Opposition Brief — National Federation of the Blind v. Federal Trade Commission (No. 05-927)

5

behalf of the particular seller or non-profit organi-

zation;

(2) the prohibition on abandoned (and recorded) calls,

16 C.F.R. 310.4(b)(1 (iv), which requires the tele-

marketer to connect each call to a representative

within two seconds of the recipient’s completed

greeting:

(3) the prohibition on placing calls before 8 a.m. or

after 9 p.m., 16 C.F.R. 310.4(¢);

(4) the requirement that telemarketers transmit

caller identification information, 16 C.F.R.

310.4(a)(7); and

(5) a requirement that telefunders promptly indicate

that the purpose of the call is to solicit charitable

contributions and identify the charity on behalf of

whom they are soliciting, 16 C.F.R. 310.4(e).

b. The Commission’s authority under the Tele-

marketing Act overlaps with authority provided to the

Federal Communications Commission (F'CC) under the

Telephone Consumer Protection Act of 1991 (TCPA), 47

U.S.C. 227. Among other things, the TCPA directs the

FCC to issue rules addressing “the need to protect resi-

dential telephone subscribers’ privacy rights to avoid

receiving telephone solicitations to which they object,”

47 U.S.C. 227(c)(1), and also prohibits most prerecorded

calls to residential phone lines with a few exceptions, 47

U.S.C. 227(b)(1)B). The definition of “telephone solici-

tation” under the TCPA specifically exempts calls “by a

tax exempt nonprofit organization.” 47 U.S.C. 227(a)(3).

In July 2003, the FCC issued revised TCPA rules that

are nearly identical to the Commission's TSR, including

the “do-not-call” requirements, the abandoned call pro-

visions, the time restrictions, and the disclosure and

6

caller identification provisions. See Jn re Rules and

Regulations Implementing the TCPA (In re TCPA), 18

F.C.C.R. 14,014 (2003). The FCC’s amended rule sub-

jects all commercial entities to its requirements, includ-

ing for-profit entities exempt from the FTC’s jurisdic-

tion. Jn re TCPA, 18 F.C.C.R. 18,558, 18,560 (2003).

The FCC retained regulatory provisions, however, that

exempt from coverage solicitations by both non-profit

organizations themselves and their for-profit

telefunders. 68 Fed. Reg. at 44,161.

2. Petitioners National Federation of the Blind and

Special Olympics Maryland, Inc., are both tax-exempt

non-profit organizations that hire telefunders to solicit

charitable contributions for them. Pet. App. 49a. In

April 2003, petitioners filed suit for declaratory and in-

junctive relief against the FTC in the United States Dis-

trict Court for the District of Maryland. As relevant

here, petitioners contended that the five provisions of

the amended TSR described above, pp. 4-5, supra, vio-

late the First Amendment to the Constitution. Pet. App.

8a, 49a.

The district court granted the Commission’s motion

for summary judgment. Pet. App. 43a-70a. The court

held, inter alia, that the modest restrictions imposed by

the TSR comport fully with the First Amendment. /d.

at 55a-68a.

The court of appeals affirmed the district court’s

judgment. Pet. App. 2a-42a. The court held that the

TSR does not violate the First Amendment because it is

a “reasonable regulation” that is “narrowly drawn” to

serve “sufficiently strong subordinating interest(s] that

the [government] is entitled to protect”—namely pre-

venting fraud and protecting home privacy. Pet. App. 3a

(quoting Secretary of State v. Joseph H. Munson Co.,

467 U.S. 947, 960-961 (1984)). Analyzing each of the

7

challenged TSR provisions in turn (Pet. App. 15a-23a),

the court concluded that they are the “most reasonable

and minor restrictions on telemarketing practices.” /d.

at 20a. For example, the court held that the charity-

specific do-not-call provision is narrowly tailored be-

cause “it restricts only calls that are targeted at unwill-

ing recipients,” and it requires recipients to object to

calls on a charity-by-charity basis. /d. at 17a-18a (quot-

ing Mainstream Mktg. Servs., Inc. v. FTC, 358 F.3d

1228, 1242 (10th Cir.), cert. denied, 543 U.S. 812 (2004)).

The court distinguished the present case from this

Court’s decisions in Munson, supra, Village of Schaum-

burg v. Citizens for a Better Environment, 444 U.S. 620

(1980), and Riley v. National Federation of the Blind of

North Carolina, Inc., 487 U.S. 781 (1986), which held

unconstitutional “blunt and broad” state laws that lim-

ited fundraising fees. Pet. App. 20a. The court of ap-

peals explained that the laws invalidated in those cases

were insufficiently tailored to prevent fraud, whereas

the challenged TSR provisions “are carefully crafted” to

prevent fraud and to protect privacy. /d. at 21a.

The court of appeals also rejected petitioners’ argu-

ment that the TSR is unconstitutionally under-inclusive

because it covers calls by telefunders but not direct

solicitations by charities themselves. Pet. App. 23a-30a.

The court concluded that the purported under-inclusive-

ness in the TSR “is justified by a neutral and legitimate

reason”—the Commission’s jurisdictional limitations.

