IN THE SUPREME COURT
STATE OF NORTH DAKOTA
|State of North Dakota ex rel.|
|Wayne Stenehjem, Attorney General,|
|FreeEats.com, Inc. dba|
|The FreeEats Companies,|
|Supreme Court No. 20050171|
APPEAL FROM THE OPINION AND ORDER DATED FEBRUARY 2, 2005;
ORDER FOR FINAL JUDGMENT DATED MARCH 14, 2005;
FINAL JUDGMENT FOR THE STATE OF NORTH DAKOTA DATED MARCH 15, 2005;
AND NOTICE OF ENTRY OF FINAL JUDGMENT DATED MARCH 17, 2005
HONORABLE GAIL HAGERTY PRESIDING
BURLEIGH COUNTY DISTRICT COURT, CIVIL NO. 08-04-C-01694
|Patrick J. Ward, ID#03626|
|Lawrence E. King, ID#04997|
|ZUGER KIRMIS & SMITH|
|PO Box 1695|
|Bismarck, ND 58502-1695|
|ATTORNEYS FOR APPELLANT|
|David H. Bamberger|
|James P. Rathvon|
|DLA Piper Rudnick Gray|
|Cary US LLP|
|1200 Nineteenth Street, NW|
|Washington, DC 20036|
|Emilio W. Cividanes|
|575 Seventh Street, N.W.|
|Washington, D.C. 20004-1601|
TABLE OF CONTENTS
|Table of Authorities||ii.-v.|
|Statement of the Issue Presented for Review||1|
|Statement of the Case||2|
|A.||Nature of the Case||2|
|B.||Course of the Proceedings and Disposition Below||2|
|Statement of the Facts||4|
|A.||Preemption Standards Generally||4|
|B.||The District Court Erred in Construing the Savings Clause|
|of the TCPA in Isolation, Without Regard to Established|
|Federal Law Regarding Interstate Communications||6|
|C.||The FCC's TCPA Regulations Occupy the Field of|
|Interstate Political Polling Calls||12|
|D.||Application of NDCC § 51-28-02 to Interstate Political|
|Polling Calls Directly Conflicts with the FCC's TCPA|
|E.||The District Court's Reliance on Van Bergen is Misplaced||20|
TABLE OF AUTHORITIES
|Consolidated Telephone Cooperative v. Western Wireless Corp.,|
|2001 ND 209, 637 N.W.2d 699 (N.D. 2001)||11, 22|
|Home of Economy v. Burlington Northern Santa Fe Railroad,|
|2005 ND 74, N.W.2d ___||6|
|Otter Tail Power Co. v. Public Serv. Comm'n,|
|354 N.W.2d 701 (N.D. 1984)||6|
|Skoog v. City of Grand Forks, 301 N.W.2d 404 (N.D. 1981)||12|
|Sunbehm Gas, Inc. v. Conrad, 310 N.W.2d 766 (N.D. 1981)||11|
|AT&T and the Associated Bell System Cos., 56 FCC 2d 14 (1975),|
|aff'd California v. FCC, 567 F.2d 84 (D.C. Cir. 1977), cert. denied,|
|434 U.S. 1010 (1978)||12|
|Bank One v. Guttau, 190 F.3d 844 (8th Cir. 1999)||21|
|Boomer v. AT&T Corp., 309 F.3d 404 (7th Cir. 2002)||16|
|Capital Cities Cable v. Crisp, 467 U.S. 691 (1983)||11|
|City of New York v. FCC, 486 U.S. 57 (1987)||11|
|Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000)||16|
|English v. General Electric Co., 496 U.S. 72 (1990)||4, 13, 15|
|Fidelity Fed. Sav. & Loan Ass'n v. De la Cuesta, 458 U.S. 141 (1982)||5|
|Geier v. American Honda Motor Co., 529 U.S. 861 (2000)||16, 21|
|Hines v. Davidowitz, 312 U.S. 52 (1941)||5, 16|
TABLE OF AUTHORITIES CONT.:
|Jones v. Rath Packing Co., 430 U.S. 519 (1977)||5|
|Louisiana Pub. Serv. Comm. v. FCC, 476 U.S. 355 (1986)||7|
|NARUC v. FCC, 746 F.2d 1492 (D.C. Cir. 1984)||11|
|National Ass'n of Regulatory Util. Com'rs v. FCC,|
|533 F.2d 601 (D.C. Cir. 1976)||7|
|Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947)||5|
|United States v. Locke, 529 U.S. 89 (2000)||6, 21, 22|
|United States v. Shimer, 367 U.S. 374 (1961)||6|
|Vaigneur v. Western Union Telegraph Co.,|
|34 F. Supp. 92 (E.D. Tenn. 1940)||13|
|Van Bergen v. State of Minnesota,|
|59 F.3d 1541 (8th Cir. 1995)||15, 20, 21, 22|
CONSTITUTION AND STATUTES:
|U.S. Const. Art. VI, cl. 2||4|
|NDCC Ch. 51-28||6|
|NDCC § 51-28-01(7)(c)(2), (d) & (f)||18|
|NDCC § 51-28-02||Passim|
|Federal Communications Act of 1934, 47 U.S.C. § 151, et seq||7|
|Telephone Consumer Protection Act, Pub. L. No. 102-243||7|
|Pub. L. No. 102-243, § 2 (Congressional Statement of Findings (1)-(6))||8|
|Pub. L. No. 102-243, § 2 (Congressional Statement of Findings 13)||8|
Constitution and Statutes Cont.:
|47 U.S.C. § 152||12|
|47 U.S.C. § 152(a)||7|
|47 U.S.C. § 152(b)||7, 13|
|47 U.S.C. § 227 (b)(1)(A)||14|
|47 U.S.C. § 227(b)(1)(B)||7, 8|
|47 U.S.C. § 227(b)(2)(B)(i)||8|
|47 U.S.C. § 227(d)||10|
|47 U.S.C. § 227(e)||10|
|47 U.S.C. 227 (e)(1)||10|
|47 U.S.C. § 227(e)(1)(A)-(D) and (2)||11|
|47 U.S.C. § 227(f)(1)||10|
|47 U.S.C. § 227(f)(2)||10|
|47 U.S.C. § 227(f)(6)||10|
|47 U.S.C. § 227(3)(e)||11|
