Jd. at 729-30. The

Court emphasized that this speech restraint was based on a

private actor’s choice. It explained that “Congress has erected

a wall—or more accurately permits a Citizen to erect a wall—

that no advertiser may penetrate without his acquiescence. .. .

The asserted right of a mailer, we repeat, stops at the outer

boundary of every person’s domain.” /d. at 738.

The parallels between the law at issue in Rowan and the

do-not-call list in this case are unmistakable. If consumers are

constitutionally permitted to opt out of receiving mail which

can be discarded or ignored, then surely they are permitted to

opt out of receiving phone calls that are more likely to disturb

their peace. In this way, a do-notcall list is more narrowly

tailored to protecting privacy than was the law in Rowan.

Moreover, this particular restriction seems even more

reasonable given the fact that the FTC has only subjected

telefunders to a charity-specific list. Under this procedure, a

consumer cannot report to a central authority that he wishes

not to be called by any telemarketers generally; he must

instead repeat his request as to each caller individually. This

charity-specific alternative to a national list is an option that

the Mainstream Marketing court called “extremely bur-

densome to consumers.” 358 F.3d at 1244. In light of this, we

have no trouble finding the charity-specific restriction on

speech to be a permissibly narrow means of protecting the

home environment.

19a

Fourth, the charities challenge the TSR provision requiring

telefunders to transmit their name and phone number to caller

ID services. 16 C.F.R. § 310.(a)(7). This minimal restriction

simply allows consumers to screen and ignore telemarketing

calls that come at a bad time. Like the do-not-call list, this

provision is narrowly tailored to protect privacy because

it only “effectively block[s] . . . the calls that cause the

problems the government [seeks] to redress.” Mainstream

Marketing, 358 F.3d at 1238. Just as a peep-hole in a door

allows residents to pre-select whom they wish to welcome

into their homes, so caller ID information allows residents to

pre-select whom they wish to speak to on a particular

evening. This rule does not stop a telefunder from calling, nor

does it prevent a potential donor from answering the phone

when it is convenient. It iaerely gives families a tool

specifically designed to protect their private time, and it is

thus narrowly tailored to serve that government interest.

Fifth and finally, the charities object to the disclosure

provision of the TSR which requires telefunders to promptly

explain that they are seeking donations on behalf of a specific

charity. 16 C.F.R. § 310.4(e). We can easily reject this

challenge because the Supreme Court has implicitly rejected

it already. In Riley itself, the Court held the~ “nothing in this

opinion should be taken to suggest that the State may not

require a fundraiser to disclose unambiguously his or her

professional status. On the contrary, such a narrowly tailored

requirement would withstand First Amendment scrutiny.”

487 U.S. at 799 n.11. If the First Amendment permits an

obligation for a telefunder to disclose his professional status,

then surely it also permits the present modest disclosure

requirement—-only to state the name of the charity and the

purpose of the call.

In revigwing these rules, we have no wish to exaggerate.

Not every home is a “peaceable kingdom.” And it is not the

end of the world when a family receives an abandoned call

20a

or a late night call that interrupts its evening. But it is one

more small strain that families already stressed by twenty-

first century life are forced to endure. Our Constitution does

not require that we add to family burdens by forbidding even

the most reasonable and minor restrictions on telemarket-

ing practices.

B.

Notwithstanding plaintiffs’ arguments to the contrary,

these five FTC regulations are very different from the ones at

issue in Riley, Munson, and Schaumburg. Those three cases,

as the Supreme Court has subsequently explained, considered

“prophylactic statutes designed to combat fraud by imposing

prior restraints on solicitation when fundraising fees exceeded

a specified reasonable level.” Madigan, 538 U.S. at 612

(2003). The restrictions at issue in this case are, quite frankly,

horses of a different color.

In Schaumburg, a local community passed an ordinance

requiring every person intending to solicit charitable dona-

tions to apply for a permit. 444 U.S. at 623-24. A permit

would issue caly if an application contained “satisfactory

proof that at least seventy-five percent of the proceeds of such

solicitations {would} be used directly for the charitable

purpose of the organization.” /d, at 624. The Supreme Court

found the law to be unconstitutional because it could not find

“any substantial relationship between the 75-percent require-

ment” and an interest in preventing fraud or protecting

privacy. /d. at 638.

Clearly, the law in Schaumburg is very different from the

regulation in the present case, First, the TSR does not involve

an application for a license, which is a prior restraint typically

disfavored in First Amendment cases. See, e.g., Forsyth

County v. Nationalist Movement, 505 U.S. 123, 130-31

(1992). Moreover, while the blunt and broad 75% rule was

not narrowly tailored to either prevent fraud or to protect

2la

privacy, the regulations here (as demonstrated above) are

carefully crafted for precisely those purposes. Four of the

challenged restrictions were designed specifically to weed out

unwanted and invasive calls. Indeed, the caller ID and do-not-

call list provisions actually place the decision of specifying

just which speech is restricted with the consumer, not with

the government. Meanwhile, the fifth requirement—the dis-

closure provision—seeks to prevent fraud by requiring tele-

funders to be forthright about their reason for calling.

The state statute struck down in Munson is also a far cry

from the FTC’s regulation here. In Munson, the state of

Maryland passed a law similar to the one at issue in

Schaumburg, but with a slightly more flexible twist. 467 U.S.

at 950-51. The law prohibited charities from paying

professional fundraisers more than 25% of the amount they

raised, but permitted a waiver of this rule if the restriction

“would effectively prevent the charitable organization from

raising contributions.” Id. The Court was not persuaded that

the waiver saved the regulation. It found, as in Schaumburg,

that fraud could be prevented by “measures less intrusive than

a direct prohibition on solicitation.” /d. at 961.

Unlike the Schaumburg and Munson statutes, the TSR does

not impose “a direct prohibition on solicitation.” /d. It does

not set up a flat percentage limitation on how much com-

mission a proiessional fundraiser can take home. Rather, it

merely restrains when and how a call can be made and it does

so largely in an effort to protect consumer privacy. The

difference between a flat prohibition of the sort condemned in

Schaumburg and Munson and the regulations here is a

difference of kind, not simply one of degree.

Finally, plaintiffs place heavy reliance on the third case of

this trilogy, Riley v. Nat'l Fed. of the Blind, 487 U.S. 781

(1988). The statute in Riley directly regulated telefunders in

three different ways. First, it prohibited the professional

fundraisers from collecting “unreasonable or excessive” fees.

22a

Those terms were defined by a three-tiered schedule, as-

signing different standards depending on what percentage

commission the telefunders collected. /d. at 784-85. Second,

the law required telefunders to disclose to donors the

percentage of revenue the telefunder had retained from the

charity over the past twelve months. /d. at 786. And third, it

required telefunders to obtain a license before engaging in

solicitation, while volunteer fundraisers encountered no such

hurdle. /d. at 786-87.

As an initial matter, we reemphasize that the North

Carolina law in Riley was not seeking to protect consumer

privacy, but was rather “([rjesponding to a study” that

indicated a growing trend of large commissions being

charged by charity telefunders. /d. at 784. The Supreme Court

was candid that an interest in keeping donors informed about

how their charitable doilars are spent “is not as weighty as the

State asserts.” /d. at 798. Riley did not consider how restraints

on charitable solicitations might further domestic privacy—a

concern to which the Court has attached particular signifi-

cance—and a concern that clearly motivated the agency here.

It is thus difficult to compare Riley to the present case

because, since the proffered state interests are not the same,

the “narrowly tailored” analysis will necessarily differ.

Nonetheless, we note other significant differences between

the TSR and the prohibitions in the North Carolina statute.

Indeed, the regulations in Riley were far more restrictive than

the ones before us today. The FITC has noi asked the

telefunders to obtain a license here, particularly not by a

licensing procedure that could permit “a delay without limit.”

Id. at 802. Further, the TSR disclosure requirement—

designed only to identify quickly the nature and purpose of

the call—is much more modest than an obligation to reveal

how much one is being paid for the call. /d. at 786. Not only

does the latter requirement compel more speech, but it also

23a

adversely affects how receptive a listener will be to the

remainder of what is said.

Finally, the TSR does not use a rough “percentage-based

measure” to determine whether a telefunder’s fee is

reasonable or not. /d. at 793. Indeed, no limitation is placed

on the amount of the telefunder’s fee at all. Telefunders must

comply, of course, with rules governing the manner in which

they may call potential donors. But in this regard, they are no

different from all other telmarketing companies regulated by

the FTC. And the restraints that the FTC requires—by

rationing calls rather than by prohibiting speech—are mark-

edly different from the unconstitutional restraints in Riley.

The Riley Court itself noted that “more benign and narrowly

tailored options are available.” /d. at 800. The FTC’s new

rule provides an example of just such an option.

C

We thus find the TSR restrictions to be modest, reasonable,

and quite different from the laws invalidated in the three main

Supreme Court cases governing this field. The plaintiffs make

an additional argument, however, for why the TSR is not

“narrowly drawn” to serve the two government interests at

stake. Munson, 467 U.S. at 961. Their argument rests on an

allegedly impermissible dichotomy between the way the FTC

treats professional fundraisers and the way it treats in-house

charity callers. As we have noted, the challenged restrictions

apply to the former, but not the latter—adversely affecting

those charities that choose to out-source their fundraising

work. According to the plaintiffs, this distinction makes the

TSR unconstitutionally “underinclusive.”

A law is underinclusive in this sense, and thus not narrowly

tailored, when it discriminates against some speakers but not

others without a legitimate “neutral justification” for doing

so. See City of Cincinnati v. Discovery Network, Inc., 507

U.S. 410, 429-30 (1993). Even when the government has a

compelling interest for restricting speech, it may not seek to

24a

further that interest by creating arbitrary distinctions among

speakers that bear no “reasonable fit” to the interest at hand.

Id. at 416-47. Thus, in Discovery Network, the government

was prevented from advancing an interest in street aesthetics

by banning only newsracks containing commercial handbills,

but not other publications. /d. at 425-26. The Court remarked

that all news-racks are “equally unattractive” and it found

suspicious the fact that the city’s selective ban only elim-

inated 62 of the nearly 2000 racks. /d. at 418, 425. Put

simply, as Discovery Network illustrates, a regulation can

violate the First Amendment by restricting too little speech,

as well as too much.

The concept of underinclusiveness needs to be approached

with some caution, however. Holding an underinclusive

classification to violate the First Amendment can chase

government into overbroad restraints of speech. Thus, a

speech restriction with a limited reach is not doomed to fail

First Amendment scrutiny. See Burson, 504 U.S. at 207 (“We

do not. . . agree that the failure to regulate all speech renders

the statute fatally underinclusive.”) What concerned the Court

in Discovery Network was not, as the plaintiffs would have it,

simply the fact that some speakers were restrained where

others were not. Rather, the Court invalidated the ordinance

because there was “no justification for that [distinction] other

than the city’s naked assertion that commercial speech has

‘low value.”” /d. at 429.