Id. at 24a; see id. at 26a-29a. The court reasoned that

those jurisdictional boundaries do not raise any “red

flag|s] indicating First Amendment problems,” such as

an attempt to favor one side of a public debate, the

pursuit of an illegitimate government interest, or the

failure genuinely to serve the interest that the

challenged regulation is designed to advance. /d. at 28a.

8

The court noted that the “TSR provisions do not exhibit

any disapproval of the content of the calls placed by

telefunders. The TSR applies evenhandedly to

solicitations for charities of all persuasions 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.” /d. at 32a. The court therefore concluded

that the Rule is consistent with the First Amendment.

Id. at 38a.

Judge Duncan dissented. Pet. App 34a-42a. Relying ~

on Riley, supra, and City of Cincinnati v. Discovery

Network, Inc., 507 U.S. 410 (1993), she reasoned that the

TSR is unconstitutionally under-inclusive because it cov-

ers telefunders but not in-house charity callers. Pet.

App. 34a-37a. Unpersuaded that there is a legitimate

justification for that distinction, she concluded that the

Rule violates the First Amendment. /d. at 37a-42a.

ARGUMENT

The decision of the court of appeals is correct, and it

does not conflict with any decision of this Court or of

another court of appeals. This Court’s review is there-

fore not warranted.

1. Although professional fundraising on behalf of

charities enjoys some First Amendment protection, this

Court has consistently held that speech “{s]oliciting fi-

nancial support is undoubtedly subject to reasonable

regulation.” Village of Schaumburg v. Citizens for a

Better Env't, 444 U.S. 620, 632 (1980); see Riley v. Na-

tional Fed ‘xn of the Blind of N.C., Inc., 487 U.S. 781, 795-

796 (1988); Secretary of State v. Joseph H. Munson Co.,

467 U.S. 947, 959-960 (1984). The government may im-

pose content-neutral regulations on charitable fundrais-

ing if the regulations serve “sufficiently strong, subordi-

]

nating interest|s] that the [government] is entitled to

protect” and are “narrowly drawn * * * toserve [the]

interes|ts] without unnecessarily interfering with First

Amendment freedoms.” Munson, 467 U.S. at 960-961

(quoting Schaumburg, 444 U.S. at 636-637). The TSR

provisions challenged by petitioners easily pass that

test.

Petitioners incorrectly assert (Pet. 16-18) that the

TSR’s restrictions are “substantial burdens” on speech.

On the contrary, as the court of appeals explained, the

Rule’s provisions are narrowly tailored to further impor-

tant governmental interests. Pet. App. 15a-23a. Most of

the challenged provisions impose modest limitations on

telemarketing calls in order to protect residential pri-

vacy, which this Court has recognized as an interest “of

the highest order in a free and civilized society.” Frisby

v. Schultz, 487 U.S. 474, 484 (1988) (quoting Carey v.

' Petitioners incorrectly contend (Pet. 10) that the TSR is not

content-neutral. In general, a regulation is content-neutral unless “the

government has adopted [the] regulation because of disagreement with

the message it conveys.” Ward v. Rock Against Racism, 491 U.S. 781,

791 (1989). The TSR was clearly not adopted for such a purpose. As

the court of appeals explained, “the TSR provisions do not exhibit any

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

applies evenhandedly te «ticitations for charities of all persuasions and

beliefs. The restrictio@s apply to all telemarketing calls made by

entities within the FTC's jwriadiction, regardless of the subject matter

of the call or the viewpoint expressed by the caller.” Pet. App. 32a.

Petitioners appear to argue that the TSR is not content-neutral based

on the supposition that its restrictions are more likely to affect small or

unpopular charities. Pet. 10-11. Petitioners provide no support for that

supposition, but it is irrelevant in any event. As explained above, the

TSR “serves purposes unrelated to the content of expression”—the

protection of privacy and the prevention of fraud—and it is therefore

“deemed neutral, even if it has an incidental effect on some speakers or

messages but not others.” Ward, 491 U.S. at 791.

10

Brown, 447 U.S. 455, 471 (1980)). For example, the pro-

hibition on calls early in the morning or late at night

enables families to enjoy a few uninterrupted hours at

home but still permits a generous thirteen hours each

day for solicitations. 16 C.F.R. 310.4(c). Similarly, the

restriction on abandoned calls, 16 C.F.R. 310.4(b)(1)(iv),

protects households from an intrusion that the Commis-

sion found, based on extensive public comment, to be

particularly severe. Abandoned calls not only waste con-

sumers’ time but also frighten some consumers, who

become concerned that they are being monitored by

stalkers or burglars. 68 Fed. Reg. at 4641-4643.

Other provisions of the TSR simply give individual

households the choice to restrict unwelcome solicita-

tions. The entity-specific do-not-call provision enables

consumers to indicate that they do not wish to receive

additional calls on behalf of a particular charity. 16

C.F.R. 310.4(b)(1)(iii( A). Similarly, the provision re-

quiring telemarketers to transmit their caller identifica-

tion information gives households the opportunity to

screen solicitation calls and either accept or ignore the

calls as they see fit. 16 C.F.R. 310.4(a)(7); see 68 Fed.