|H. Rep. No. 317, 102d Cong., 1st Sess. 13 (1991)||8|
|H.R. Rep. No. 101-633 (July 27, 1990)||14|
|Rules and Regulations Implementing the Telephone Consumer|
|Protection Act of 1991, CC Dkt. No. 92-90, Report and Order,|
|7 FCC Rcd 8752 40 (1992)||17|
|Rules and Regulations Implementing the Telephone Consumer|
|Protection Act of 1991, CG Dkt. No. 02-278, Report and Order,|
|18 FCC Rcd 14014 136 (2003)||19|
Other Authorities Cont.:
|S. Rep. No. 102-178||13|
|47 C.F.R. § 64.1200(a)(2)(ii)||17|
|69 Fed. Reg. 61380 (Oct. 18, 2004)||3|
|70 Fed. Reg. 37317 (June 29, 2005)||3|
|70 Fed. Reg. 37318 (June 29, 2005)||3|
|137 Cong. Rec. H 10339, H 10342 (Nov. 18, 1991)||9|
|137 Cong. Rec. S 16205 (daily ed. Nov. 7, 1991)||14|
|137 Cong. Rec. S 18781, S 18784 (Nov. 27, 1991)||9|
|137 Cong. Rec. S 18785 (daily ed. Nov. 27, 1991)||14|
|1991 U.S.C.C.A.N. 1968||13|
STATEMENT OF THE ISSUE PRESENTED FOR REVIEW
Whether the enforcement of NDCC § 51-28-02 as to interstate political polling calls is preempted by Section 2 of the Communications Act of 1934, as amended by the Telephone Consumer Protection Act of 1991.
STATEMENT OF THE CASE
A. Nature of the Case.
Founded in the late 1990s, and located in Herndon, Virginia, FreeEats has evolved primarily into a survey and database company. In conducting its business by telephone, it uses pre-recorded messages to reach households, which usually have been targeted based upon location demographics. See Appendix at 1. All of FreeEats's calls are made from facilities in Ashburn, Virginia. See Appendix at 2.
Political campaigns typically use FreeEats's technology, using prerecorded messages to find supporters through survey polls and subsequently turn them out to vote or to work for the campaign (hereinafter "political polling calls"). A copy of the script of the August 2004 poll at issue before this Court can be found in the Appendix at 4-6.1 Examples of other polls conducted by
FreeEats can be downloaded from the company's web site.
B. Course of the Proceedings and Disposition Below.
In late August 2004, FreeEats learned of the State's position that the company's interstate polling calls made from Virginia on behalf of a Georgia-based client were in violation of NDCC § 51-28-02. In response, FreeEats ceased making calls into North Dakota, but then advised the Attorney General that application of NDCC § 51-28-02 to FreeEats's interstate political polling calls was preempted by federal law. FreeEats then filed a Petition for Expedited Declaratory Ruling before the Federal Communications Commission ("FCC") in Washington, D.C. on September 13, 2004.2 After being fully apprised of FreeEats's filing with the FCC outlining the federal preemption issue, the State, nevertheless, filed this lawsuit on September 17, 2004, seeking civil penalties for each and every interstate telephone call directed to North Dakota.
FreeEats moved to dismiss the complaint on preemption grounds. The State filed a Cross-Motion for Summary Judgment on Liability, urging the Court to treat FreeEats's motion as one for summary judgment, deny FreeEats's motion, and grant summary judgment to the State on the issue of liability. Following a hearing on October 18, 2004, regarding the pending motions, the District Court issued an Order, dated October 29, 2004, declining the State's suggestion that it treat FreeEats's motion as one for summary judgment but also denying FreeEats's motion to dismiss.
FreeEats then filed a Cross-Motion for Summary Judgment on both preemption and First Amendment grounds. Adopting as true FreeEats's characterization of its polling calls as both interstate and noncommercial in nature, the District Court on February 2, 2005, issued an Order granting summary judgment to the State on the issue of liability and denying FreeEats's motion for summary judgment. Specifically, the District Court found that NDCC § 51-28-02 was not preempted by federal law.
Following the filing of a joint stipulation of the parties regarding damages, the District Court issued an Order for Final Judgment dated March 14, 2005, imposing civil penalties of $10,000 upon FreeEats for its violation of § 51-28-02 and attorneys' fees and costs of $10,000.