There are other cases, by contrast, where an underinclusive

speech restriction is justified by a neutral and legitimate

reason for the distinction. In Members of City Council of Los

Angeles v. Taxpayers for Vincent, for example, a city

ordinance banned signposts only on public but not private

property. 466 U.S. 789, 811 (1984). Although obviously

underinclusive, the distinction was neutrally justified by a

“private citizen’s interest in controlling the use of his own

property.” /d.

25a

As the district court in the present case noted, the Supreme

Court has found an underinclusive restriction of speech to be

impermissible in three circumstances: (1) where the law

represents an attempt by the government to give one side of a

public debate an advantage over another, City of Ladue v.

Gilleo, 512 U.S. 43, 51 (1994); (2) where the regulation is so

broad or narrow in scope that it “undermines the likelihood of

a genuine governmental interest,” F.C.C. v. League of Women

Voters of California, 468 U.S. 364, 396 (1984) (citation omit-

ted); and (3) where the underinclusiveness is so severe that it

“raises serious doubts” about whether the government is

actually serving the interests it invokes. Florida Star v.

BJ.F., 491 U.S. 524, 540 (1989); see also Discovery Net-

work, 507 U.S. at 424-26.”

Significantly, in all three scenarios the limited scope of the

regulation served as a red flag to signal a governmental

trespass on a fundamental First Amendment concern. A

distinction among speakers is thus not objectionable per se,

but only because it renders implausible the government's

claim that the regulation making this distinction is narrowly

tailored to address a certain interest. The City of Ladue Court,

for instance, was troubled by the distinction in that case

> The dissent reads Riley to create yet another category, one that would

require “a compelling justification” for “regulations that distinguish

between charities.” Dissenting Op. at 30. But Riley cannot bear the weight

that the dissent would place upon it. The “key deficiency” of the North

Carolina statute was not, as the dissent would have it, the fact that “it

necessarily only applied to those charities that used professional fun-

draisers.” /d. at 30. Rather, the problem was that the provision could not

withstand “exacting First Amendment scrutiny” because the state’s inter-

est was insufficiently “weighty” and “the means chosen to accomplish it

[were] unduly burdensome and not narrowly tailored.” Riley, 487 U.S. at

798. As we have noted, the Riley Court emphasized that imposing

requirements upon professional fundraisers does not offend the First

Amendment so long as those requirements are sufficiently narrowly tai-

lored, id. at 799 n.11, as the restrictions in this case are.

26a

because it “diminish[ed] the credibility of the government’s

rationale for restricting speech.” 512 U.S. at 51. Similarly, the

Discovery Network Court did not invalidate the ordinance

simply because it applied to some newsracks and not to

others, but rather because the selective application of the ban

left the city relying on the notion that commercial handbills

were “low value,” a characterization that the Court was

“unwilling” to countenance. 507 U.S. at 428. See also Metro-

media, Inc. v. City of San Diego, 453 U.S. 490, 511 (1981)

(framing the underinclusiveness question by asking whether

“the city denigrates its interest .. . and defeats its own case by

permitting” some speech and not others).

There is no mystery, however, about why the FTC has

distinguished telefunders from in-house charity callers.

Indeed, the agency candidly explained that it drew this line

because that was the only way to reconcile the new in-

structions from Congress set forth in the PATRIOT Act with

the old, unchanged instructions from Congress set forth in the

Telemarketing Act. Thus, the agency noted that:

Reading the amendments to the Telemarketing Act

effectuated by § 1011 of the USA PATRIOT Act to-

gether with the unchanged sections of the Telemarketing

Act compels the conclusion that for-profit entities that

solicit charitable donations now must comply with the

TSR, although the Rule’s applicability to charitable

organizations themselves is unaffected.

See 68 Fed. Reg. 4580, 4585 (January 29, 2003). This recon-

ciliation of the two statutes, as the lower court explained, is

“(t]he only logical conclusion that can be drawn from reading

these two provisions together.” See Nat’! Fed. of the Blind,

303 F. Supp. 2d at 714. And it is thus no surprise that the

agency reached it.

In fact, when it announced the TSR, the FTC specifically

responded to comments it had received from charities

27a

claiming that this interpretation of Congress’ instructions

created “a double standard”— increasing costs for only those

charities who choose to use telefunders and not for those

charities who do not. In response, the FTC explained:

Again, the Commission notes that despite its broad

mandate to regulate charitable solicitations made via

telemarketing, the USA PATRIOT Act amendments did

not expand the Commission’s jurisdiction under the TSR

to make direct regulation of non-profit organizations

possible.

. .. the jurisdictional reach of the Rule is set by statute,

and the Commission has no authority to expand the Rule

beyond those statutory limits.

See 68 Fed. Reg. at 4586, 4587.

The dissent finds itself unable to accept the distinction

between paid solicitors and in-house volunteers. It rejects the .

view that telefunders, presumably on commission, will more

aggressively pursue residents because “[u]nlike the FTC, [the

dissent} cannot accept that one’s strongest motivations are

always monetary.” Dissenting Op. at 32 n.2. Whether or not

one accepts the view that paid solicitors are more likely to

hound residents for money, the question before us is not a

matter of substantial evidence review of an agency decision,

but rather a question of whether we have an adequate basis

in law for finding the TSR to be unconstitutional. No such

basis exists.

The distinction of which appellants complain was some-

thing the agency was bound to make by simple application of

its jurisdictional limitations. And, what is more, drawing this

sort of line is not a new enterprise for the FTC. The agency

has made distinctions in the past—analogous to the one

challenged here—with regard to telemarketing done on behalf

28a

of other entities outside its jurisdiction. The introduction to

the TSR explains:

The Commission notes that, from the inception of the

Rule, the Commission has asserted that parties acting on

behalf of exempt organizations are not thereby exempt

from the FTC Act, and thus, for example, a nonbank

company that contracts with a bank to provide tele-

marketing services on behalf of the bank is covered by

this Rule. This reading is consistent with the Commis-

sion’s long-standing interpretation of the scope of its

authority under the FTC Act, as well as with judicial

precedent.

68 Fed. Reg. at 4586 (quotation marks omitted).

When an agency regulates to the extent of its jurisdiction it

will unavoidably leave out some speakers and some speech

that is beyond its authority to regulate. But, in such

circumstances, the danger of governmental overreaching—

which cases such as Discovery Network aim to prevent—is

removed. Unlike in those cases, here it does not make sense

to see this unavoidabie distinction as a red flag indicating

First Amendment problems. Any underinclusiveness that

appellants have identified is not the result of the FTC

attempting to favor one side of a public debate over another,

City of Ladue, 512 U.S. at 51, or pursuing an illegitimate

governmental interest, League of Women Voters, 468 U.S. at

396, or not genuinely serving the interest it purports to seek,

Florida Star, 491 US. at 540. Rather, such

underinclusiveness results from the simple fact that the

PATRIOT Act designated “charitable solicitations” as being

within the type of behavior the FTC could regulate, but it left

speech by charities outside the agency’s jurisdiction.

The agency’s jurisdictional boundary, therefore, serves as

the “neutral justification” for the distinction that was missing

in Discovery Network. See 507 U.S. at 429-30. While plain-

29a

tiffs complain that the regulation also fails to cover some

commercial, political, and intrastate speech, this fact too is

explained by the FTC’s assiduous attention to its own

jurisdiction.

Appellants’ argument suffers from another flaw. They ask

us to hold that the FTC’s distinction, based on the clear

congressional directives governing its jurisdiction, is uncon-

stitutional. But if we did so, then any regulation by any

federal age.wy that applied to only some speakers would be

imperiled. \.’orse still, Congress could not remedy such

defects by re-assigning jurisdiction among agencies. For the

reassignment would itself necessarily distinguish among

speakers or speech that each agency can regulate. This is so

because jurisdiction, by its very nature, is underinclusive.

The upshot of appellant’s position is thus a stark choice for

lawmakers—either assign all regulation touching on speech

to one federal agency, or do not regulate at all. We do not

believe the Constitution hamstrings Congress in such a

manner.

In any event, effectively instructing Congress to reorder an

agency's jurisdiction would be an unwarranted exercise of

judicial authority. Agency jurisdiction often reflects tradi-

tional areas of expertise and experience which extend well

beyond this or indeed any single problem. See Weinberger v.

Bentex Pharm. Inc., 412 U.S. 645, 654 (1973) (emphasizing

agency “specialization” and specific “insight gained through

experience”). Congress has a great deal on its plate, and it

is neither wise nor within our competence as judges to

casually direct the legislative branch to re-organize executive

agencies.°

° In this regard, we do not find it surprising that different agencies

might adopt different policies. The point has been made that the FCC,

when interpreting the Telephone Consumer Protection Act, exempted all

charitable speech from its regulation and did not distinguish telefunders

30a

Our fine dissenting colleague takes to task the FTC’s

action because it offends the all-or-nothing way in which the

dissent believes the government should operate. In the dis-

sent’s view, government is not entitled to messy or untidy

solutions, but instead is confined to sweeping pronounce-

ments, bereft of the ability to make distinctions or to strike

compromises. This is a view that we cannot accept. Indeed,

we note that accepting plaintiffs’ underinclusiveness argu-

ments would strike a blow to the democratic process and our

Structure of government. We have no warrant to prevent the

government from addressing a problem one step at a time.

And, if we were to strike down these regulations as under-

inclusive, we could weil provoke legislatures to pass broader

regulations that would prove far more damaging to free

speech. We thus need not prevent the government from

confronting problems incrementally; to do so would ignore

the warning that the government is not required to “make

progress on every front before it can make progress on any

front.” See United States v. Edge Broad. Co., 509 U.S. 418,

434 (1993).

Vi.

The same respect for the democratic process that leads us

to credit the FTC for faithfully applying its jurisdictional

mandate counsels respect for the obvious efforts the agency

has taken to balance the competing interests involved. Indeed,

were we not to respect the compromises made by the agency,

we would be depriving our legislative and executive branches

of the authority to protect residential privacy even to the

modest extent that these regulations do.

from in-house charity callers. We note that the two agencies are operating

with different jurisdictional boundaries and are interpreting different

Statutes. In any event, the fact that two agencies disagree with each other

is hardly remarkable. For such variance is commonplace in government.

The mere fact of agency disagreement does not suggest to us that one or

the other view is unconstitutional.

31a

A brief review of the TSR underscores its status as a series of

compromises. The regulations do not, for instance, prohibit

telemarketing altogether—only early moming and late night

calls are disallowed. Neither do the regulations require a cum-

bersome and lengthy disclosure of identifying information—

only the name of the charity represented and the purpose of the

call must be disclosed. Furthermore, the regulations do not sub-

ject telefunders to the more restrictive national do-not-call list—

instead they must only comply with a charity-specific registry.