Reg. at 4627. The Court has repeatedly approved regu-

lations of this type, which allow individuals to opt in to

limitations on speech, because they are a far more nar-

rowly tailored means of protecting privacy than absolute

prohibitions on speech. See Rowan v. United States

Post Office Dep't, 397 U.S. 728, 737-738 (1970) (uphold-

ing law permitting residents to bar mailings that they

consider to be provocative); Watchtower Bible & Tract

Soc’y of N.Y., Ine. v. Village of Stratton, 536 U.S. 150,

168-169 (2002) (recognizing validity of law permitting

enforcement of “no solicitation” signs posted by resi-

dents); United States v. Playboy Entm’t Group, Inc.,

11

529 U.S. 803, 815 (2000) (targeted blocking by consumer

less restrictive than government ban on speech).

The fifth provision challenged by petitioners requires

telefunders to identify the charity on whose behalf they

are calling and the purpose of the call. 16 C.F.R.

310.4(e). As the court of appeals explained, that provi-

sion is narrowly tailored to further the government’s

substantial interest in preventing fraud. Pet. App. 19a.

The required disclosures permit consumers to make

informed decisions about their charitable donations, in-

cluding whether to invoke the entity-specific do-not-call

provision. See /llinois v. Telemktg. Assocs., Inc., 538

U.S. 600, 623 (2003). This Court has upheld substaa-

tially broader disclosure requirements in order to pre-

vent charitable solicitation fraud. See Riley, 487 U.S. at

799 n.11, 800 (professional fundraisers may be required

to disclose their “professional status,” and a State may

publish their “detailed financial disclosure forms”);

Munson, 467 U.S. at 961-962 n.9 (upholding law requir-

ing charity to disclose its finances).

* Petitioners incorrectly contend (Pet. 16, 17, 19) that the TSR can

pass muster under the First Amendment only if it is “the least re-

strictive means” to further the government’s interests. This Court has

never imposed that level of scrutiny on laws regulating professional

fundraising for charities. Instead, the Court has required only that the

regulations be “narrowly drawn” to serve a “sufficiently strong, subor-

dinating interest.” Munson, 467 U.S. at 960-961 (quoting Schaumburg,

444 U.S. at 636-637). Cf. Ward, 491 U.S. at 797-799 & n.6 (rejecting

assertion that narrow tailoring requirement mandates least-restrictive-

means analysis of content-neutral time, place, and manner restrictions).

In any event, the challenged TSR provisions satisfy the strict scrutiny

advocated by petitioners. Protecting the privacy of the home and pre-

venting fraud are compelling state interests, and the TSR’s provisions

directly advance those interests by imposing only the most minimal

limitations on speech. Any less restrictive alternatives (such as

12

2. Petitioners mistakenly argue (Pet. 6-16, 18-19)

that the TSR violates the First Amendment because it

is under-inclusive. Petitioners’ primary complaint is

that the TSR covers telefunders but not solicitation calls

made directly by charities themselves. As the court of

appeals explained, however, that limitation on the scope

of the TSR is “justified by a neutral and legitimate rea-

son”—the FTC’s limited jurisdiction, Pet. App. 24a; see

id. at 26a-29a. And the limits on the FTC’s jurisdiction

present no First Amendment concerns. See ?d. at 32a.

“There is no mystery * * * about why the FTC has

distinguished telefunders from in-house charity callers.”

Pet. App. 26a. The Commission has no jurisdiction over

charitable organizations, and it therefore lacks authority

to subject them to the TSR. See 68 Fed. Reg. at 4586-

4587. At the same time, in the USA PATRIOT Act, Con-

gress unambiguously directed the FTC to use the au-

thority that it does possess to prevent abusive charitable

solicitations. See 15 U.S.C. 6106(4) (2000 & Supp. II

2002). The FTC therefore included for-profit tele-

funders within the coverage of the TSR, just as the FTC

included other for-profit entities that are subject to its

jurisdiction. 68 Fed. Reg. at 4585. The FTC’s decision

to regulate all entities over which it has jurisdiction, but

only those entities, does not reflect discrimination

against any category of speech or group of speakers. On

the contrary, the FTC’s jurisdictional constraints pro-

vide a “ neutra! justification” for the scope of the TSR.

Pet. App. 28a (quoting City of Cincinnati v. Discovery

Network, Inc., 507 U.S. 410, 429-430 (1993)).

Petitioners contend (Pet. 12, 15-16) that the First

Amendment does not permit Congress to subject

permitting late night calls or calls from persons who refuse to identify

themselves) would leave consumers vulnerable to abuse or fraud.