FreeEats then appealed to this Court.
STATEMENT OF THE FACTS
The relevant facts in this case are largely incorporated in the Statement of the Case. Specifically, FreeEats, prior to September 13, 2004, made political polling calls from the State of Virginia to residents of the State of North Dakota. It did so by using an automatic dialing-announcing device ("ADAD"). All of the calls were interstate calls, and all of the calls were non-commercial calls, as defined by the FCC.
The Enforcement of NDCC § 51-28-02 as to Interstate Calls is Preempted by Section 2 of the Communications Act of 1934, as Amended by the Telephone Consumer Protection Act of 1991.
A. Preemption Standards Generally
The Supremacy Clause provides that "[t]his Constitution, and the Laws of the United States which shall be made in Pursuance thereof. . . shall be the supreme Law of the Land . . . , any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. Art. VI, cl. 2. Under the Supremacy Clause, Congress has the power to preempt state law. Whether state law is preempted "fundamentally is a question of congressional intent." English v. General Electric Co., 496 U.S. 72, 78-79 (1990). Preemption may be either express or implied and "is compelled whether Congress' command is explicitly stated in the statute's language or implicitly contained in its structure or purpose." Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977). The "federal preemption doctrine" recognizes three categories of preemption.
Express preemption refers to situations where Congress, in enacting a federal statute, has explicitly stated its intent to preempt state law in a particular area. E.g., Jones, 430 U.S. at 530-532 (state labeling regulations for bacon preempted by Federal Meat Inspection Act).
Implied (or "field") preemption refers to situations where a congressional intent to preempt may be inferred because, for example, the federal program "touch[es] a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject." Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).
Conflict preemption refers to situations "where Congress has not completely displaced state regulation in a specific area, [but] state law is nullified to the extent that it actually conflicts with federal law," Fidelity Fed. Sav. & Loan Ass'n v. De la Cuesta, 458 U.S. 141, 153 (1982), or even where the state law simply "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Hines v. Davidowitz, 312 U.S. 52, 67 (1941).
"Federal regulations have no less pre-emptive effect than federal statutes." De la Cuesta, supra, 458 U.S. at 153. In cases where Congress has directed an agency to exercise its discretion in promulgating rules, and the agency's "'choice represents a reasonable accommodation of conflicting policies that were committed to the agency's care by the statute,'" the agency's regulations have the force of law and may preempt state law. Id. at 154 (quoting United States v. Shimer, 367 U.S. 374, 383 (1961)).
The established framework for analyzing preemption claims starts with the assumption that Congress does not intend to displace state law. Otter Tail Power Co. v. Public Serv. Comm'n, 354 N.W.2d 701, 705 (N.D. 1984). However, as this Court recently reiterated: "The assumption that Congress did not intend to displace state law is not triggered when a state regulates in an area where there has been a history of significant federal presence." Home of Economy v. Burlington Northern Santa Fe Railroad, 2005 ND 74, 6, N.W.2d ___, ___ (citing United States v. Locke, 529 U.S. 89, 108 (2000) (state regulation of maritime commerce)).
B. The District Court Erred in Construing the Savings Clause of the TCPA in Isolation, Without Regard to Established Federal Law Regarding Interstate Communications.
NDCC Ch. 51-28 attempts to regulate the use of prerecorded voice messages in all telephone calls. Specifically, this statute prohibits the use of an ADAD "unless the subscriber has knowingly requested consented to, permitted, or authorized receipt of the message or the message is immediately preceded by a live operator before the message is delivered", or unless the message is "from school districts to students, parents, or employees, messages to subscribers with whom the caller has a current business relationship, or messages advising employees of work schedules." NDCC § 51-28-02. This chapter and statute are not restricted to intrastate calls. Yet, as hereafter discussed, they cannot be applied to interstate calls because, to that extent, they are preempted by federal law.
The Federal Communications Act of 1934, 47 U.S.C. § 151 et seq. ("Communications Act") vests all regulatory authority over "interstate and foreign commerce in wire and radio communication" in the FCC. 47 U.S.C. § 151. Section 2(a) of the Act, 47 U.S.C. § 152(a), makes clear that the FCC exercises authority over "all interstate and foreign" communications originating from or received into the United States. (Emphasis added.) Section 2(b) provides, however, that with certain exceptions, the FCC does not have jurisdiction over intrastate wire and radio communications and services. 47 U.S.C. § 152(b). Thus, it has long been recognized that FCC regulations preempt state enactments regarding interstate communications, but do not preempt state laws regarding intrastate communications. E.g., National Ass'n of Regulatory Util. Com'rs v. FCC, 533 F.2d 601, 606-607 (D.C. Cir. 1976) (FCC cable regulations do not preempt state rules regarding two-way, intrastate, non-video communications carried by cable). See also Louisiana Pub. Serv. Comm. v. FCC, 476 U.S. 355, 370 (1986) (Section 2(b) "fences off" intrastate matters from FCC reach or regulation and bars federal preemption of state regulation over depreciation of telephone plant and equipment for intrastate ratemaking purposes).
The Telephone Consumer Protection Act ("TCPA") Pub. L. No. 102-243, was enacted as an amendment to the Communications Act, 47 U.S.C. §§ 151 et seq., to address the exponential growth in telemarketing calls and especially, complaints of residential subscribers that unrestricted telemarketing solicitations constitute a nuisance and invasion of privacy. See Pub. L. No. 102-243, § 2 (Congressional Statement of Findings (1)-(6)). At the same time, Congress recognized that regulatory restrictions over such calls must be consistent with constitutional protections of free speech. Id. (13), (15).