Indeed, the agency’s compromises are explicitly recog-

nized in the TSR itself. Aware of Riley, Schaumburg, and

Munson, the Commission properly noted the importance of

“minimz[ing] the impact on the First Amendment rights of

charitable organizations and the telemarketers who solicit on

their behalf.” 68 Fed. Reg. at 4636. The agency was explicitly

sensitive to the fact that smaller charities tend “to employ for-

profit firms to make their calls.” /d. at 4666. Because of this,

the FTC was concerned that subjecting telefunders to a

national do-not-call list would “sweep too broadly,” id. at

4636, and it thus settled on a “more limited approach” re-

quiring telefunders to honor only a charity-specific do-not-

call list. Jd. at 4637. This compromise, it noted, was “likely to

be of significant benefit to smaller charities,” id. at 4666, and

“work[ed] better to accommodate both the right of privacy

and the right of free speech.” /d. at 4637.

These regulations are, in short, the product of a necessary

balancing. The rights of charities and telefunders to commu-

nicate with potential donors were weighed against the right of

those donors to enjoy residential peace. In this respect, the

regulations are akin to the numerous time, place, and manner

restrictions on speech that the Supreme Court has often

upheld against First Amendment challenge. See, e.g., Ward v.

Rock Against Racism, 491 U.S. 781, 803 (1989). Just as those

restrictions balance the government’s interest in protecting

the community, see id. at 796, against a speaker's nght to

disseminate his ideas, see id. at 802 (regulation must “leave

32a

open ample alternative channels of communication”), so do

the FTC’s restrictions on telemarketing accomplish such a

reconciliation of personal and public interests.

The dissent analogizes what took place here to a decision by

Congress to assign a particular agency jurisdiction over speakers

with a particular political orientation or point of view.

Dissenting Op. at 34-35 (discussing hypothetical agency

jurisdiction “over one political party”). This analogy is so far

afield from the neutral character of the jurisdictional division

here as to be apples and oranges. Like time, place, and manner

restrictions, the TSR provisions do not exhibit any disapproval

of the content of the calls placed by telefunders. The TSR

applies evenhanded!y to solicitations for charities of all persua-

sions and beliefs. The restrictions apply to all telemarketing calls

made by entities within the FTC’s jurisdiction, regardless of the

subject matter of the call or the viewpoint expressed by the

caller. “{L]aws that confer benefits or impose burdens on speech

without reference to the ideas or views expressed are in most

instances content neutral.” Turner Broadcasting Sys., Inc. v.

FCC, 512 U.S. 622, 643 (1994). And narrowly-drawn content-

neutral restraints on speech represent a permissible govern-

mental response to a legitimate and substantial public concern.

See Ward, 491 U.S. at 798-99.

Compromises of this sort are critical to a government

of separated powers. They permit all three branches to

participate in striking a balance between individual nghts on

the one hand and public interests on the other. The judicial

branch identifies a constitutional right (as in Riley), and then

the executive and legislative branches reconcile respect for

that right with a measured protection of the public interest.

We should be wary of upsetting such a delicate dance in

which all three partners of government play their distinctive

roles.’ Courts have their vital part to play, but here it is best

” Admittedly, the FTC is often called an “independent agency” and

is not fully accountabie to the executive branch. However, the FTC

33a

performed in conjunction with, and not to the exclusion of,

the coordinate branches of our government."

VII.

Our Constitution does not prevent the democratic process

from affording the American family some small respite and

sense of surcease. We hold, therefore, that the FTC was

authorized by Congress to promulgate the TSR, and we find

that the rule is consistent with the First Amendment. Since

it is “narrowly drawn” to serve the “strong subordinating

interest” of protecting residential peace, the TSR embodies a

proper compromise between the important speech interests of

charities and tite equally important need to protect the public

from excessive intrusions into the home. Munson, 467 U.S. at

960-961. The district court’s judgment is accordingly

AFFIRMED.

acted pursuant to an explicit congressional directive, see 15 U.S.C.

§ 6102(a)(1), and it conducted hearings giving ample opportunity to

interested parties to voice concerns within this congressional rubric. See

68 Fed. Reg. 4580, 4582 (Jan. 29, 2003). It thus reflects the efforts of our

democratic branches.

* The charities additionally claim that the TSR constitutes an impermis-

sible prior restraint of speech, and violates the Equal Protection Clause.

We find these arguments to be without merit.

First, as the district court noted, plaintiffs’ prior restraint argument “

ignores the long-held distinction between prior restraints and subsequent

punishments.” Nat'l Fed. of the Blind v. FTC, 303 F. Supp. 2d 707,

723- 24 (D. Md. 2004). Traditionally, unconstitutional prior restraints are

found in the context of judicial injunctions or a licensing scheme that

places “unbridled discretion in the hands of a government official or

agency.” FW / PBS, Inc. v. City of Dallas, 493 U.S. 215, 225-26 (1990).

Here, by contrast, it is only after the speech is uttered that a violation of

the TSR can occur and sanctions can be imposed.

Second, there is no Equal Protection violation for the same reasons

there is no First Amendment violation. See Nat'i Fed. of the Blind, 303

F. Supp. 2d at 723.

34a

DUNCAN, Circuit Judge, dissenting:

There are few more annoying occurrences than the

disruption of one’s sleep due to a late-night or early-morning

phone call by a telephone solicitor. Whether the end result is

simply mild frustration (due to an ill-timed solicitation) or

actual fear (due to the phenomenon of “abandoned calls”), the

invasion of privacy that the majority identifies due to un-

wanted telephone solicitations is certainly a compelling

interest that government can seek to remedy. I do not disagree

with the majority’s assessment that the regulations at issue in

this case are modest attempts by the Federal Trade Com-

mission (“FTC”) to provide some respite to the public from

the barrage of such intrusions. Were these regulations to

apply equally to all charities that seek to engage in telephone

solicitations, 1 would concur in the majority’s decision to

affirm. However, because the TSR in my view impermissibly

distinguishes between the type of speech permitted based

upon the identity of the speaker without any legitimate neu-

tral justification, I must unfortunately, respectfully, dissent.

I.

As the majority correctly points out, a law or regulation is

underinclusive when it restricts the speech of one group of

speakers but not that of another similarly situated group

without a legitimate “neutral justification” for the distinction.

See City of Cincinnati v. Discovery Network, Inc., 507 U.S.

410, 429-30 (1993). Even where, as here, the government has

a compelling interest in regulating a particular type of speech,

its distinctions between similarly situated actors must reflect a

“reasonable fit” between the restriction and the goal to be

achieved by the disparate treatment. /d. At 417. If the

distinction restricts speech in a way that does not achieve its

stated goal, or is made without sufficient evidentiary jus-

tification, the regulation is constitutionally underinclusive.

35a

In Riley v. Nat'l Fed. Of the Blind of North Carolina, Inc.

487 U.S. 781 (1988), the Supreme Court made clear that the

two groups at issue here, charities that use “ielefunders” and

those that keep solicitation in-house, are similarly situated

actors. Riley involved a North Carolina statute requiring all

professional fundraisers to disclose to potential donors the

percentage of the charitable contributions collected in the

previous twelve months that was actually turned over to the

charity. /d. at 784 n.2. The Supreme Court struck down the

requirement, holding that the state’s interest in informing

donors about the charity’s fundraising agreement did not out-

weigh the fundraisers’ significant speech interests. /d. at

798-99,

Most importantly for our purposes, the Court noted that the

statute’s key deficiency was that it necessarily only applied to

those charities that used professional fundraisers. /d. at 784.

The Court recognized that in addition to the heightened

scrutiny given to all regulations affecting charitable solici-

tations, courts should be especially cognizant of the compara-

tive effect regulations that distinguish between charities based

upon the professional/volunteer status of the solicitor can

have on the success of the charity itself. See id. at 799.

Because charities using professional solicitors are likely to be

smaller and less popular than those relying on in-house

efforts, the statute’s application of the financial disclosure

requirements to these professional fundraisers would place

them at a competitive disadvantage. The state in Riley argued

that even under this heightened scrutiny, its regulation was

justified due to the increased risk of fraud inherent in

telefunder solicitation. The Court specifically rejected this

assertion, holding that there exists “no nexus” between the

percentage of funds retained by a solicitor and the likelihood

of fraud. /d. at 793. Because regulations that distinguish

between charities can affect the financial success of one vis a

vis another, such distinctions must have a compelling

justification. With no evidence to support the state of North

36a

Carolina's bald assertion of a greater likelihood of fraud, the

court held that the state could not treat these similarly situated

actors differently, and the distinction could not be upheld. /d.

at 798-99. It is against this backdrop that we must review the

regulation now before us. '

The FTC asserts that it intended the amended TSR to

further the dual goals of fraud protection and consumer

privacy. However, it is unclear that either of these goals is

advanced in any material way by the TSR’s inclusion of only

solicitations made by telefunders rather than the broader

category of all charitable solicitors in its speech restrictions.

The district court found sufficient the FTC’s declaration that

a professional telefunder’s financial interest in obtaining

greater contributions leads it to be more likely to engage in

fraudulent behavior than a non-professional solicitor. Nat'l

Fed. of the Blind v. F. T.C., 303 F. Supp. 2d 707, 721 (D. Md.

2004). However, the FTC, when pressed at oral argument,

conceded that there existed “no empirical evidence” in the

administrative record to support this assumption. In fact, the

FTC conceded that the only evidentiary support the agency

had for solely applying the TSR to telefunders was its

intuitive, “common-sense” assumption that telefunders com-

mit fraud more frequently. This is the exact assumption

rejected by Riley. Further, as it is not grounded on any fact

that the FTC or this court has before it, I cannot accept it as a

“neutral justification” for the speech limitation distinction.’

' In its well-reasoned opinion, the majority considers Riley but does not

address its implications concerning underinclusiveness. While the regula-

tions at issue here may be more limited than in Riley, there is no indica-

tion that its holding that charities are similarly situated actors that must be

treated equally without compelling justification is any less applicable.

? The majority is correct in asserting that our review is not one for

“substantial evidence,” but rather is a question as to whether we have a

substantial basis for finding the regulation unconstitutional. Majority Op.

at 24. Here we most certainly do. The lack of evidence (as opposed to

37a

The same evidentiary deficiencies undercut the FTC’s

conclusion that its regulations advance the goal of protecting

consumer privacy. While it cannot be doubted that the gov-

ernment’s rules will prevent some degree of consumer annoy-

ance, the FTC again presents no evidence that telefunders are

more likely to be violators of consumer fj rivacy or engage in

abusive telemarketing practices than in-house solicitors.

There is no suggestion in the record that consumers are more

likely to feel that their privacy is invaded when receiving a

call from a telefunder than a volunteer or in-house employee

of a charitable organization. The FTC has also provided no

evidence showing that telefunders generate a majority, or

even a significant percentage of the charitable solicitation

calls. It is not enough for us to accept the agency’s rationale

that the regulation is justifiable because it will help con-

sumers in some small way. See Discovery Network, 507 U.S.

at 426 (1993) (holding that a selective ban on commercial

newsracks was not justifiable simply because it would “in

some small way limit the total number of newsracks.”).

In order for it to pass the underinclusiveness test, the FTC

must show that the evidence illustrates that it makes sense to

treat these similarly situated charities differently. This it does

not do.

It is certainly not the case that the First Amendment

requires the government to regulate all aspects of a problem

“common-sense” assumptions) providing a “neutral justification” for the

distinction between telefunders and in-house solicitors requires the find-

ing of a First Amendment violation.