13

telefunders to the telemarketing protections of the TSR

unless it also expands the FTC’s jurisdiction to cover in-

house charity callers. But it is perfectly reasonable for

Congress to distinguish between solicitations by profes-

sional fundraisers and solicitations by charities them-

selves. That distinction reflects the common-sense judg-

ment that for-profit solicitors are more likely to engage

in abusive or coercive telemarketing behavior because

their compensation depends on the level of contributions

they solicit. Several courts have recognized the validity

of that judgment in upholding solicitation laws that ex-

empt in-house charity callers. See Fraternal Order of

Police, N.D. State Lodge v. Stenehjem, 431 F.3d 591, 598

(8th Cir. 2005) (deferring to legislative judgment “that

professional charitable solicitors intrude more regularly

on residents’ privacy than [the charity’s] volunteers or

employees”), petition for cert. pending, No. 05-1149

(filed Mar. 6, 2006); National Coalition of Prayer, Inc.

v. Carter, No. 02-0536-C B/S, 2005 WL 2253601, at *12-

*13 (S.D. Ind. Sept. 2, 2005) (same), appeal docketed,

No. 05-3995 (7th Cir. Oct. 14, 2005); Special Programs,

Ine. v. Courter, 923 F. Supp. 851, 860 (E.D. Va. 1996)

(same); Lucas v. Curran, 856 F. Supp. 260, 273 (D. Md.

1994) (same).

This Court has also recognized that the government

may impose narrowly tailored restrictions on tele-

funders without imposing those restrictions on charities.

As noted above, in Riley, the Court expressly approved

laws that required fundraisers to disclos“ their “profes-

sional status” and provided for publication of the amount

of money that the fundraisers turned over to the chari-

ties for which they solicited, because those laws are nar-

rowly tailored to prevent telefunder fraud. Riley, 487

U.S. at 795, 799 n.11, 800.

14

There is thus no merit to petitioners’ contention (Pet.

8-9, 12, 18-19) that this Court—in Riley, Schaumburg,

and Munson—categorically rejected any connection

between the paid status of a telefunder and fraud.

Rather, in those cases, the Court struck down laws that

presumed that solicitations were fraudulent based solely

on the percentage of funds retained by the solicitor, be-

eause those laws only “peripherally promoted” the gov-

ernment’s interest in preventing fraud. Schaumburg,

444 U.S. at 636; see Riley, 487 U.S. at 788-789; Munson,

467 U.S. at 966-967. At the same time, the Court recog- ~*

nized that the “interest in protecting charities (and the

public) from fraud is, of course, a sufficiently substantial

interest to justify a narrowly tailored regulation” im-

posed on professional fundraisers. Riley, 487 U.S. at

792.

Petitioners also err in contending that Riley holds

that laws directed at telefunders but not charities them-

selves “‘necessarily’ discriminate against small or un-

popular charities.” Pet. 10-11; see Pet. 6. One of the

laws held unconstitutional in Riley required profes-

sicnal fundraisers, during the solicitation and before the

appeal for funds, to disclose the amount of money that

they turned over in the previous year to the charities for

which they solicited. The Court reasoned that this dis-

closure requirement would so prejudice “legitimate”

fundraising efforts that it would “discriminate| |” against

charities that hire professional fundraisers. 487 U.S. at

799. But the Court did not rule that all limitations di-

rected only at professional fundraisers are discrimina-

tory and unconstitutional. On the contrary, as noted

above, the Court expressly approved several limitations

of that kind because they were narrowly tailored to ad-

dress legitimate governmental interests. See id. at 795,

799 n.11, 800. The TSR’s modest strictures, including

15

the requirement that telefunders disclose the identity of

the charity for which they are soliciting and the purpose

of the call, are the sort of narrowly tailored regulations

approved in Riley. See id. at 799 n.11.

Petitioners are also mistaken in asserting (Pet. 7, 9,

12, 19) that the decision below conflicts with Discovery

Network. That case involved a city’s ban on newsracks

dispensing commercial handbills, but not newsracks dis-

pensing newspapers, for the purported purpose of pro-

moting esthetics and pubic safety.. The Court struck

down the ban, which covered approximately 4% of the

city’s newsracks, because it made only a “minute” or

“paltry” contribution to the city’s goals. 507 U.S. at 417-

418. The Court also noted that the city proffered “no

justification” for its distinction between commercial

newsracks and newspaper racks other than a “naked

assertion that commercial speech has ‘low value.’” /d.

at 429. In sharp contrast to the “paltry” manner in

which the law at issue in Discovery Network furthered

the government’s asserted interests, the TSR’s applica-

tion to telefunders directly and significantly furthers the

protection of privacy and the prevention of fraud by, for

example, restricting early-morning and late-night calls,

eliminating menacing hang-up calls, and requiring basic

disclosures about the purpose of solicitations. Mo e-

over, as discussed above, distinguishing between tele-

funders and in-house charity callers is entirely reason-

able. See p. 13, supra.

3. Petitioners also object (Pet. 7, 14, 18-19) to other

exemptions in the TSR that they contend render it

impermissibly under-inclusive. There are, however,

legitimate reasons for all of those exemptions. In each

case, the entity or speech exempted from the TSR is

either subject to another federal law protecting consum-

16

ers or does not pose the same risk of overreaching or

harassment as calls by telefunders.

First, all commercial telemarketers that are not cov-

ered by the TSR are fully covered by the FCC’s TCPA

rules, which are virtually identical in all relevant re-

spects to the TSR. See /n re TCPA, 18 F.C.C.R. at

14,034; id. at 14,138-14,139. Similarly, intrastate calls

are covered by the FCC’s parallel TCPA rules. See 47

U.S.C. 152(b); In re TCPA, 18 F.C.C.R. at 14,028; id. at

14,138-14,139.