In the TCPA, Congress prohibited the making of certain categories of unsolicited calls using automated telephone equipment, including "any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message," 47 U.S.C. § 227(b)(1)(B), and directed the FCC to promulgate regulations implementing these prohibitions. Id. § 227(b)(2). Congress found, however, that the FCC "should have the flexibility to design different rules for those types of automated or prerecorded calls that it finds are not considered a nuisance or invasion of privacy, or for noncommercial calls, consistent with the free speech protections embodied in the First Amendment of the Constitution." See Pub. L. No. 102-243, § 2 (Congressional Statement of Findings 13). Congress thus expressly authorized the FCC to exempt, "by rule or order," inter alia, "calls that are not made for a commercial purpose." 47 U.S.C. § 227(b)(2)(B)(i). Congress's intent to exclude public opinion polling calls and other calls made for non-commercial purposes from the FCC's telemarketing rules is also reflected in the statute's legislative history. E.g., H. Rep. No. 317, 102d Cong., 1st Sess. 13 (1991) ("House Committee Report") (see Appendix at 31-46 for copy of pertinent pages) ("the [House Energy and Commerce] Committee does not intend the term 'telephone solicitation' to include public opinion polling, consumer or market surveys, or other surveys conducted by telephone").
The TCPA was enacted in the face of a patchwork of state laws and regulations seeking to restrict telemarketing calls. Congress concluded that the nature of the problem was national in scope, and, therefore, that more federal law, not state law, was needed to address the issue. For example, the House Committee on Energy and Commerce stated in its report accompanying the legislation that most of the evidence "documents the existence of a national problem and argues persuasively in favor of federal intervention." See Appendix at 36. After noting the fact that nearly 500 privacy bills related to marketing were pending in state legislatures, the committee stated: "Under the circumstances, a substantive argument can be made that federal legislation is needed to both relieve states of a portion of their regulatory burden and protect legitimate telemarketers from having to meet multiple legal standards." Id. Accord 137 Cong. Rec. H 10339, H 10342 (Nov. 18, 1991) (statement of Mr. Rinaldo, ranking member of the House Subcommittee on Telecommunications and co-sponsor of bill) ("To ensure a uniform approach to this nationwide problem H.R. 1304 would preempt inconsistent State law. From the industry's perspective, preemption has the important benefit of ensuring that telemarketers are not subject to two layers of regulation."); 137 Cong. Rec. S 18781, S 18784 (Nov. 27, 1991) (statement of Sen. Hollings, chairman of Senate Commerce Committee and co-sponsor of bill) ("Pursuant to the general preemptive effect of the Communications Act of 1934, State regulation of interstate communications, including interstate communications initiated for telemarketing purposes, is preempted.").3
The TCPA includes a "savings clause" at 47 U.S.C. § 227 (e)(1), which provides:
(e) Effect on State Law
(1) State law not preempted
Except for standards prescribed under section (d) of this section and Subject to paragraph (2) of the subsection4, nothing in this section or in the Regulations prescribed under this section shall preempt any State law
That imposes more restrictive intrastate requirements or regulations on, or
(A) the use of telephone facsimile machines or other electronic
devices to send unsolicited advertisements;
(B) the use of automatic telephone dialing systems;
(C) the use of artificial or prerecorded voice messages; or
(D) the making of telephone solicitations.
This savings clause is what the District Court relied upon to find that NDCC § 51-28-02, when applied to interstate calls, is not preempted by federal law. In doing so, the District Court erred in construing the savings clause of the TCPA in isolation, rather than against the backdrop of the preemptive federal regulation of interstate calls, as provided in the Communications Act.
As discussed above, the Communications Act has a basic division of authority - state authority over intrastate calls and federal authority over interstate calls. This division of authority was recognized by this Court in Consolidated Telephone Cooperative v. Western Wireless Corp., 2001 ND 209, 8-9, 637 N.W.2d 699, 702-03 (N.D. 2001). Under this regulatory scheme, the FCC has exclusive jurisdiction over interstate telecommunications. See, e.g., Capital Cities Cable v. Crisp, 467 U.S. 691, 700 (1983) (finding that FCC regulations preempted local standards); see also City of New York v. FCC, 486 U.S. 57, 63-64 (1987) (same); NARUC v. FCC, 746 F.2d 1492, 1498 (D.C. Cir. 1984) (interstate communications are "totally entrusted to the FCC"). Yet, the District Court ignored the Communications Act in its analysis and accepted the State's erroneous analysis of the TCPA savings clause. The State argued below that the savings clause allows states (1) to impose more restrictive intrastate requirements or regulations on four specific activities covered by 47 U.S.C. § 227 (e)(1)(A)-(D) and (2) to prohibit those four specific activities, whether intrastate or interstate. In other words, the state argues that the word "intrastate" in 47 U.S.C. § 227 (3)(e) modifies "any State law that imposes more restrictive . . . requirements or regulations" but does not modify "any State law . . . which prohibits". This is an incorrect interpretation of the savings clause of the TCPA for two reasons.