Further, even if such so-called “common sense” assumptions were a

sufficient evidentiary basis for speech distinctions (and Discovery Net-

work counsels that they are not), I would not accept this one. It could just

as plausibly be argued that a solicitation conducted by someone with a

personal interest in the success of a charity (such as an employee or a

volunteer) may lead to more overreaching and thus a greater potential for

fraud. Unlike the FTC, I cannot accept that one’s strongest motivations

are always monetary.

38a

before regulating any part of it. United States v. Edge Broad.

Co., 509 U.S. 418, 434 (1993). We generally give the

government the latitude it needs to find ways to address

problems in society in the manner in which it sees fit, and

those judgments are deserving of deference.” However,

where, as here, no evidentiary basis has been articulated for

the disparate treatment of similarly situated groups, such

deference is unwarranted. See Florida Star v. B.J.F., 491 U.S.

524, 537-38 (1989). The FTC has made no showing that the

professional/non-professional distinction it employs in the

TSR furthers the goals of fraud prevention and consumer

privacy. It is this showing that Discovery Network’s “neutral

justification” and “reasonable fit” requirements compel. 507

U.S. at 428-30. Because these requirements are not satisfied,

the TSR cannot survive.

The majority characterizes my analysis as reflecting a

belief that government must act in an “all-or-nothing” man-

ner. It asserts that I believe that the government cannot under-

take “messy” solutions, but rather must only make “sweeping

pronouncements.” Majority Op. at 26. It is unclear to me how

such broadly painted assumptions about my beliefs concern-

ing the role of government could be ascertained from such a

narrow dissent; in any event, nothing could be further from

the truth. Rather, I simply believe that the Supreme Court

meant what it said in Discovery Network that without a

“neutral justification,” neither Congress nor executive agen-

cies can create speech restrictions that treat similarly-situated

actors differently. 507 U.S. at 428-30. The FTC had ample

* The majority’s deference borders on subservience. By suggesting that

after the judiciary finds a constitutional right, as in Riley, it is then up to

the legislative and executive branches to define the scope of that right, the

majority seems to suggest a far too limited role for the courts. However

the “elaborate dance” between the governmental branches is to proceed,

the judiciary cannot relinquish its role as the ultimate protector of

constitutional guarantees. ,

39a

opportunity during the rule-making process to create an

evidentiary record to support the distinction it has drawn. It

failed to do so, and the majority’s mischaracterization of my

views and expressions of concern for the “democratic proc-

ess” and “our structure of government” are no substitute. The

government is certainly able to “make distinctions or to strike

compromises,” Majority Op. at 26, but in doing so, it must

abide by the First Amendment. Here, the FTC did not.

I.

Seeking to save the FTC from these evidentiary de-

ficiencies, the majority holds that the distinction the TSR

draws between in-house fundraisers and external telefunders

is:justified due to the agency’s jurisdictional restraints. The

FTC Act gives the agency jurisdiction over “persons, partner-

ships and corporations,” but no authority over nonprofit

organizations. 15 U.S.C. § 45(a)(2). The majority correctly

notes that without the jurisdiction to regulate all nonprofit

organizations, the FTC has no ability to correct the under-

inclusiveness inherent in the TSR. According to the majority,

some degree of underinclusiveness is inevitable in all agency

regulation, and an agency’s jurisdictional boundaries can

therefore serve as the “neutral justification” for an under-

inclusive distinction.

The implications of this holding are staggering. If a

regulation that places different restrictions on speech based

upon the identity of the speaker can be upheld simply by

relying on the jurisdiction of the agency as the “neutral jus-

tification” for the distinction, this court will have created a

perverse incentive for all legislative bodies. Congress can

restrict speech, even unconstitutionally, so long as it does so

by parsing jurisdiction between various agencies. If, for

example, Congress were to give a particular agency juris-

diction over one political party—for instance if the Depart-

ment of Homeland Security were given jurisdiction over the

Independent party in America—the majority’s holding would

40a

allow a regulation that restricted that party’s ability to raise

funds to be upheld simply by referring to the agency’s

jurisdiction.’ Restrictions on speech that go to the heart of the

First Amendment, those differentiating solely on the identity

of the speaker, would be given little to no scrutiny, as the

legislative decision to disperse jurisdiction amongst various

executive agencies would justify the disparities. The majority

would allow Congress to do indirectly that which it cannot

do directly, and that is to regulate speech in an underin-

clusive manner.

The majority’s sole focus on the FTC’s jurisdiction and

that agency’s inability to promulgate an even-handed regu-

lation overlooks the fact that Congress is well able to correct

the constitutional deficiency.” In this case it could have done

so by simply expanding the FTC’s jurisdiction to include all

charitable solicitations, thus authorizing the agency to pass a

regulation that advances the goals of fraud protection and

consumer privacy materially and constitutionally. Congress

could have also simply required the Federal Communications

“ The majority criticizes this analogy without providing any basis for

distinguishing it from the situation before us. The government could dis-

perse jurisdiction over political parties among various agencies without

“exhibit[ing] any disapproval of the content” of the parties’ messages. See

Majority Op. at 28. If one of such agencies were then to create a set of

restrictions that apply to all parties within its jurisdiction, and “impose

burdens on speech without reference to the ideas or views expressed,” the

majority’s reasoning would require us to uphold the restriction. Sig-

nificantly, the majority is unable to point to any language in its opinion

which would preclude such a result. The majority’s unexplained assertion

that my analogy is “se far afield” from the regulation at hand as to be

“apples and oranges” reflects a conciusion rather than an analysis.

> The majority suggests that a “correction” by Congress of an agency’s

jurisdiction would in and of itself, be underinclusive. However it posits no

basis for this proposition. If true, all Congressional grants of jurisdiction

that differentiate between groups would be underinclusive. The First

Amendment does not require this radical result; it simply requires some

legitimate basis for differential treatment.

4la

Commission, the agency with oversight authority over all

non-telefunder charitable solicitation, to pass a similar regu-

lation, thus insuring that all charities were on a level playing

field in their quest to solicit funds. However what it cannot do

is hide behind jurisdictional barriers which it erected as a

shield for its unconstitutional restrictions on speech based

upon the identity of the speaker.°

III.

The Supreme Court has recognized that the ability to raise

funds is the lifeblood of a charity. Riley, 487 U.S. at 789. For

very large or very popular charities, fundraising can be

conducted in-house through employees of the charities or

volunteers. The use of volunteers can even be a selling point

to potential donors, as an individual’s willingness to dedicate

his or her free time to a cause suggests a strong belief in its

goals. However, for small or unpopular charities, the ability

to engage in mass volunteer fundraising may be impossible,

and thus the use of professional fundraisers may hold the key

to the entity’s existence.

As charities compete for the finite charitable donation

dollar, those charities that either choose to or are forced to use

telefunders are placed at a competitive disadvantage by the

regulations that affect them and not their charitable coun-

terparts. It may very well be the case that following the

regulations laid down in the TSR would be a good practice

for all charities. Calling consumers early in the morning or in

the middle of the night appears unlikely to provide the most

© The majority’s concern about judicial overreaching is understandably

but inapplicable here. If Congress and the executive agencies have evi-

dentiary reasons for their respective decisions to pass regulations that have

the effect of treating similar groups differently, they may well pass

constitutional muster. However when, as here, no such evidentiary basis

exists, the effect of this Congressional choice is to create an unconstitu-

tional restriction on speech. It is not overreaching to prevent this result.

42a

successful fundraising strategy. However, whatever decisions

the individual charities make, Riley and Discovery Network

compel the conclusion that the government must apply an

even hand. The FTC has no evidence and no reason beyond

jurisdictional authority justifying its decision to regulate

charitable solicitations differently based upon the identity of

the speaker.

The majority holds that this suffices, and that Congress

can justify unconstitutional restrictions on speech based upon

the identity of the speaker simply by delineating jurisdiction

over those speakers between various executive agencies. This

argument is untenable. It provides a jurisdictional loophole

through which government can achieve indirectly that which

it cannot do directly. I do not believe ‘that such jurisdictional

parsing can be a “neutral justification” for a regulation that

imposes different speech restrictions based upon the identity

of the speaker. I therefore respectfully dissent.

43a

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

CIVIL NO. JFM-03-963

NATIONAL FEDERATION OF THE BLIND.

and

SPECIAL OLYMPICS MARYLAND, INC.,

Vv.

FEDERAL TRADE COMMISSION.

ORDER

For the reasons stated in the accompanying memorandum,

it is, this 24th day of February 2004

ORDERED that

1. Plaintiffs’ motion for summary judgment is denied; and

2. Defendant’s cross-motion for summary judgment is

granted.

/s/

| J. Frederick Motz

United States District Judge

44a

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

CIVIL NO. JFM-03-963

NATIONAL FEDERATION OF THE BLIND,

and

SPECIAL OLYMPICS MARYLAND,

Vv.

FEDERAL TRADE COMMISSION.

MEMORANDUM

Plaintiffs National Federation of the Blind and Special

Olympics Maryland, Inc. (“Plaintiffs”) have filed this action

against Defendant Federal Trade Commission (“FTC”)

challeiging the amendments to the Telemarketing Sales Rule

promulgated by the FTC. These amendments impose modest

restrictions upon the activities of professional telemarketers

who solicit charitable contributions on behalf of non-profit

organizations. Plaintiffs claim that the amended rule exceeds

the FTC’s statutory authority and violates the First and Fifth

Amendments to the United States Constitution. Pending

before the court are the parties’ cross-motions for summary

judgment. For the reasons stated below, Plaintiffs’ motion for

summary judgment will be denied and Defendant's cross-

motion for summary judgment will be granied.

A.

In 1994, Congress passed the Telemarketing Consumer

Fraud and Abuse Prevention Act (“Telemarketing Act”), 15

U.S.C. §§ 6101 et seq. That legislation directed the FTC to

prescribe rules prohibiting deceptive and abusive telemar-

keting acts or practices. 15 U.S.C. § 6102(a)(1). The defini-

45a

tion of “telemarketing” in the statute was limited to plans,

programs, or Campaigns involving more than one interstate

phone call, which sought to “induce purchases of goods

or services.” 15 U.S.C. § 6106(4) (1994). Congress also

instructed the FTC to include several specific rules with

respect to “abusive” practices, namely: (1) a requirement that

telemarketers not undertake a pattern of unsolicited calls that

the reasonable consumer would consider coercive or abusive

of his right to privacy; (2) restrictions on the hours of the day

and night during which unsolicited calls could be made; and

(3) a requirement that the telemarketer promptly and clearly

disclose to the consumer receiving the call that the purpose of

the call is to sell goods or services. 15 U.S.C. § 6102(a)(3)

(1994).

The Telemarketing Act expressly limited the activities that

could be regulated by the FTC to those activities that were

within the FTC’s jurisdiction as defined by the FTC Act. 15

U.S.C. § 6105(a). Under the FTC Act, the FTC has juris-

diction over “persons, partnerships, or corporations,” except

for banks, savings and loan institutions, federal credit unions,

common carriers, and some other entities not relevant to this

case. 15 U.S.C. § 45(a)(2). To qualify as a “corporation,” an

entity must be organized to carry on business for its own

profit or that of its members. 15 U.S.C. § 44. Incorporating

these jurisdictional limits into the Telemarketing Act meant

that nonprofit organizations were exempt from the scope of

the statute.