Second, the TSR does not cover political fundraising

because political solicitations are neither commercial nor

charitable telemarketing and therefore do not fall within

the terms of the Telemarketing Act. See 15 U.S.C.

6106(4) (2000 & Supp. IT 2002); 68 Fed. Reg. at 4589 &

n.106. Laws regulating political speech pose unique

First Amendment concerns. See Burson v. Freeman,

504 U.S. 191, 196 (1992); Meyer v. Grant, 486 U.S. 414,

425 (1988). Congress has therefore decided to regulate

political fundraising under a separate regime, the Fed-

eral Election Campaign Act of 1971 (FECA), 2 U.S.C.

431 et seq., administered by a separate agency, the Fed-

eral Election Commission, which has expertise in the

area. That decision does not render the TSR constitu-

tionally suspect.

Finally, Congress’s decision not to regulate calls that

do not solicit funds, such as education or advocacy calls,

is also reasonable. Those calls do not pose the same con-

cerns as fundraising calls. See Hill v. Colorado, 530

U.S. 703, 723-724 (2000) (upholding a statute against a

charge of under-inclusiveness because the speech it per-

mitted was not “similarly likely to raise the legitimate

concerns to which [the statute] respond[ed]”); United

States v. Kokinda, 497 U.S. 720 (1990) (upholding a reg-

17

ulation that restricted solicitations, but not other forms

of expression).

4. Petitioners do not—and could not—contend that

this Court’s review is necessary to resolve any split of

authority among the courts of appeals. The courts of

appeals have consistently upheld the TSR, as well as

analogous state charitable solicitation laws. Many of

those state laws contain exemptions for in-house charity

callers, political solicitations, and other types of speech

or speakers similar to the exemptions in the TSR.

For example, the Eighth Circuit recently upheld a

state do-not-call law that applies to charitable solicita-

tions but exempts in-house charity callers, advocacy

calls, political fundraising calls, and calls to persons with

a prior business relationship. Stenehjem, 431 F.3d at

596-599; see also National Fed'n of the Blind of Ark.,

Ine. v. Pryor, 258 F.3d 851, 855 n.3, 857 (8th Cir. 2001)

(upholding law that regulates charitable and commercial

solicitations but not political solicitations or advocacy

calls). Other courts of appeals have likewise upheld

state laws restricting charitable solicitations or impos-

ing disclosure requirements that contain similar exemp-

tions from coverage. See American Target Adver., Ince.

v. Giani, 199 F.3d 1241, 1248-1249 (10th Cir.) (upholding

disclosure and other requirements imposed only on pro-

fessional charitable fundraisers), cert. denied, 531 U.S.

811 (2000); Dayton Area Visually Impaired Persons,

Ine. v. Fisher, 70 F.3d 1474, 1481-1482, 1485 (6th Cir.

1995) (upholding law requiring various disclosures by

charitable fundraisers and containing various exemp-

tions), cert. denied, 517 U.S. 1135 (1996); Auburn Police

Union v. Carpenter, 8 F.3d 886, 901 (st Cir. 1993) (up-

holding law prohibiting solicitations benefitting police

officers and containing an exemption for campaign

speech), cert. denied, 511 U.S. 1069 (1994).

18

Finally, the Tenth Circuit recently rejected a First

Amendment challenge to the nationa! TSR do-not-call

registry, which, as noted above, applies to commercial

but not charitable telemarketing. Mainstream Mktg.

Servs., Inc. v. FTC, 358 F.3d 1228 (10th Cir.), cert. de-

nied, 543 U.S. 812 (2004).

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

PAUL D. CLEMENT

Solicitor General

WILLIAM BLUMENTHAL

General Counsel

JOHN F. DALY

Deputy General Counsel for

Litigation

MICHAEL D. BERGMAN

Atto ney

Federal Trade Commission

APRIL 2006

. Supreme Court, U.S

j : FILED

v4 4

S MAY 5 - 2006

No. 05-927

OFFICE GF THE «

IN THE

Supreme Court of the Anited States

NATIONAL FEDERATION OF THE BLIND;

SPECIAL OLYMPICS MARYLAND, INC.,

Petitioners,

V.