First, this interpretation makes no sense on its face, as it would lead to the absurd conclusion that Congress intended to allow states to ban outright certain interstate activities but not to allow states merely to restrict or regulate such interstate activities. See Sunbehm Gas, Inc. v. Conrad, 310 N.W.2d 766, 771 (N.D. 1981) (statutory or constitutional provision must be construed to avoid ludicrous and absurd results); Skoog v. City of Grand Forks, 301 N.W.2d 404, 407 (N.D. 1981) (in enacting a statute it is presumed that a just and reasonable result is intended and the statute must be construed to avoid a ludicrous or absurd result).
Second, the state's argument ignores completely the historical role of the TCPA, as envisioned by Congress. The Communications Act, 47 U.S.C. § 152, took regulation over intrastate calls away from the FCC. The TCPA then returned to the FCC the authority to impose federal standards upon intrastate matters, but only in connection with telemarketing. The TCPA's "savings clause" was intended simply to carve back out (to "save") from the FCC's new intrastate telemarketing jurisdiction the states' authority to regulate four specifically-enumerated intrastate telemarketing activities. Nothing in the TCPA repealed the FCC's jurisdiction over all interstate calls. The FCC continues to be the sole body that can regulate interstate political polling calls, pursuant to the Communications Act.
C. The FCC's TCPA Regulations Occupy the Field of Interstate Political Polling Calls.
It is well established that, in the absence of a specific statutory provision preempting state law, courts nonetheless will infer preemption where state law seeks to assert its authority "in a field that Congress intended the Federal Government to occupy exclusively. Such an intent may be inferred from a 'scheme of federal regulation . . . so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it.'" English, 496 U.S. at 79-80 (citations omitted). Here, the text of the statutory scheme, its legislative history and the congressional findings in the preamble to the TCPA leave no doubt that Congress intended the federal government to occupy fully the field of regulating interstate noncommercial polling and advocacy calls.
The text of the Communications Act, as amended by the TCPA, reveals that Congress provided a comprehensive framework of exclusive federal control over interstate telemarketing practices. "The effect of the [Communications Act] is to bring all interstate communications under [its] coverage to the exclusion of local statutes or decisions." Vaigneur v. Western Union Telegraph Co., 34 F. Supp. 92, 93 (E.D. Tenn. 1940).5
In drafting the TCPA, Congress aggressively expanded the jurisdiction of the FCC with respect to telemarketing practices to cover even intrastate calls previously fenced off from FCC authority by Section 2(b)(1).6 In doing so, Congress took note of the absence of state jurisdiction over interstate calls.7 In introducing the Senate bill that became the TCPA, Senator Hollings (R.-S.C.) pointed out that "State law does not, and cannot, regulate interstate calls. Only Congress can protect citizens from telephone calls that cross State boundaries."8 (Emphasis added.) Congress also noted the variety of state regulation of telemarketing9 and the need for regulatory uniformity.10 Congress recognized that those concerns required "Federal law ... to control residential telemarketing practices."11 Congress perceived such a great need for uniformity that it drew no general limitations in the jurisdictional coverage of the TCPA, covering both intrastate and interstate telemarketing.12
The preamble to the TCPA makes clear that Congress authorized the FCC to promulgate implementing regulations and to consider certain categories of exemptions from these regulations in order to give the FCC "the flexibility to design different rules for those types of automated or prerecorded calls that it finds are not considered a nuisance or invasion of privacy, or for noncommercial calls, consistent with the ... First Amendment."13 Thus, Congress delegated to the FCC the task of "balanc[ing]" "[i]ndividuals' privacy rights [and] public safety interests" against "commercial freedoms of speech and trade."14 The broad range of activities and restrictions included in the TCPA, the evidence that Congress intended to create a comprehensive solution to the states' inability to regulate interstate telemarketing calls and the mandate to the FCC to balance the relevant factors all demonstrate a congressional intent to impose "Federal ... control" over interstate telemarketing to the exclusion of differing state requirements.15 The Communications Act and the TCPA thus constitute "a 'scheme of federal regulation ... so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it'" in regard to interstate calls. English, 496 U.S. at 79-80.
The District Court held that the TCPA did not intend to "'occupy the field' of ADAD regulation" because "it expressly does not preempt state regulation of intrastate ADAD that differs from federal regulation." Opinion and Order at 5 (February 2, 2005) (quoting Van Bergen, at 1547 (emphasis added)). In framing the "field" under consideration as one including all "ADAD regulation," the District Court erroneously failed to distinguish between the intrastate noncommercial polling calls (a field which the TCPA does not occupy fully), and interstate noncommercial polling calls (a field which the TCPA does fully occupy).
D. Application of NDCC § 51-28-02 to Interstate Political Polling Calls Directly Conflicts with the FCC's TCPA Regulations.
NDCC § 51-28-02 directly conflicts with the TCPA because its enforcement as to interstate political polling calls "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress" in enacting the TCPA. Hines v. Davidowitz, 312 U.S. at 67. It is well settled that, where state and federal law seek to achieve similar objectives, but state law strikes a different "calibration" in the achievement of those objectives, the state law is preempted. See, e.g., Crosby v. National Foreign Trade Council, 530 U.S. 363, 380 (2000) (Supreme Court struck down Massachusetts statute which struck a different balance in regard to international sanctions than that established by federal law; "Sanctions are drawn not only to bar what they prohibit but to allow what they permit, and the inconsistency of sanctions here undermines the congressional calibration of force.") (emphasis added); Geier v. American Honda Motor Co., 529 U.S. 861, 881 (2000) (state tort claims based on the failure to install air bags preempted because such claims would pose an obstacle "to the variety and mix of devices that . . . federal regulation sought").
