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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2005

## Text

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.

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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

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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 Co

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_0742%3A1. Public record. Not legal advice.