FEDERAL TRADE COMMISSION,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

REPLY BRIEF

ERROL COPILEVITZ

Counsel of Record

WILLIAM RANEY

COPILEVITZ & CANTER, LLC

423 W. 8th Street

Suite 400

Kansas City, Missouri 64105

(816) 472-9000

May 5, 2006 Attorneys for Petitioners

MAREE eI AOU RS NRTA ENNIO ESE OS “ENCE A

WiILSON-EPES PRINTING Co.,INC. — (202)789-0096 -— WASHINGTON, D. C.20001

TABLE OF CONTENTS

Page

PARE R RS APE PRU BF EECIUUL FLEES cccivcosuscsecccesovsceveceossoseosesoess il

tai an dees aokenuanbensentiverecieesinaiadineniion 2

A. The Court Should Consider This Petition

Concurrently With the Petition for a Writ

of Certiorari Regarding Fraternal Order of

|| SR TS AA ya kale BENS. ale LOR ORE 2

B. A Congressional Act Cannot Constitute

“Neutral Justification” for the Abridgement of

UI SII 1s sass Gi baediinevennsdevesnesdveennebebeurtobesbundans’ 3

C. The FTC’s Regulations are Content-Based

Se NII in dendckccienthhasetbsecnibebotadiovecke 4

D. The FTC Admits the Absence of any

Evidentiary Basis for the Fourth Circuit's

SESE ERSTE SES EA DEM PER Se 5

E. The FTC Failed to Address the Equal Pro-

I INI 2c ss. dub a Scar hve radaienslucnanebhnen eens 7

oS calico sascukat se sstcouniaskanriuanierckeienniore 9

(i)

TABLE OF AUTHORITIES

CASES Page

Adarand Constructors v. Pena, 515 U.S. 200,

ES Fee Rckistiinucenciirsinramesipsicipoitatbenianibeadinidl da 8

City of Cincinnati v. Discovery Network, Inc.,

SE Tees RD Sektacicasercath cckchadiasbiasinntndate 5

Fraternal Order of Police, et al. v. Stenehjem,

431 F.3d 591 (2005) ........ ‘abate eedbsnses kai ensiandeaidalaohe 1-3

Mainstream Marketing Services, Inc. v. Federal

Trade Commission, 358 F.3d 1228 (10th Cir.

PUN sc dats shcabtadadcepcritichuensussachmeastuenccasAmmdedesiit he

Riley v. National Federation of The Blind, 487

UG TE oe EE Uiiclishndevuivacedsuestelaceecdiuninaiaaen 6

Secretary of State of Maryland v. Joseph H.

Mur.son Co., Inc., 476 U.S. 947 (1984)............. 6

Shuttlesworth v. Birmingham, 394 U.S. 147

CRG cn cacaseseibadsdicciadeogieniiiccstedlnnhretcsaubusbecenacs 5

United States v. Playboy Entertainment Group,

Bebe SES Ais Pt CRIED cnckisckscitiaieeninsbsioxiniascnes 7

Village of Schaumburg v. Citizens for a Better

Environment, 444 U.S. 620 (1980).............00..... 6

OTHER

U.S. Constitution, First Amendment ..................... 34

U.S. Constitution, Fifth Amendment..................... 8

U.S. Constitution, Fourteenth Amendmert ........... 8

BE REA i ORs Gicidtcciesecskcndinrintesiantbirdnolonsss 4

ee eA EE ciiecocnins sanbacaendontphccdbcocexoncensaial 4

IN THE

Supreme Court of the United States

No. 05-927

NATIONAL FEDERATION OF THE BLIND;

SPECIAL OLYMPICS MARYLAND, INC.,

Petitioners,

Vv.

FEDERAL TRADE COMMISSION,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

REPLY BRIEF

Pursuant to Supreme Court Rule 15, Petitioners National

Federation of the Blind and Special Olympics Maryland, Inc.

(“Petitioners”) respectfully submit this “Reply Brief Sup-

porting Petition for a Writ of Certiorari” to (A) request that

the Court consider this Petition concurrently with the

“Petition for a Writ of Certiorari” filed in the matter entitled

Fraternal Order of Police et al. v. Stenehjem, 431 F.3d 591

(2005), Case No. 05-1149; and (B) address matters newly

raised in the “Brief for the Federal Trade Commission in

Opposition” {the “Opposition”) filed on behalf of the Federal

Trade Commission (the “FTC’”’).

2

ARGUMENT

A. The Court Should Consider This Petition Con-

currently With the Petition for a Writ of Certiorari

Regarding Fraternal Order of Police.

In the Opposition, the FTC relies upon the recent decision

of the Eighth Circuit in Fraternal Order of Police et al. v.

Stenehjem, 431 F.3d 591 (2005). See Opposition p. 13 (citing

Fraternal Order of Police for the proposition that “several

courts have recognized the validity of that [common sensc]

judgment in upholding solicitation laws that exempt in-house

charity callers”) and p. 17 (noting that “the Eighth Circuit re-

cently upheld a state do-not-call law that applies to charitable

solicitations but exempts in-house charity callers, advocacy

calls, political fundraising calls, and calls to persons with a

prior business relationship.”’)

Both this case and Fraternal Order of Police involve the

constitutionality of charitable speech restrictions that apply

to charities using professional fundraisers to solicit by

telephone, but do not apply to charities using volunteer

fundraisers to solicit by telephone. In this case, the Fourth

Circuit has upheld the application of certain provisions of the

FTC’s Telemarketing Sales Rule (including the entity specific

do-not-call provis:on, calling time restrictions, a requirement

that telefunders transmit caller-ID information and promptly

identify the call as a solicitation, and a prohibition on aban-

doned calls) to charities using professional fundraisers. In

Fraternal Order of Police, the Eighth Circuit has upheld the

application the national do-not-call registry to charities using

professional fundraisers in North Dakota. Charities using

volunteer fundraisers are exempt from the charitable speech

restrictions at issue in these cases.