An independent supplemental state law enforcement system as to interstate political polling calls inevitably would lead to conflicting requirements for such calls. To permit such a confusing and inevitably inconsistent mix of enforcement regimes "would result in the application of fifty bodies of law," Boomer v. AT&T Corp., 309 F.3d 404, 418 (7th Cir. 2002), precisely what Congress intended to avoid in enacting the TCPA. The patchwork regulation of interstate calls by state law enforcement systems would upset the careful "balance" that Congress expressly authorized the FCC, and only the FCC, to strike between consumers' privacy rights and the needs of legitimate polling and other non-commercial calling.
The FCC has issued rules implementing the TCPA on two occasions. First the FCC issued comprehensive rules implementing the TCPA in 1992. Second the FCC amended its rules in 2003 to implement a consumer "do-not-call" registry and modify other requirements.
The FCC's 1992 telemarketing rules generally prohibit telephone calls that use artificial or prerecorded messages without the residential subscriber's consent. Importantly, however, the rules provide in pertinent part: "No person or entity may [i]nitiate any telephone call to any residential line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party, unless the call [i]s not made for a commercial purpose." 47 C.F.R. § 64.1200(a)(2)(ii) (emphasis added). Thus, the 1992 FCC rules permit unsolicited telephone calls using pre-recorded messages made for the purpose of conducting public opinion polling. Indeed, the FCC explicitly confirmed this conclusion. See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CC Dkt. No. 92-90, Report and Order, 7 FCC Rcd 8752 40 (1992) ("FCC's 1992 Order") (see Appendix at 47-50 for a copy of pertinent pages) ("[T]he exemption for non-commercial calls from the prohibition on prerecorded messages to residences includes calls conducting research, market surveys, political polling or similar activities which do not involve solicitation as defined by our rules.") (Emphasis added.)
North Dakota's attempt to regulate interstate calls using prerecorded messages, NDCC § 51-28-02, differs markedly from the federal regulations permitting the use of prerecorded messages for noncommercial calls, insofar as § 51-28-02 contains no exemption for surveys or political polling calls.16 Thus, § 51-28-02 seeks to prohibit interstate calling activities that were intended to be lawful under the TCPA and the FCC's telemarketing rules.17
On July 25, 2003, the FCC issued a Final Rule that modified its regulations under the TCPA, primarily in order to establish a national "do-not-call" registry. Those regulations create a single national database of numbers for residential telephone subscribers who object to receiving solicitations. The FCC left unchanged its rule regarding use of pre-recorded messages and expressly reiterated the exemption for non-commercial calls. Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Dkt. No. 02-278, Report and Order, 18 FCC Rcd 14014 136 (2003) ("TCPA Order") (see Appendix at 213-220 for a copy of pertinent pages).
In the 2003 TCPA Order, the FCC also addressed the preemptive effect of its telemarketing rules under the TCPA. (See TCPA Order 78-85. Appendix at 216-20.) The FCC noted that some states may have adopted do-not-call rules that are less restrictive than the federal rules. The FCC concluded that its rules would preempt such states rules, with regard to both interstate and intrastate calls. TCPA Order 81. Appendix at 217-18. With regard to states that have adopted more restrictive do-not-call rules than the federal rules, the FCC concluded that such rules, with respect to interstate calls, would "almost certainly conflict" with the FCC rules and be preempted. Id. 82. Appendix at 218. In doing so the FCC ruled as follows:
We recognize that states traditionally have had jurisdiction over only intrastate calls, while the Commission has had jurisdiction over interstate calls. Here, Congress enacted section 227 and amended section 2(b) to give the Commission jurisdiction over both interstate and intrastate telemarketing calls. Congress did so based upon the concern that states lack jurisdiction over interstate calls. Although section 227(e) gives states authority to impose more restrictive intrastate regulations, we believe that it was the clear intent of Congress generally to promote a uniform regulatory scheme under which telemarketers would not be subject to multiple, conflicting regulations. We conclude that inconsistent interstate rules frustrate the federal objective of creating uniform national rules, to avoid burdensome compliance costs for telemarketers and potential consumer confusion. . . .
We therefore believe that any state regulation of interstate telemarketing calls that differs from our rules almost certainly would conflict with and frustrate the federal scheme and almost certainly would be preempted. . . . We will consider any alleged conflicts between state and federal requirements and the need for preemption on a case-by-case basis. Accordingly, any party that believes a state law is inconsistent with section 227 or our rules may seek a declaratory ruling from the Commission. . .
Id. 83, 84. Appendix at 218-19. (Emphasis added.)
Consistent with this FCC ruling, FreeEats filed its Petition for Expedited Declaratory Ruling. The State ignored this petition, and instead filed the Complaint four days later seeking compensatory damages for violation of NDCC § 51-28-02. The State has taken the position that it is not bound by the determination of the FCC, and the district court, in its ruling, did not even address the 2003 FCC ruling.
