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Do Not Call list in legal limbo

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The fate of the Federal Trade Commission’s Do Not Call Registry appeared to be uncertain Friday, as the agency weighed its options to fight a federal court injunction barring launch of the anti-telemarketing list next week. Legal experts expect the U.S. Supreme Court to take up a Denver judge’s order, which sides with telemarketer’s arguments that their First Amendment rights have been violated. Ironically, when the do-not-call gets its day in court, the case will turn on a distinction made between commercial and non-profit telemarketing calls — a distinction the FTC included to avoid First Amendment issues.

The legal wrangling almost certainly will delay launch of the list, which was scheduled for Wednesday, Oct. 1, legal experts said.

The furious last-minute jockeying to stop unsolicited telemarketing continues. A spokeswoman for the Federal Trade Commission said Friday the agency will ask U.S. District Judge Edward Nottingham to allow the list to be implemented while the agency appeals.

FTC Chairman Timothy Muris said Friday the agency will fight the decision.

“I do not believe that our Constitution dictates such an illogical result,” Muris said. “To the contrary, our Constitution allows consumers to choose not to receive commercial telemarketing calls.”

Muris said that if Nottingham’s reasoning were applied elsewhere, it would cripple the more than two dozen state do-not-call lists.

On Thursday, Nottingham ruled in favor of telemarketers who said the FTC’s implementation of a do-not-call list violated the marketing firms’ First Amendment rights. The judge said it was unfair to allow non-profit telemarketing calls made by political campaigns and charitable organizations, but prevent commercial telemarketing calls.

That distinction was made in the FTC’s design of the do-not-call list because it was concerned any effort it made to block political fund-raising phone calls would certainly run afoul of First Amendment issues, said Ari Schwartz, associated director of the Center for Democracy and Technology.

“They were trying to get protected speech out of the way,” Schwartz said.

The judge’s ruling was fairly technical, said Chris Hoofnagle, associate director at the Electronic Privacy Information Center. In order to allow a government agency to limit commercial speech, it must be able to prove that it substantially advances a state interest, such as personal privacy. Because the do-not-call list blocked only some telemarketing calls, and not others, the judge said the FTC failed to prove it was advancing a state interest.

“The court said the list didn’t materially advance privacy, which is absurd,” he said.

Both Hoofnagle and Schwartz, supporters of the do-not-call list, said they expected the U.S. Supreme Court would overturn Nottingham’s ruling, because non-profit speech — particularly political speech — is customarily afforded higher protection than commercial speech.

But it’s not entirely a slam dunk, said Garnter analyst Walter Janowski. There can be blurry distinctions between non-profits firms and commercial firms, and that troubled Nottingham, he said.

“The judge said (the FTC is) attempting to draw distinctions between poorly defined categories for which there aren’t clear distinctions,” he said. “The ruling doesn’t say you can’t. It says you can’t treat them differently without a good cause.”

Still, he expected the legal wrangling would eventually settle down, and the do-not-call list would take force perhaps just a few weeks after its scheduled launch.

“It will probably be delayed for at least couple extra weeks. We may need to see adjustments in the way the ruling is phrased,” Janowski said. But courts will find a way to side with the massive popular opinion behind the program, he said.

Meanwhile, the telemarketing industry Friday indicated it would voluntarily offer consumers some relief, even as it continues is legal battles.

The largest telemarketing industry group said it wants its members to abide by the national “do-not-call” list next week despite two court rulings that have thrown the program’s future into legal limbo.

“We are telling our members, yes indeed, we don’t want you calling people who have told anyone they don’t want any calls,” Direct Marketing Association President H. Robert Wientzen said Friday. He said he hasn’t had time to arrange agreements making that request binding, but “up to the moment I have had nobody disagree.”

Showdown began in Oklahoma
The legal and legislative gymnastics started Tuesday when U.S. District Judge Lee R. West in Oklahoma blocked the Oct. 1 rollout of the list, saying that the FTC had overstepped its authority by creating the registry.

That legal hurdle was scaled by Congressional action. The House jumped in Thursday, approving by 412-8 a measure designed to counter the Oklahoma judge’s ruling. Then the Senate voted 95 to zero to reinstate the list and send it on to President Bush, who indicated he would approve it.

But late Thursday, Nottingham stepped into the fray, giving telemarketers a critical legal victory.

Nottingham agreed with the telemarketers’ claims that allowing charitable solicitations but banning commercial calls “borrows from the reasoning of the pigs in George Orwell’s ‘Animal Farm.’ ... ‘Some animals are more equal than others.’”

The judge granted a summary judgment to the telemarketing firms, and barred the FTC from launching the registry next week.

“The Federal Trade Commission has chosen to entangle itself too much in the consumers’ decision by manipulating consumer choice and favoring speech by charitable (organizations) over commercial speech,” the judge wrote.

Nottingham’s decision set off another round of complaints from consumers, who vocally objected to West’s ruling Tuesday and have expressed overwhelming support for the do-not-call list. More than 50 million phone numbers have been entered into the FTC’s list.

On Tuesday, West had ruled that the FTC didn’t have proper authority to regulate telemarketers, indicating only the FCC could do so. Thursday, West denied an FTC request to stay his order while the agency files an appeal.

Nottingham and West actually disagreed over the issue of the FTC’s authority — Nottingham dismissed that claim by the telemarketers.

Earlier Thursday, do-not-call supporters thought they had won a solid victory in the legal tussle, with Congress swiftly passing a law that essentially negated West’s court ruling.

“(West) in this case is dead wrong and I’m sure his decision will in turn be overturned,” said Rep. Billy Tauzin, R-La., chairman of the House Energy and Commerce Committee. “We should probably call the bill ‘This Time We Really Mean It Act’ to cure any myopia in the judicial branch. The bill leaves no doubt as to the intent of Congress.”

The bill says the FTC may operate the list, which was approved by Congress last year.

Consumer advocates hailed Congress’ quick action in light of West’s ruling yesterday.

“I’ve never seen government work so fast as they have in past 24 hours,” said Diana Mey, a private citizen who’s been one of the most vocal do-not-call supporters for the past three years. “The news yesterday was very upsetting ... I was just stunned like everybody else.”

The FTC hopes the list will block 80 percent of telemarketing calls. Exemptions include calls from charities, pollsters and political campaigns.

The FTC’s rules require telemarketers to check the list every three months to see who doesn’t want to be called. Those who call listed people could be fined up to $11,000 for each violation. Consumers would file complaints to an automated phone or online system.

Despite the legal wrangling, the FTC is moving ahead with the list and is encouraging consumers to continue signing up.

Telemarketers say the list would devastate their industry and lead to the loss of thousands of jobs. The Direct Marketing Association, one of the groups that challenged the registry, said it hadn’t decided whether its members would stop calling people on the list starting next Wednesday.

Since the FTC opened the do-not-call list for registration in June, people have submitted 31.1 million phone numbers at the Web site and 10.9 million by calling toll-free at 1-888-382-1222. An additional 8.6 million numbers were transferred from existing state lists.

There are about 166 million residential phone numbers in the United States and an additional 150 million cell phone numbers.

The Associated Press and Reuters contributed to this report.