3

~

Because these cases present similar issues, Petitioners

request that the Petitions be considered together, and that

review be granted in both cases.’

B. A Congressional Act Cannot Constitute “Neutral

Justification” for the Abridgement of Free Speech.

In the Opposition, the FTC argues that its lack of juris-

diction over charities constitutes a “neutral justification” for

its disparate treatment of charities using professional fund-

raisers, stating:

‘There is no mystery . . . about why the FTC has

distinguished telefunders from in-house charity callers.’

[Citation.} The Commission has no jurisdiction over

charitable organizations, and it therefore lacks authority

to subject them to the TSR.” See Opposition, p. 12.

“On the contrary, the FTC’s jurisdictional constraints

provide a ‘neutral justification’ for the scope of the

TSR.” See Opposition, p. 12.

Absent an amendment to the Constitution, a federal

agency's jurisdictional limitations cannot constitute a “neutral

justification” justifying impairment of the freedom of speech

under the First Amendment. The First Amendment expressly

states: “Congress shall make no law . . . abridging the

' These cases exemplify the different regulations of charitable tele-

phone solicitation being imposed by the FITC, FCC and various states.

Reviewing courts are reaching inconsistent results. As pointed out by

Amicus Veterans First, in upholding the constitutionality of the national

do -not-call registry as applied to core commercial speech, the Tenth Cir-

cuit noted its exemption of all charitable solicitations. See Mainstream

Marketing Services, Inc. v. FTC, 358 F.3d 1228 (10th Cir. 2004). In

Fraternal Order of Police, the Eighth Circuit recently upheld the apph-

cation of the national do-not-call registry to charitable solicitations made

by professional fundraisers in North Dakota. These different rulings

refute the FTC's argument that “Petitioners do not and could not

contend that this Court’s review is necessary to resolve any split of

authority among the courts of appeals.” See Opposition, p. 17.

4

freedom of speech, or of the press... .” See United States

Constitution, First Amendment.

The jurisdiction of a federal agency, including the FTC, is

established by an Act of Congress. In the Opposition, p. 2,

the FTC explains: “The FTC’s jurisdiction under the

Telemarketing Act is coextensive with its jurisdiction under

the Federal Trade Commission Act (FTC Act), 15 U.S.C. 41

et seq. See 15 U.S.C. 6105(a). Its jurisdiction under the FTC

Act excludes many non-profit entities. See 15 U.S.C. 44,

45(a)(2).”

If the FTC's jurisdictional limitations abridge a charity’s

rights under the First Amendment, they are unconstitutional.

Moreover, permitting the FTC to use its jurisdiction as

“neutral justification” for abridging speech is tantamount

to arguing that any Congressional Act can be a “neutral

justification” justifying the abridgment of freedom of speech.

The First Amendment would be completely eviscerated by

allowing a Congressional Act to serve as “neutral justifica-

tion” justifying the abridgement of free speech.

C. The FTC’s Regulations are Content-Based Speech

Restrictions.

In the Opposition, the FTC argues that the challenged

regulations are content-neutral because: “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 called” (see Opposition,

p. 8, and p. 9, n.1) and “the TSR ‘serves purposes unrelated to

the content of expression’—the protection of privacy and the

prevention of fraud—and it is therefore ‘deemed neutral, even

if it iias an incidental effect on some speakers or messages but

not others.’ Opposition, p. 9, n.1.

These arguments miss the mark. The challenged regula-

tions are content-based. Among other things, the underlying

5

definition of “telemarketing” contained in the TSR—“a plan,

program or campaign which is conducted to induce... a

charitable contribution . . .”—~ is so vague and overbroad that

it gives the government virtually unfettered authority to

determine, based upon the content of the speech, whether a

call is “conducted to it cuce” a contribution. Based on the

content of a call, the TSR requires the FTC to decide, for

example, whether a sees of calls only providing information

and never mentioning a request for a contribution is actually

conducted to “induce” a charitable contribution. See Shut-

tlesworth v. Birm‘ngham, 394 U.S. 147, 150-153 (1969)

(discussing the unconstitutionality of a statute which “con-

ferred upon the City Commission virtually unbridled and

absolute power to prohibit any parade, procession, or demon-

stration on the city’s streets or public ways”).

D. The FTC Admits the Absence of any Evidentiary

Basis for the Fourth Circuit’s Decision.

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

410, 414 (1993), this Court held: “It was the city’s burden to

establish a ‘reasonable fit’ between its legitimate interests in

safety and esthetics and its choice of a limited and selective

prohibition of newsracks as the means chosen to serve those

interests.” In this case, the FTC has utterly failed to establish

the existence of any legitimate interest to be remedied, much

less any “reasonable fit” between any such interest and its

selective regulation of charities using professional fund-

raisers.