In 1995, the FTC promulgated the original Telemarketing

Sales Rule to implement the Telemarketing Act, codified at

16 C.F.R. §§ 310 et seq. This rule prohibited various decep-

tive telemarketing practices, 16 C.F.R. § 310.3, and also

regulated certain abusive practices. 16 C.F.R. § 310.4. The

FTC's jurisdiction was not restated in the rule because the

Telemarketing Act clearly defined the agency’s jurisdiction

by incorporating the FTC Act. 60 Fed. Reg. 43842, 43843

46a

(Aug. 23, 1995). In addition, the FTC specifically stated in

the Final Rule that it did not intend to expand or contract its

jurisdiction or the scope of the rule’s coverage. /d.

In October 2001, after the September |] attacks, Congress

passed the Uniting and Strengthening America by Providing

Appropriate Tools Required to Intercept and Obstruct Terror-

ism Act (“USA PATRIOT Act”), Pub. L. No. 107-56, 115

Stat. 272 (2001). Section 1011 of this statute amended the

Telemarketing Act by expanding the definition of telemarket-

ing to include calls intended to induce “a charitable contri-

bution, donation, or gift of money or any other thing of

value.” 15 U.S.C. § 6106(4). The USA PATRIOT Act also

added “fraudulent charitable solicitations” as a deceptive

practice and directed the FTC to include rules in its regulations

with respect to such solicitations. 15 U.S.C. § 6102(a)(2).

Finally, the section of the Telemarketing Act describing the

abusive practices that the FTC was to regulate was expanded to

include a specific provision about the solicitation of charitable

contributions. 15 U.S.C. § 6102(a)(3)(D). The USA PATRIOT

Act did not, however, change the provision of the Telemar-

keting Act setting forth the FTC's jurisdiction. The FTC

confirmed this point, stating, “Notwithstanding its amendment

of these provisions of the Telemarketing Act, neither the text

of section 1011 nor its legislative history suggest that it amends

Section 6105(a) of the Telemarketing Act—the provision

which incorporates the jurisdictional limitations of the FTC

Act into the Telemarketing Act and, accordingly, the TSR.” 67

Fed. Reg. 4492, 4496 (Jan. 30, 2002).

Soon after the enactment of the USA PATRIOT Act, in

2002, the ¥ VC issued a Notice of Proposed Rulemaking that

suggested a series of amendments to the original Telemar-

keting Sales Rule. The FTC received 64,000 comments about

its proposed amendments and conducted a three-day public

forum to discuss the amendments. 68 Fed. Reg. 4580, 4582

(Jan. 29, 2003). The Final Amended Rule (“TSR”) was

promulgated in January 2003. The TSR made clear that one

47a

consequence of the USA PATRIOT Act was the expansion

of the coverage of the Telemarketing Act (and thus the

Telemarketing Sales Rule) to those telemarketers often called

“telefunders”—that is, for-profit entities that solicit charitable

contributions on behalf of non-profit organizations. See 68

Fed. Reg. at 4584-85. The FTC stated, “Reading the amend-

ments to the Telemarketing Act effectuated by § 1011 of the

USA PATRIOT Act together with the unchanged sections of

the Telemarketing Act compels the conclusion that for-profit

entities that solicit charitable donations now must comply

with the TSR, although the Rule’s applicability to charitable

organizations themselves is unaffected.” /d. at 4585. The TSR

also added more restrictions on telemarketing to the original

rule, only some of which applied to telefunders.

The restrictions in the TSR being challenged in this case

are the following: (1) a company-specific do-not-call provi-

sion, which prohibits a telemarketer from calling any con-

sumer who has indicated that she wants no further calls

from that particular seller or organization, 16 C.F.R,

§ 310.4(b)(1)(iii)(A)'; (2) a prohibition on “abandoned calls,”

which requires the telemarketer to connect the call to a

representative within two seconds of the person’s completed

greeting, 16 C.F.R. § 310.4(b)(1)(iv); (3) a prohibition on

placing calls before 8:00 a.m. or after 9:00 p.m., 16 C.F.R.

§ 310.4(c); and (4) a requirement that telemarketers transmit

caller ID information, 16 C.F.R. § 310.4(a)(7). The TSR also

includes a specific requirement that telefunders promptly

identify themselves and tell consumers that they are soliciting

donations. 16 C.F.R. § 310.4(e).”

' The TSR also created a national do-not-call registry and prevented

telemarketers from calling any consumer whose name was included in this

registry. 16 C.F.R. § 310.4(b)(1)(iti)(B). However, it specifically exempted

all charitable solicitations from this provision. 16 C.F.R. § 310.6(a).

> The same requirement is applied to commercial telemarketers in a

parallel provision of the TSR. 16 C.F.R. § 310.4(d).

48a

B.

Also relevant to the issues presented in this case are certain

Statutes and rules involving the Federal Communications

Commission (“FCC”). In 1991, Congress passed the Tele-

phone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227,

which directed the FCC to issue rules concerning “the need to

protect residential telephone subscribers’ privacy rights to

avoid receiving telephone solicitations to which they object.”

47 U.S.C. § 227(c)(1). This statute expressly exempted calls

or messages by tax-exempt nonprofit organizations from its

definition of “telephone solicitation.” 47 U.S.C. § 227(a)(3).

The FCC adopted rules implementing the TCPA in 1992,

and in September 2002, it issued a Notice of Proposed

Rulemaking seeking comments on whether te revise its

TCPA rules. In early 2003, after the TSR was promulgated,

Congress instructed the FCC to consult with the FTC to

maximize consistency with the FTC’s rules. Im July 2003, the

FCC released its final report amending the TCPA rules. The

amended rules contain nearly identical provisions to those of

the TSR that are challenged in this case, including the

company-specific do-not-cal] provision, the time restrictions,

the abandoned call provision, and the disclosure and caller

ID provisions. See 16 C.F.R. §§ 64.1200, 64.1601. The FCC

recognized that its amended rule would subject all commer-

cial entities to its requirements, including those exempt from

the FTC’s jurisdiction. Report on Regulatory Coordination,

18 F.C.C.R. 18558, 18560 (2003). However, the TCPA

exempted nonprofit organizations from its provisions, and the

amended TCPA rules maintained this exemption. 68 Fed.

Reg. 44144, 44160 (Jul. 25, 2003). The FCC also concluded,

“In light of the record before us, the Commission believes

that there has been no change in circumstances that warrant

distinguishing those calls made by a professional telemarketer

on behalf of a tax-exempt nonprofit organization from those

made by the tax-exempt nonprofit itself” /d.

49a

bd

Plaintiffs are both nonprofit organizations with tax-exempt

status under § S5O0I(c)(3) of the Internal Revenue Code.

National Federation of the Blind is a group that provides

support for blind persons and their families, as well as

education, information, 2nd referral services about blindness.

Special Olympics Maryland, Inc. provides sports training and

athletic competition for citizens with mental retardation, as

well as public education, community services, and outreach

initiatives. Both plaintiffs require charitable contributions to

fulfill their program services, However, they do not have the

resources to use ii-house volunteers or employees as

telemarketers. Instead, they hire professional representatives

to conduct telemarketing with the purpose of inducing

charitable contributions. As a result, the provisions of the

TSR directly impact Plaintiffs’ telephone solicitation.

In their complaint, Plaintiffs seek declaratory and injunc-

tive relief, challenging the TSR on several grounds. They

claim first that the FTC did not have the statutory authority to

issue the TSR. Second, Plaintiffs make a facial challenge to

the TSR on various First Amendment grounds. Third, they

allege that the TSR violates equal protection, as applied to the

federal government in the Fifth Amendment. Plaintiffs also

raise the same claims specifically with respect to the call

abandonment provisions of the TSR.

Il.

Rule 56(c) of the Federal Rules of Civil Procedure pro-

vides that summary judgment is appropriate if the pleadings,

denositions, answers to interrogatories, admissions, and

afiidavits demonstrate that there is no genuine issue as to any

material fact and that the moving party is entitled to judgment

as a matter of law, The materiality requirement means that

only those factual disputes that might affect the outcome of

the suit preclude the entry of summary judgment. Anderson v.

50a

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In order for

there to be a “genuine” issue of material fact, the evidence

must be such that a reasonable jury could return a verdict for

the non-moving party. /d. If the evidence is merelv colorable

or is not significantly probative, summary judgment may be

granted. /d. at 249-50.

Because this case involves review of the decisions of a

federal administrative agency, the Administrative Procedure

Act (“APA”) is also applicable. According to the APA, the

reviewing court may set aside agency action, findings, and

conclusions if they are “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law,” “con-

trary to constitutional right, power, privilege, or immunity,”

or “in excess of statutory jurisdiction, authority, or limita-

tions, or short of statutory right.” 5 U.S.C. § 706(2)(A)-(C).

In making these determinations, the court must limit its

review to the administrative record or those parts of it cited

by the parties. 5 U.S.C. § 706; Florida Power & Light Co. v.

Lorion, 470 U.S. 729, 743-44 (1985).

In addition, in cases where an agency’s construction of a

statute that the agency administers is in issue, a court must

apply the two-step analysis laid out in Chevron U.S.A., Inc. v.

Natural Res. Def Council, Inc., 467 U.S. 837 (1984). It must

first be determined whether Congress has directly spoken to

the precise question at issue. /d. at 842. If Congress’ intent is

clear, the court must give effect to that intent, and the analysis

is complete. /d. at 842-43. If, however, the statute is silent or

ambiguous with respect to the specific issue, the court must

decide whether the agency’s interpretation is based on a

permissible construction of the statute. /d. at 843. In this case,

the Chevron analysis must be amolied to the question of the

FTC’s interpretation of its authority under the Telemarketing

Act and the USA PATRIOT Act’s amendments. However,

the opinion of the FTC as to the constitutionality of its

regulations is not entitled to any deference—if the court

Sla

determines that these rules violate the Constitution, they must

be invalidated. Porter v. Califano, 592 F.2d 770, 780 (Sth Cir.

979); Mainstream Mktg. Serv., Inc. v. Federal Trade Com-

mission, 283 F. Supp. 2d 1151, 1160 (D. Colo. 2003).

The facts in this case are undisputed, and accordingly, the

only question is which party is entitled to judgment as a

matter of law.

ii.

A.

Plaintiffs’ first claim is that the FTC exceeded its juris-

diction by regulating in the TSR nonprofit organizations

that employ telefunders. According te Plaintiffs, the USA

PATRIOT Act does not evince an intention to regulate

telefunders. Moreover, they contend that the USA PATRIOT

Act amendments cannot be read to allow the FTC to regulate

telefunders because such an interpretation would permit the

FTC to indirectly exercise jurisdiction over exempt entities—

namely, the nonprofit organizations themselves.