The District Court held that NDCC § 51-28-02 does not conflict with the TCPA because a political polling firm like FreeEats can obey both sets of requirements. See Opinion and Order at 6 (February 2, 2005). The District Court ignored, however, that FreeEats can conform to both sets of requirements only by forsaking the federally recognized right to use prerecorded messages when making interstate polling calls to residents of North Dakota.
E. The District Court's Reliance on Van Bergen is Misplaced.
It is clear that the District Court relied almost exclusively on Van Bergen v. State of Minnesota, 59 F.3d 1541 (8th Cir. 1995), an Eighth Circuit case that found an almost identical Minnesota statute not preempted by federal law. However, that reliance upon the holding of Van Bergen was misplaced.
To the extent that Van Bergen addressed only intrastate calls, its holding is simply inapposite, as the instant case concerns only interstate calls. However, to the extent that the Court's ruling was broad enough to encompass interstate calls, then Van Bergen, even at the time it was decided, incorrectly analyzed the law. 18 If Van Bergen considered interstate calls, then the Court failed to analyze section 227(e)(1) against the essential backdrop of section 2 of the Communications Act, as evidenced by the Court's mistakenly referring to Section 227(e)(1) as a "preemption provision," whereas section 227(e)(1) serves merely as a savings clause.19
Van Bergen also cannot be relied upon as good law (if it is assumed that it applies to interstate calls) because it was decided before the United States Supreme Court's 2000 decisions in Geier v. American Honda Motor Co., 529 U.S. 861 (2000), and United States v. Locke, 529 U.S. 89 (2000). Those cases make it clear that statutory savings clauses do not insulate state enactments from preemption analysis. Geier, 529 U.S. at 869-74; Locke, 529 U.S. at 106-08. As in Locke, there is a "settled division" between federal and state authority over the subject matter at issue (telecommunications), and it would be error to construe the narrow savings clause in the TCPA as altering this long-established division of authority. Id. at 106.
Even more significantly, Van Bergen was decided before the 2003 FCC Ruling, discussed above, in which the FCC stated its position that any state law that applies more restrictive requirements on interstate telemarketing calls than those applied by the FCC "would almost certainly be preempted." This Court, in Consolidated, rejected the notion that "this Court has the power to declare invalid, or to simply ignore, a questionable FCC regulation or interpretive ruling." Consolidated, 2001 ND 209, 19, 637 N.W.2d at 707:
The federal courts of appeal have exclusive jurisdiction to review the FCC's declaratory rulings, policies, practices and regulations. Unless the FCC's rulings and regulations have been appropriately challenged in the proper federal forum, we are not at liberty to review the FCC's statutory interpretation even if we doubted its soundness, and we must apply the rulings and regulations as written.
Id. (Citations omitted.)
To the extent that it relied upon Van Bergen, the District Court erred in failing to recognize that Van Bergen pre-dated the 2003 FCC Ruling, which confirmed the supremacy of federal law in regard to interstate telemarketing practices.
For the reasons outlined above, the District Court erred in granting summary judgment to the State. State regulation of interstate ADAD political polling calls is clearly preempted by Federal Law. The Court should reverse and remand ordering the District Court to enter summary judgment in favor of FreeEats.
Dated this ____ day of September, 2005.
|Patrick J. Ward, ID#03626|
|Lawrence E. King, ID#04997|
|ZUGER KIRMIS & SMITH|
|PO Box 1695|
|Bismarck, ND 58502-1695|
|David H. Bamberger|
|James P. Rathvon||DLA PIPER RUDNICK GRAY|
|CARY US LLP|
|1200 Nineteenth Street, NW|
|Washington, DC 20036-2430|
|Emilio W. Cividanes|
|575 Seventh Street, N.W.|
|Washington, D.C. 20004-1601|
|ATTORNEYS FOR APPELLANT|
1 FreeEats maintains an internal do-not-call registry listing the residential telephone numbers of persons who have asked not to be called again, and scrubs all telephone numbers dialed for political polling calls against that list. See Appendix at 2.
2 See Appendix at 7-30 for a complete copy of the filing. The FCC has twice initiated public notice and comment proceedings regarding FreeEats's petition. See 69 Fed. Reg. 61380 (Oct. 18, 2004) (summary of notice); 70 Fed. Reg. 37318 (June 29, 2005). FreeEats also joined more than thirty other companies, non-profits, and trade associations in petitioning the FCC to declare formally its exclusive regulatory jurisdiction over interstate telemarketing. See 70 Fed. Reg. 37317 (June 29, 2005) (summary of public notice and invitation to comment on the joint petition). Comments on these proceedings are due July 29, 2005 and reply comments are due August 18, 2005.
3 The Federal Communications Act authorizes the attorney general of a state to "bring a civil action on behalf of its residents" for violations of the TCPA or the FCC's telemarketing regulations. 47 U.S.C. § 227(f)(1). However, any such claim must be brought in federal court because the federal courts "shall have exclusive jurisdiction over all civil actions brought" by an attorney general of a state for violations of the TCPA or the FCC's telemarketing regulations. Id. § 227(f)(2). Reflecting the distinction between telemarketing and fraud, and implicitly acknowledging that a fraud committed on an interstate call should still be punishable as a fraud, the TCPA also preserves the right of state attorneys general to proceed in state court to punish fraudulent activity under its general civil and criminal laws. See id. § 227(f)(6).