In the Opposition, the FTC admits its absence of empirical

evidence supporting its selective regulation of charities using

professional fundraisers. The FTC has previously used the

absence of evidence of problems associated with charitable

calls to justify the application of the national do-not-call

registry to commercial speech. See Mainstream Marketing

Services, Inc., 358 F.3d at 1236-1237 (relying on the FTC’s

6

evidence of the harassing effects of commercial speech, and

the lack of similar evidence for charitable solicitations, to

uphold the application of the national do-not-call registry to

core commercial speech).

In the Opposition, the FTC broadly claims that “the TSR’s

application to telefunders directly and significantly furthers

the protection of privacy and the prevention of fraud” and

that “distinguishing between telefunders and in-house charity

callers is entirely reasonable.” See Opposition, p. 15.

The FTC has not identified the existence of any privacy

invasions by charities using professional fundraisers, which

might justify its regulations. Indeed, in 2004, the FTC

declared “victory” over privacy intrusions, stating, among

other things, that: “The Do Not Call Registry has made

dinner time interruptions a thing of the past.” See FTC

website, press release dated June 24, 2004, entitled “National

Do Not Call Celebrates One-Year Anniversary.” In declaring

its victory over the privacy intrusions associated with tele-

marketing, the FTC removed any possible rationalization—

much less any “sufficiently strong, subordinating interest that

the [government] is entitled to protect” (Opposition, p. 9)—

for burdening the speech of charities using professional

fundraisers.

Nor has the FTC identified the existence of any fraud that

would be remedied by the selective regulation of calls by

charities using professional fundraisers. The Supreme Court

has repeatedly rejected any connection between the fact that a

solicitor is paid for services and the likelihood that those

services are fraudulent. See Riley v. Nat'l Fed'n of the Blind

of N.C., Inc., 487 U.S. 781, 789-90 (1988), Sec’v of State of

Marvland v. Joseph H. Munson Co., Inc., 476 U.S. 947, 966-

67 (1984), and Village of Schaumburg v. Citizens for a Better

Env't, 444 U.S. 620, 636-37 (1980).

7

Having failed to offer any evidence of any legitimate

interest served by its selective regulation of charities using

professional fundraisers, the FTC urges the Court to ignore its

absence of evidence and to defer to its “common-sense

judgment that for-profit solicitors are more likely to engage in

abusive or coercive telemarketing behavior because their

compensation depends on the level of contributions they

solicit.” See Opposition, p. 13. However, there is nothing

“common-sense” about the leap that the FTC urges the Court

to make. It is equally plausible that committed volunteers of

a charity are more likely to engage in coercive solicitation

because of their personal emotional stake in the charity. It is

also likely that the coerciveness of a telephone solicitor

depends more on the individual solicitor’s temperament than

on whether they are being compensated for the call.

Thus, the FIC’s suggestion that professional solicitors

are more likely to engage in coercive solicitation is not

a “common-sense judgment;” is it sheer speculation. As

pointed out in the “Amicus Brief of Veterans First in Support

of Petition for a Writ of Certiorari by National Federation of

the Blind,” p. 5-6, such rash speculation has never been

permitted to justify restrictions on constitutional freedoms.

See United States v. Playboy Entertainment Group, Inc., 529

U.S. 803, 813 (2000) (holding that the government failed to

carry its burden where it offered “anecdotal evidence” but

“little hard evidence” and “no proof” justifying its regulation

of speech). Because there is no demonstrable need for, or

effect of, the FTC’s regulation of the speech or charities using

professional fundraisers, the regulations should be stricken.

E. The FTC Failed to Address the Equal Protection

Argument.

The regulations at issuc in this case violate the consti-

tutional promise of cqual protection. See “Amicus Brief of

Veterans First in Support of Petition for a Writ of Certiorari

8

by National Federation of the Blind.” In its Opposition, the

FTC has failed to address the equal protection violations

associated with the challenged regulations.

The FTC’s argument in its Opposition that its jurisdictional

limitations justifies its disparate treatment of charities using

professional fundraisers flies in the face of the Fourteenth

Amendment, as applied to the federal government under the

Fifth Amendment. See Adarand Constructors v. Pena, 515

U.S. 200, 217 (1995). The Fourteenth Amendment expressly

provides: “No State shall make or enforce any law which

shall abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person of life,

liberty, or property, without due process of law; nor deny

to any person within its jurisdiction the equal protection of

the laws.” See United States Constitution, Fourteenth

Amendment.

As discussed above, jurisdictional limitations, including the

jurisdictional limitations of the FTC, are created by Acts of

Congress. See Opposition, p. 2. Allowing Congress deny

equal protection simply by making a law defining a fed-

eral agency’s jurisdiction is exactly what is proscribed by

the Fourteenth (and Fifth) Amendment, and is patently

unconstitutional.

9

CONCLUSION

Based upon the foregoing, Petitioners respectfully request

that the Court consider the Petition in this action concurrently

with the Petition for a Writ of Certiorari in the Fraternal

Order of Police, Case No. 05-1149 and grant both Petitions.

Respectfully submitted,

ERROL COPILEVITZ

Counsel of Record

WILLIAM RANEY

COPILEVITZ & CANTER, LLC

423 W. 8th Street

Suite 400

Kansas City, Missouri 64105

(816) 472-9000

May 5, 2006 Attorneys for Petitioners