The plain language of the USA PATRIOT Act undermines

Plaintiffs’ contention. The Act expanded the definition of

“telemarketing” to include solicitation of “charitable contri-

butions.” 15 U.S.C. § 6106(4). At the same time, the FTC’s

jurisdiction remained unchanged—that is, nonprofit organiza-

tions were still exempt from FTC regulation. 15 U.S.C.

§ 6105(a); 67 Fed. Reg. at 4496. The only logical conclusion

that can be drawn from reading these two provisions together

is that charitable solicitations by nonprofits themselves re-

main exempt, but charitable solicitations by professionai

representatives fall within the FTC’s jurisdiction. If that were

not the case, the addition of charitable contribution solic-

itations to the definition of telemarketing would have been

meaningless. °

* In their briefs, Plaintiffs relied on statements made by Senator Mitch

52a

The FTC’s interpretation of the statutes at issue is bolstered

by case law regarding the jurisdiction of the FTC. Courts

have held that an entity’s exemption from FTC jurisdiction is

based on that entity’s status, not its activity. Official Airline

Guides, Inc. v. Federal Trade Commission, 630 F.2d 920, 923

(2d Cir. 1980); Federal Trade Commission v. Miller 549,

F.2d 452, 455 (7th Cir. 1977); Federal Trade Commission v.

American Standard Credit Sys., Inc., 874 F. Supp. 1080, 1086

(C.D. Cal. 1994). Applied here, these cases indicate that

because telefunders are not nonprofit entities, they can be

regulated by the FTC, regardless of the fact that they engage

in the same activities as the nonprofits. Indeed, two district

McConnell (R-KY) at the introduction of the USA PATRIOT Act to

support the claim that this statute’s amendments to the Telemarketing Act

were intended only to target fraudulent charities and not to protect home

privacy. Senator McConnell certainly emphasized the problem of false

charities in his attempts to persuade Congress of the need for the

legislation. See 147 Cong. Rec. S 10059-01, S 10065 (daily ed. Oct. 2,

2001). However, the statements of one Congressman cannot be treated as

a definitive recitation of Congress’ purposes with respect to the statute.

Additionally, during oral argument, Plaintiffs pointed out that, in

section 1011(1) of the USA PATRIOT Act, Congress first amended the

Telemarketing Act to include fraudulent charitable solicitations as a

deceptive practice, and then, in section 1011(3), amended the

Telemarketing Act to add charitable solicitations to the definition of

“telemarketing.” Plaintiffs argued that this sequencing demonstrates that

Congress’ intention was merely to regulate fraudulent charities, but when

it recalled that the FTC did not have jurisdiction over charities, it needed

to amend the definition of telemarketing to add charitable solicitations.

This argument very well might accurately describe the sequence of events,

but it does not prevail over the plain language of the statute. The original

Telemarketing Act instructed the FTC to issue rules that would prevent

fraud and protect consumers’ right to privacy, see 15 U.S.C. § 6102(a)(3),

and the TSR addresses both these concerns. Congress must have

recognized that by amending the USA PATRIOT Act to include

charitable solicitations in the definition of telemarketing, ail the

telemarketing rules would apply to charitable solicitations. Otherwise, it

would have written the USA PATRIOT amendments differently.

53a

courts have held specifically that professional fundraisers

hired by nonprofit organizations are not exempt from FTC

jurisdiction even though the nonprofits themselves are ex-

empt. Federal Trade Commission v. Gold, No. 99-2895, slip,

op. at 5 (C.D. Cal. Dec. 13, 2000); Federal Trade Com-

mission v. Saja, 1997 WL 703399, at *1 (D. Ariz. Oct. 7,

1997). I fully agree with this conclusion.“

Plaintiffs make a separate claim that the FTC exceeded its

statutory authority by issuing the call abandonment pro-

visions of the TSR. There are two kinds of “abandoned calls”:

those in which telemarketers hang up on consumers without

speaking to them, and those in which there is a prolonged

period of silence between the time the consumer answers the

call and the time the representative is connected to the call.

68 Fed. Reg. at 4641. Abandoned calls result from the

use of mechanisms called “predictive dialers,” which call

multiple consumers at a time to permit sales representatives

to maximize the time they actually speak to consumers and

minimize the time they spend waiting to reach consumers. /d.

A side effect of the use of predictive dialers is that the dialer

* Plaintiffs’ reliance on Fruit Growers’ Express Inc. v. Federal Trade

Commission, 274 F. 205 (7th Cir. 1921) is misplaced. In that case, the

FTC entered a cease and desist order against equipment suppliers,

claiming that the suppliers had made an unlawful contract with certain

common carriers which, under the FTC Act, are exempt from FTC

jurisdiction. /d. at 205. The court held that the carriers were necessary

parties to the action, and thus the FTC could not enter an order regarding

the contraci because the carriers were subject to the exclusive jurisdiction

of the Interstate Commerce Commission. /d. at 206-07. In this case,

however, the nonprofit organizations hiring the telefunders are in no way

“necessary parties” to any violations of the TSR by those telefunders. As

such, the rule in Fruit Growers’ does not prohibit the FTC from exerting

its jurisdiction over the telefunders. See also Official Airline Guide, 630

F.2d at 923-24 (distinguishing Fruit Growers’ because the exempt air

Carriers were not necessary parties to the unlawful acts).

54a

often reaches more consumers than can be connected to sales

representatives, and as a result, the dialer either disconnects

the call or keeps the consumer connected in case a repre-

sentative becomes available. /d. at 4641-42. Abandoned calls

are defined by the TSR as those in which a telemarketer does

not connect the call to a sales representative within two

seconds of the consumer’s completed greeting. 16 C.F.R.

§ 310.4(b)(1)(iv). The TSR prohibits abandoned calls but

constructs a safe harbor that allows telemarketers to use

predictive dialers in a regulated manner.”

Plaintiffs claim that the call abandonment provisions

actually amount to a regulation of predictive dialers, and that

the FTC has no authority to regulate these dialers because the

authority to do so was given by Congress to the FCC. For

support, they point to the TCPA, which restricts the use of

telephone equipment and refers specifically to predictive

dialers. 47 U.S.C. j 227(a)(1). However, Plaintiffs ignore the

fact that while the FCC may have authority to regulate pre-

dictive dialers, the FTC was given authority in the Tele-

marketing Act to regulate abusive telemarketing practices.

The FTC found in its notice and comment period that

abandoned calls are “one of the most invasive practices of the

telemarketing industry,” because they frighten consumers,

invade their privacy, and waste their time. 68 Fed. Reg. at

4642 n.723. Although the FTC cannot regulate the dial-

> A telemarketer will riot be held liable for abandoning calls if (1) it

employs technology that ensures that no more than 3% of calls are

abandoned, measured per day per calling campaign; (2) for each call, the

telemarketer allows the phone to ring for at least fifteen seconds or four

rings before disconnecting an unanswered call; (3) whenever a repre-

sentative is not available to speak to the consumer within two seconds

of the consumer’s completed greeting, the telemarketer plays a recorded

message that states the name and phone number of the seller on whose

behalf the call was made; and (4) the telemarketer retains records

establishing compliance with the first three requirements. 16 C.F.R.

§ 310.4(b)(4).

55a

ers themselves, the Telemarketing Act does not restrict its

authority to regulate abusive practices that may involve the

use of dialers.

Plaintiffs cite no case law supporting their contention that

the FTC and the FCC cannot both regulate the same area. On

the contrary, the two district court opinions that have ad-

dressed this precise issue have held that the FTC has authority

to regulate abandoned calls, despite the FCC’s authority to

regulate predictive dialers. Mainstream Marketing Services,

283 F. Supp. 2cl at 1170 (“[T]he court finds no basis to

conclude that the FCC has exclusive jurisdiction to regulate

the practice of abandoning calls”); U.S. Security v. Federal

Trade Commission, 282 F. Supp. 2d 1285, 1292 (D. Okla.

2003) (“The [TSR’s] restriction on abandoned calls is a

permissible regulation of this most (and undisputedly) inva-

sive and abusive practice, and its promulgation, which is in

no way hindered or hobbled by the FCC’s grant of authority,

has carried into effect congressional intent as expressed by

the (Telemarketing Act]’”). Thus, while the Telemarketing

Act does not directly address this issue, the FTC’s interpre-

tation of its authority is an entirely reasonable construction of

the statute.

IV

The bulk of Plaintiffs’ argument focuses on the TSR’s

alleged infringement of First Amendment free speech pro-

tections. Plaintiffs claim that: (1) the TSR is a content-based

regulation that requires strict scrutiny; (2) the government’s

interests in promulgating the TSR are not compelling, and

even if they were, the TSR is not narrowly tailored to support

those interests because the regulations are underinclusive;

(3) the TSR is overbroad; and (4) the TSR is an unlawful

prior restraint.

A.

Because charitable solicitation involves a variety of speech

56a

interests, it is entitled to the protections of the First Amend-

ment. Riley v. Nat'l Fed'n of the Blind of North Carolina,

Inc., 487 U.S. 781, 789 (1988); Sec’y of State of Maryland v.

Joseph H. Munson. Company, 467 U.S. 947, 959 (1984);

Village of Schaumburg v. Citizens for a Better Env't, 444

U.S. 620, 632 (1980). If a regulation restricts protected

speech, the court must determine which standard of review is

applicable. The principal distinction in First Amendment

cases is between those regulations that are content-based and

those that are content-neutral. Content-based regulations are

subject to strict scrutiny—i.e., the government must show that

the regulation is necessary to serve a compelling state interest

and that it is narrowly drawn to achieve that end. Burson v.

Freeman, 504 U.S. 191, 198 (1992). By contrast, content-

neutral regulations are subject to an intermediate level of

scrutiny. Turner Broad. Sys., Inc. v. Federal Communications

Commission, 512 U.S. 622, 642 (1994). Generally, iaws that

by their terms distinguish favored speech from disfavored

speech on the basis of ideas or views expressed are content-

based. /d. at 643. Regulations that serve purposes unrelated to

the content of expression are content-neutral, even if they

have an incidental effect on some speakers or messages but

riot others. Ward v. Rock Against Racism, 491 U.S. 781, 791

(1989). In this regard, the government’s purpose in passing

the regulation is the controlling consideration. /d. Even if a

law distinguishes among speakers, it is only subject to strict

scrutiny when it reflects a government preference for the

substance of what the favored speakers have to say or an

aversion to what the disfavored speakers have to say. Turner,

512 U.S. at 658.

The Supreme Court has articulated a specific standard of

review that applies to charitable solicitations. When a gov-

ernment regulation is a direct and substantial limitation on

charitable solicitation, it can only be sustained if it serves a

sufficiently strong, subordinating interest that the govern-

ment is entitled to protect. Munson, 467 U.S. at 960-61;

S7a

Schaumburg, 444 U.S. at 636; Moreover, the regulations must

be narrowly drawn to serve the government’s interests with-

out unnecessarily interfering with First Amendment free-

doms. Schaumburg, 444 U.S. at 637. While the Court never

articulated that this standard was for content-neutral regu-

lations, it closely resembles other content-neutral standards,

such as the one applicable to time, place, and manner

regulations. See Ward, 491 U.S. at 791 (“government may

impose reasonable restrictions on the time, place, or manner

of protected speech, provided the restrictions are justified

without reference to the content of the regulated speech, that

they are narrowly tailored to serve a significant governmental

interest, and that they leave open ample alternative channels

for communication of the information’’) (internal quotations

omitted). Indeed, courts addressing this issue have held that

the Schaumburg/Munson standard is an intermediate scrutiny

standard applicable to content-neutral regulations. See Nat'l

Fed ‘n of the Blind of Arkansas v. Pryor, 258 F.3d 851, 855

(8th Cir. 2001); American Target Adver., Inc. v. Giani, 199

F.3d 1241, 1247 (10th Cir. 2000).