4 The exceptions contained in the first paragraph of 47 U.S.C. § 227(e)(1) do not apply here. Section 227(d) prescribes minimal technical and procedural standards for facsimile machines and prerecorded voice systems. Paragraph (2) of 47 U.S.C. § 227(e) prohibits "Do Not Call" states from failing to include State residents from the national "do not call" database into their own database.
5 See also AT&T and the Associated Bell System Cos., 56 FCC 2d 14, 20 (1975), aff'd California v. FCC, 567 F.2d 84 (D.C. Cir. 1977), cert. denied, 434 U.S. 1010 (1978) ("The States do not have jurisdiction over interstate communications.").
6 TCPA § 3(b). See also 47 U.S.C. § 152(b) (excluding the provisions of the TCPA from the general limitation of the FCC's authority to regulate intrastate telecommunications).
7 See S. Rep. No. 102-178, at 5, reprinted in 1991 U.S.C.C.A.N. 1968, 1973 ("Federal action is necessary because States do not have jurisdiction to protect their citizens against those who ... place interstate telephone calls.") ("S. Report"); TCPA § 2(7) ("over half the States now have statutes restricting various uses of the telephone for marketing, but telemarketers can evade their prohibitions through interstate operations.").
8 137 Cong. Rec. S 16205 (daily ed. Nov. 7, 1991) (statement of Sen. Hollings).
9 TCPA § 2(7).
10 See H.R. Rep. No. 101-633, at 3 (July 27, 1990) (House bill "is an attempt to resolve the patchwork of intrastate and interstate regulation. ... by establishing a single set of rules to guide telemarketers."); 137 Cong. Rec. S 18785 (daily ed. Nov. 27, 1991) (statement of Sen. Pressler) ("The Federal Government needs to act now on uniform legislation to protect consumers.").
11 TCPA § 2(7).
12 See, e.g., 47 U.S.C. § 227 (b)(1)(A) (prohibiting "any call" using an automatic dialer to certain categories of recipients).
13 TCPA § 2(13).
14 Id. §2(9).
15 Id. §2(7).
16 Chapter 51-28 does contain an exclusion from the definition of "telephone solicitation" for certain communications by or on behalf of tax-exempt charitable organizations. These include communications by or on behalf of (1) a person engaging solely in polling, unless the communication is made through an automatic dialing-announcing device "in a manner prohibited by section 51-28-02"; and (2) a political party or group. NDCC § 51-28-01(7)(c)(2), (d) & (f). These exclusions do not apply to section 51-28-02 because section 51-28-02, which governs the use of prerecorded or synthesized voice messages, does not use, contain, or rely upon the term "telephone solicitation."
17 It is undisputed that the legislature deliberately chose to include political calls within the scope of the statute's prohibition on prerecorded message calls. (See Appendix at 51-133 for the complete legislative history of Chapter 51-28.) For example, at a hearing before the House Judiciary Committee, various witnesses described the impact that the prohibition would have on the political process. The Attorney General described the legislation in the following manner: "I think that prerecorded calls are pesky, and I know that some political parties think they are useful and cheap. Parties won't be able to do that." Hearings before the House Judiciary Committee (March 10, 2003). Appendix at 65. Jason Stverak, on behalf of the state Republican party, explained the challenges of recruiting sufficient persons to make "live," nonrecorded calls during the campaign season: "There is [under the proposed legislation] the opportunity to use live calls, but in certain situations like the weekend before the election, where you can't find or purchase 300 people to make those live calls in a two hour time span." Appendix at 74.
Indeed, the issue of using prerecorded calls to conduct political polling was explicitly addressed:
Rep. Wrangham: I have a question for the AG's office, would polling not be allowed.
Mr. Stenehjem: No, polling would be allowed under the exception in the bill, you can call to solicit opinions, ask people to get out to vote and not asking for money, that is specifically permitted. What you are not allowed to use is prerecorded messages. Those are not permitted.
18 It is not entirely clear from the Eighth Circuit's opinion whether the calls at issue in that case even included interstate calls. Indeed, the Court's discussion seems to suggest that the calling at issue was intrastate. For example, in its discussion of express preemption, the Court reads the savings clause to preserve from preemption "more restrictive intrastate requirements." 59 F.3d at 1547. The Court also comments that Congress did not preempt "state regulation of intrastate ADAD calls" and references congressional findings that "telemarketers can evade [state] prohibitions through interstate operation." Id. at 1548.
The District Court accepted the State's argument that Van Bergen must have considered interstate calls because it would have been unnecessary for the Eighth Circuit to address preemption if the calls at issue were intrastate. See Opinion and Order at 6 (February 2, 2005). Yet, as discussed above, in enacting the TCPA, Congress expanded federal authority over telemarketing by amending section 2(b) of the Communications Act to give the FCC jurisdiction over intrastate calls, as well as interstate calls. Thus, it would not have been "a waste of the [Eighth Circuit]'s time" to address a claim that Minnesota's restrictions on intrastate calls were preempted by the FCC's rules. The District Court's statement underscores its mistaken understanding of the statutory and regulatory background against which the TCPA was enacted.
19 The Eight Circuit in subsequent preemption cases has refused to apply a savings clause of one statute to limit the preemption clause of another. See, e.g., Bank One v. Guttau, 190 F.3d 844 (8th Cir. 1999).