Plaintiffs claim that the TSR is a content-based restriction

that requires strict scrutiny. On its face, however, the TSR

does not resemble those regulations that are traditionally

found to be content-based—that is, it does not draw dis-

tinctions between different kinds of speech based on the

content of the messages conveyed. The TSR applies

evenhandedly to all “telemarketing,” which the statute defines

without reference to the subject matter or viewpoint of the

solicitation. See 15 U.S.C. § 6106(4). Indeed, although sug-

gestions were made to carve out exemptions to the scope of

the TSR, the FTC decided that “no exemptions based upon

the type of organization engaged in telemarketing are

warranted, and that all telemarketing (as defined in the

Telemarketing Act as amended by the USA PATRIOT Act)

conducted by any entity within its jurisdiction should be

covered by the TSR.” 68 Fed. Reg. at 4589.

58a

Nevertheless, Plaintiffs point to three different groups that

are allegedly exempt from regulation by the TSR. The first

group is composed of commercial banks, credit unions,

savings and loan institutions, and common carriers. As noted

in Part I supra, however, these entities are exempt from the

TSR only because they are exempt from the jurisdiction of

the FTC in general. 15 U.S.C. § 45(a)(2). Plaintiffs do not

cite, and I have not found, any case indicating that the ex-

emption of a group from the scope of an agency’s regulation

due solely to its exemption from the agency’s jurisdiction

renders that regulation content-based.

Moreover, the gap created by the FTC’s limited jurisdic-

tion is filled by the FCC. The TCPA and the rules imple-

menting it are applicable to all telemarketing, including those

entities over which the FTC lacks jurisdiction. Report on

Regulatory Coordination, 18 F.C.C.R. at 18560. Thus, the

commercial entities outside of the FTC’s jurisdiction are

within the jurisdiction of tne FCC. To ensure that these

commercial entities are similarly regulated, the TCPA rules

contain provisions restricting telemarketing that are al-

most identical to the ones set forth in the TSR. See 47

C.F.R. § 64.1200(a)(6) (call abandonment provision);

§ 64.1200(c)(1) (time restriction); § 64.1200(d) (company-

specific do-not-call provision); § 64.1200(d)(4) (disclosure

requirements); § 64.1601(e) (caller ID requirement). Because

the FCC regulates these commercial entities to the same

extent that the FTC regulates entities within its jurisdiction,

this “exemption” from the TSR does not demonstrate any

intent by the government to favor one group’s speech over

another because of the content of the message.° Cf. Lucas v.

° This reasoning applies equally to the claim Plaintiffs raise in their

reply brief that insurance companies are exempt from the TSR. In fact, the

McCarran-Ferguson Act states that only those activities that constitute the

business of insurance and are regulated by state law are exempt from the

FTC Act. 15 U.S.C. § 1012(b). Because the Telemarketing Act incorpo-

59a

Curran, 856 F. Stipp. 260, 273 (D. Md. 1994) (in equal

protection context, no discrimination between First Amend-

ment rights when organizations exempt under one statute are

regulated under other statutes).

Plaintiffs also claim that the TSR is content-based because

of its exemption of charitable solicitations by nonprofit

organizations that do not hire professional telemarketers.

Again, nonprofit organizations are not expressly excluded in

the language of the TSR, but they are exempt from its scope

because the FTC lacks jurisdiction over them. 15 U.S.C.

§ 45(a)(2). Unlike the commercial entities exempt from FTC

jurisdiction, nonprofit organizations are also exempt from the

TCPA and the TCPA rules. 47 U.S.C. § 227(a)(3). However,

the lack of regulation of nonprofit organizations would only

necessitate strict scrutiny if it evinced an intent by the

government to favor the content of their speech over any

other group. See Turner, 512 U.S. at 658. In this case, there is

no differentiation based on the subject matter of the

solicitations, but only on the status of the entities making the

calls. The FTC could reasonably conclude, as it did, that

professional telemarketers working on behalf of nonprofit

organizations would be more likely to engage in fraud or

overreaching than the nonprofits themselves because the

professionals have a financial interest in obtaining the most

contributions, whereas nonprofits are motivated by more

altruistic concerns. See Special Programs, Inc. v. Courter,

923 F. Supp. 851, 860 (E.D. Va. 1996); Lucas, 856 F. Supp.

at 273.’ Thus, the “exemption” for nonprofit organizations

rates the jurisdictional limits of the FTC Act, such activities are also

exempt from the TSR, but the TSR does not expressly exclude them on its

face. Moreover, telemarketers selling insurance products are subject to the

TCPA rules to the extent that such rules do not invalidate, impair, or

supersede state insurance laws. See 68 Fed. Reg. at 44149- ISO.

’ Plaintiffs challenge the FTC’s conclusion regarding the likelihood of

overreaching by telefunders because of the lack of empirical evidence in

60a

also does not make the TSR a content-based regulation. See

Famine Relief Fund, 905 F.2d 747 (4th Cir. 1990) (applying

content-neutral Schaumburg/Munson test to regulations re-

Stricting only nonprofits that use professional solicitors);

Telco Communications v. Carbaugh, 885 F.2d 1225 (4th Cir.

1989) (same).

Finally, Plaintiffs argue that the TSR is content-based,

because political speech is allegedly excluded from its scope.

As with the first two alleged exclusions, the TSR by its terms

does not expressly exempt any group or form of tele-

marketing, including solicitation by political organizations.

Nevertheless, the FTC did indicate that it did not consider

political fundraising to be within the scope of the TSR. /d. at

4589. However, this distinction was not an effort to carve out

a particular subject matter from the TSR. Rather, it reflects

the “basic common law distinction between charities and

political organizations. ‘Gifts or trusts for political purposes

er the attainment of political objectives generally have been

regarded as not charitable in nature. Also . . . a trust to

promote the success of a political party is not charitable in

nature.”” Jd. at 4589 n.106 (citing 15 Am. Jur. 2d Charities §

60 (2002)); see also George Gleason Bogert et al., The Law

of Trusts and Trustees §§ 328 and 378 (Rev. 2d ed. 1992);

John D. Perovich, Annotation, Validity and Construction of

Testamentary Gift to Political Party, 41 A.L.R. 3d 833, §§

3[c] and 4 (1972). Thus, political fundraising is exempt from

regulation by the TSR not because it deals with politics as

opposed to other subjects, but because gifts to political

organizations are simply not considered “charitable,” and

the zecord. The Supreme Court has never laid down a categorical rule

requiring that empirical evidence be shown to support every restriction on

speech, and at least one court has specifically held that the absence of

empirical evidence was nof fatal to a speech restriction that distinguished

between types of charitable solicitations. Auburn Police Union vy.

Carpenter, 8 F.3d 886, 899-900 (1st Cir. 1993).

61a

accordingly, are not within the scope of the TSR.”

This basic distinction between charitable and political

contributions is further evident from the fact that Congress

has developed a completely separate scheme to regulate

political fundraising. As noted by the FTC, Congress has

established an administrative body-—the Federal Election

Commission (“FEC’’)}—and a comprehensive and detailed

statutory structure applicable to political fundraising, codified

at 2 U.S.C. §§ 431-455. 68 Fed. Reg. at 4590. Federal

election law includes provisions limiting sources from whom

candidates may accept contributions, 2 U.S.C. §§ 441b, 44 Ic,

441f; requiring candidates to disclose receipts and disburse-

ments, 2 U.S.C. § 434; requiring them to make certain

disclosures when soliciting funds, 2 U.S.C. § 441d; and pro-

hibiting them from making fraudulent representations when

soliciting funds. 2 U.S.C. § 441th. In addition to exemplifying

the differences between charitable and political contributions,

these regulations are significant to the Ward analysis of

content-based regulations. According to Ward, the govern-

ment’s purpose is the primary focus of whether a regulation is

content-based. As was the case with the commercial entities

exempt from FTC jurisdiction, the extensive regulation by

another agency of the activities of political candidates casts

serious doubt on Plaintiffs’ contention that the TSR was

intended to favor certain groups or subject matter over others.

Cf. Lucas, 856 F. Supp. at 273.

* Plaintiffs argue also that a political contribution falls under the defi-

nition of telemarketing because it is included in the catch-all phrase “any

other thing of value.” See 15 U.S.C. § 6106(4) (“The term ‘telemarketing’

means a plan, program, or campaign which is conducted to induce pur-

chases of goods or services, or a charitable contribution, donation, or gift

of money or any other thing of value”). As the FTC correctly points out,

the phrase “any other thing of value” is modified by the adjective

“charitable.” Thus, even if a political contribution is a thing of value,

because it is not charitable, it is not regulated by the TSR.

62a

In sum, Plaintiffs have not demonstrated that the TSR is a

content-based regulation requiring strict scrutiny. Accord-

ingly, I will apply intermediate scrutiny to the TSR and use

the Schaumburg/Munson test for content-neutral charitable

solicitation.’

B.

Under the Schaumburg/Munson test, a regulation that

directly and substantially limits protected speech must be

narrowly tailored to serve a substantial government interest.

Munson, 467 U.S. at 960-61. According to the FTC, the TSR

had two basic purposes: to prevent fraud and to protect

privacy in the home. 67 Fed. Reg. at 4497.'° Courts have

repeatedly held that the prevention of fraud in charitable

solicitation is a substantial interest that the government is

entitled to protect, Riley, 487 U.S. at 792; Schaumburg, 444

U.S. at 836; Telco, 885 F.2d at 1231; Lucas, 856 F. Stipp. at

271, and that protection of privacy in the home from

unwanted speech is also a strong, subordinating interest that

justifies government regulation. See Frisby v. Schultz, 487

” Even if I were to apply strict scrutiny to the TSR, it would still be

upheld based on the compelling nature of the government’s interests and

the narrow tailoring of the restrictions to serve those interests. See

discussion infra Part [V.B.

° Plaintiffs challenge whether the prevention of fraud was actually a

government interest. To support this argument, they cite to one statement

in the Final Amended Rule that only refers to the interest of protecting

home privacy and not to the prevention of fraud. 68 Fed. Reg. at 4636.

However, this statement was made with respect to the company specific

do-not-call provision only. The Final Rule includes other statements

relevant to the USA PATRIOT Act amendments and different provisions

of the TSR that suggest the prevention of fraud as a government interest.

See, e.g., 68 Fed. Reg. at 4612-13 (USA PATRIOT Act amendments); 68

Fed. Reg. at 4627 (caller ID provision); 68 Fed. Reg. at 4635 n.699 (do-

not-call registry).

63a

U.S. 474, 485 (1988); Schaumburg, 444 U.S. at 638; Carey v.

Brown, 447 U.S. 455, 470-71 (1980).''

Still, Plaintiffs’ contend that the TSR is not narrowly

tailored to serve these interests because it is underinclusive.

Underinclusiveness of a regulation has been found to be

impermissible in three circumstances: (1) where underin-

clusiveness indicates that the regulation is intended to give

one side of a debate an advantage over another, City of Ladue

v. Gilleo, 512 U.S. 43, 51 (1994); (2) where the regulation

excludes so much speech that it undermines the likelihood of

a genuine governmental interest, F.C.C. v. League of Women

Voters of California, 468 U.S. 364, 396 (1984); see also City

of Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 424-

26 (1993); and (3) where the underinclusiveness is so severe

as to cast doubts on whether the government is actually

serving the interests that are supposed to justify the

regulation. Florida Star v. BJ.F., 491 U.S. 524, 540 (1989);

see also City of Cincinnati, 507 U.S. at 424-26.

In this case, Plaintiffs claim that the TSR is underinclusive

for the same reason that they argue it is content-based—

namely, the exemption of certain commercial entities, non-

profit organizations that do not hire telefunders, and political

'' Plaintiffs claim that the government has no interest in protecting

consumers’ homes from charitable solicitations because, they assert, peo-

ple do not feel their privacy is invaded by calls seeking charitable

contnbutions. In support of this assertion, they cite to a portion of the

administrative record indicating that only 100 consumer email comments

received by the FTC responded to a direct question about whether

charitable fundraisers should be treated differently from commercial

fundraisers. 68 Fed. Reg. at 4637 n.685. The FTC read this response to

mean that consumers are disturbed by unwanted calls regardless of

whether the caller wishes to make a sale or ask for a charitable contri-

bution. 68 Fed. Reg. at 4637. This interpretation of the record is entirely

reasonable. Indeed, if more people distinguished charitable and commer-

cial calls with respect to the privacy intrusion involved, they presumably

would have responded to the question.

64a

fundraising. The rationale for my decision that the TSR is not

content-base'i applies equally here. The TSR’s evenhanded

application to all telemarketing demonstrates that by its

terms, the TSR favors no speaker, subject matter, or view-

point over any other. Furthermore, the extensive regulation by

other agencies of all commercial entities and political

fundraising indicates that the government’s interests in

preventing fraud and protecting home privacy are substantial

and that the government is committed to furthering those

goals as much as possible. The choice not to regulate non-

profit organizations simply reflects the government’s reason-

able conclusion that its interests would not be furthered by

restricting these groups due to their differing incentives.

Furthermore, the regulations themselves are very narrowly

drawn to prevent only particularly abusive practices and leave

First Amendment rights largely unrestricted. Those provi-

sions aimed to protect home privacy do so with limited

interference on free speech. For example, the limits on calling

time reflect concerns that calls at either end of the day are

particularly invasive of home privacy, but they still provide a

“reasonable window [from 8:00am to 9:00pm] for tele-

marketers to reach their existing and potential customers.” 68

Fed. Reg. at 4647. In addition, company-specific do-not-call

lists are much less invasive of speech than the national do-

not-call registry, for telefunders working for nonprofits are

permitted to call anyone once in an effort to convey their

message and solicit donations. Yet these lists also uphold the

consumer’s right not to be forced to listen to speech that she

has already identified as unwelcome. See Rowan v. United

States Post Office Dept, 397 U.S. 728, 737 (1970) (“Nothing

in the Constitution compels us to listen to or view any

unwanted communication, whatever its merit’). Finally, the

call abandonment provisions target one of the most abusive

telemarketing practices in terms of home privacy but still

provide telemarketers with a safe harbor that is net unduly

burdensome. Nonprofits concerned that this restriction will

65a

necessarily result in a decreased number of calls placed need

only hire telemarketers that employ the practices delineated in

the safe harbor provision. These practices are certainly

feasible for professional telemarketers, and they are entirely

reasonable given the important interest that is served.

In addition, the provisions intended to prevent fraud do not

limit the number of calls made or interfere with the ability to

convey a me~*age. The Supreme Court has “repeatedly recog-

nized the legitimacy of government efforts to enable donors

to make irformed choices about their charitable contribu-

tions.” Illinois ex rel. Madigan v. Telemarketing Assoc., Inc.,

538 U.S. 600, 123 S. Ct. 1829, 1842 (2003). Specifically, the

Court has upheld requirements that professional fundraisers

disclose their professional status, Riley, 487 U.S. at 799 a.11,

and that telefunders and charities disclose their finances.

Riley, 487 U.S. at 800; Munson, 467 U.S. at 961-62 n.9.

Disclosure of the identity of the caller and the charity on

whose behalf he is soliciting certainly furthers the govern-

ment’s interest in ensuring that consumers make informed

decisions about their contributions. These disclosures also

decrease the possibility that a caller soliciting on behalf of a

fraudulent charity will succeed in his efforts. Moreover, a

caller ID requirement allows anyone attempting to solicit for

a fraudulest charity to be held accountable for his actions and

permits consumers who have indicated an unwillingness to

donate or be called again to avoid repeated calls by tele-

marketers ignoring their requests. See 68 Fed. Reg. at 4627.

In short, the TSR satisfies the standard set forth in

Schaumburg and Munson. The FTC’s interests in passing the

regulation are substantial interests that the government is

entitled to protect, and the restrictions are narrowly tailored to

further those interests without unnecessarily interfering with

freedom of speech.

66a

.

Plaintiffs’ next First Amendment argument is that the TSR

is impermissibly overbroad. The temp “overbreadth” can be

used to describe two distinct sorts of First Amendment

challenges. The primary meaning of “overbreadth” deals with

prudential standing: a person whose own conduct is un-

protected can bring an overbreadth challenge to assert the

rights of third parties whose conduct is protected, even

though the regulation as applied to the litigant would be

constitutional. Munson, 467 U.S. at 967 n.13. In such an

action, a regulation may be invalidated only if the over-

breadth is substantial. Bd. of Airport Comers of City of Los

Angeles v. Jews for Jesus, Inc., 482 U.S. 569, 574 (1987).

Specifically, the Court has required that there be “a realistic

danger that the statute itself will significantly compromise

recognized First Amendment protections of parties not before

the Court for it to be facially challenged on overbreadth

grounds.” City Council of Los Angeles v. Taxpayers for

Vincent, 466 U.S. 789, 801 (1984). The second meaning of

“overbreadth” is simply a challenge to a statute or regulation

that in all its applications directly restricts protected First

Amendment activity and is not narrowly tailored to serve the

government's interests. Munson, 467 U.S. at 967 n.13.

In this case, Plaintiffs claim that the TSR is overbroad

because it creates a chilling effect on all nonprofit organi-

zations that use telefunders, preventing them from exercising

their fully protected right to solicit charitable contributions,

To support this argument, they cite to passages in Munson

regarding prudential standing—that is, the ability of one

whese speech is not protected to bring an action for the

benefit of those whose speech is protected and whose rights

are chilled by a particular regulation. See Munson, 467 U.S. at

956, 958. Thus, Plaintiffs appear to be invoking the standing

notion of overbreadth. However, merely citing to the state-

ments trom Munson does not prove that the TSR is actually

67a

overbroad. Plaintiffs have not demonstrated that there are

third parties whose speech rights will be affected in a manner

different from Plaintiffs’ own rights, nor have they shown

that these third parties’ rights will be significantly com-

promised by the TSR. See Hill v. Colorado, 530 U.S. 703,

732 (2000).

It appears, therefore, that Plaintiffs are simply using the

language regarding the standing notion of overbreadth to

support an argument for the second notion of overbreadth—

namely, that the TSR is not narrowly tailored to restrict only

as much speech as will serve the government’s substantial

interests. In that regard, I have already found that Plaintiffs’

argument fails. The TSR is not impermissibly underinclusive,

and the regulations themselves are drawn extremely narrowly.

Dz.

Plaintiffs’ final First Amendment argument is that the TSR,

including its call abandonment provisions, is an unlawful

prior restraint. Prior restraints have been defined as “admin-

istrative and judicial orders forbidding certain communi-

cations when issued in advance of the time that such

communications are to occur.” Alexander v. United States,

509 U.S. 544, 550 (1993). Such orders may take the form of

temporary restraining orders or permanent injunctions issued

by courts, id., or licensing schemes in which administrators

are given unbridled discretion to determine a speaker’s right

to be heard. FW/PBS, Inc. v. City of Dallas, 493 U.S. 215,

225-26 (1990); Saia v. People of State of New York, 334 U.S.

558, 560-61 (1948). Prior restraints are presumptively un-

constitutional; the government must meet a heavy burden to

justify any such restraint. Nebraska Press Ass'n v. Stuart, 427

U.S. 539, 558 (1976).

In this case, Plaintiffs claim that the TSR is an uncon-

stitutional prior restraint because it “silences” the speech of

nonprofit organizations that use professional telemarketers. It

68a

appears Plaintiffs are proposing that any regulation that

inhibits or chills protected speech in some way is a prior

restraint because the chilling effect of potential future pun-

ishment would prevent some speech before it would normally

be made, absent the regulation. Lucas, 856 F. Supp. at 269.

Under this theory, all time, place, and manner restrictions

would be prior restraints because they place some limits on

speech before the speech is actually uttered. /d.

Such a view misunderstands the meaning of “prior re-

straint” and ignores the long-held distinction between prior

restraints and subsequent punishments. While it is presump-

tively unlawful to bar speech before it occurs, First Amend-

ment law fully accepts the ability to penalize speech that

occurred in the past, after it has been challenged and the

speaker has had the opportunity for appellate review.

Alexander, 509 U.S. at 553-54; Nebraska Press, 427 U.S. at

559. In this case, the TSR does not require any speaker to

obtain a permit or license before he speaks, nor does it forbid

any speech outright. Telemarketers are free to call anyone

that they wish and say anything that they want. The time and

manner of speech are somewhat limited, and certain

disclosures must be made, but the ability to speak and the

core message that is conveyed are untouched by the TSR.

Furthermore, it is only after the speech is uttered that, if the

telemarketer has violated the TSR, he may be brought into

court by the state or a private individual. See 15 U.S.C.

§§ 6103 and 6104. This is a typical subsequent punishment,

and holding otherwise would practically erase the line be-

tween prior restraints and subsequent punishments. See

Alexander, 509 U.S. at 554.

V.

Plaintiffs’ third challenge to the TSR is that it violates the

equal protection clause, as applied to the federal government

in the Fifth Amendment. Equal protection analysis requires

strict scrutiny of a government regulation when the regulation

69a

interferes with the exercise of a fundamental right or operates

to the particular disadvantage of a suspect class. Mass. Bd. of

Rel. v. Murgia, 427 U.S. 307, 312 (1976). Rights prot

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