Victory Processing, LLC v. Fox

• Decision Date: 10 September 2019
• Docket Number: No. 18-35163,18-35163
• Citation: 937 F.3d 1218
• Parties: VICTORY PROCESSING, LLC ; Dave Dishaw, Plaintiffs-Appellants, v. Tim FOX, in his official capacity as Attorney General for the State of Montana, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

937 F.3d 1218

VICTORY PROCESSING, LLC ; Dave Dishaw, Plaintiffs-Appellants,

v.Tim FOX, in his official capacity as Attorney General for the State of Montana, Defendant-Appellee.

No. 18-35163

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 7, 2019 Seattle, Washington

Filed September 10, 2019

Blake E. Johnson (argued) and Katherine J. Spohn, Bruning Law Group, Lincoln, Nebraska; James E. Brown, The James Brown Law Office PLLC, Helena, Montana; for Plaintiffs-Appellants.

Patrick M. Risken (argued), Assistant Attorney General; Timothy C. Fox, Attorney General; Office of the Attorney General, Helena, Montana; for Defendant-Appellee.

Before: Ronald M. Gould and Richard A. Paez, Circuit Judges, and Janis Graham Jack,^* District Judge.

PAEZ, Circuit Judge:

We must decide whether Montana Code section 45-8-216(1)(e) —which restricts automated telephone calls promoting a political campaign or any use related to a political campaign—violates the First Amendment. We hold that it does.

Although automated telephone calls, or robocalls, fall within the First Amendment's protection, they are subject to regulation—and for good reason. In 2018, studies estimated that Americans received between 25 and 40 billion robocalls—a 45 to 60% increase from the prior year.¹ Most of these robocalls cause only harmless annoyances. Some are even useful, such as automated appointment or payment reminders. At their worst, though, robocalls provide a cheap vehicle for scammers masquerading as the Internal Revenue Service, banks, or utility providers; promising nonexistent preapproved loans or loan forgiveness; and more—aiming to finagle money and sensitive information from unsuspecting consumers. See Tara Siegel Bernard, Yes, It's Bad. Robocalls, and Their Scams, Are Surging. , N.Y. Times, May 6, 2018, http://www.nytimes.com/2018/05/06/your-money/robocalls-rise-illegal.html.

That robocalls are subject to regulation does not remove them from the First Amendment's protection, however. We have heard numerous First Amendment challenges to laws regulating robocalls. See Gomez v. Campbell-Ewald Co. , 768 F.3d 871, 876–77 (9th Cir. 2014) ; Bland v. Fessler , 88 F.3d 729, 732–36 (9th Cir. 1996) ; Moser v. F.C.C. , 46 F.3d 970, 973–75 (9th Cir. 1995). We have upheld statutes that regulate the method rather than the content of robocalls as reasonable time, place, and manner restrictions. See, e.g. , Moser , 46 F.3d at 973–75. We have further upheld the application of state consumer protection laws to robocalls as acceptable regulation of commercial speech. See Bland , 88 F.3d at 738–39. We have not had the occasion to evaluate the constitutionality of a content-based regulation of robocalls until now.

Regulating robocalls based on the content of their messaging presents a more severe threat to First Amendment freedoms than regulating their time, place, and manner. In particular, prohibiting political robocalls strikes at the heart of the First Amendment, CarePartners, LLC v. Lashway , 545 F.3d 867, 877 (9th Cir. 2008), as well as disproportionately disadvantages political candidates with fewer resources. As we discuss below, Montana's content-based restrictions on robocalls cannot survive strict scrutiny. We thus reverse the district court's grant of summary judgment to the defendant, Tim Fox in his official capacity as Attorney General of the State of Montana.

I.

In the early 1990s, the federal and state governments sought to address the widespread concern over computerized telephone calls that were tying up phone lines, even after the recipient hung up the phone, and filling up answering machines. The federal government passed the Telephone Consumer Protection Act in 1991 ("TCPA"), 42 U.S.C. § 227, while states followed with their own enactments for addressing the problems caused by robocalls. In 1991, the Montana legislature enacted Montana Code section 45-8-216 (hereinafter "Robocall Statute"), which provides in subsection (1) that:

(1) A person may not use an automated telephone system, device, or facsimile machine for the selection and dialing of telephone numbers and playing of recorded messages if a message is completed to the dialed number for the purpose of:

(a) offering goods or services for sale;

(b) conveying information on goods or services in soliciting sales or purchases;

(c) soliciting information;

(d) gathering data or statistics; or

(e) promoting a political campaign or any use related to a political campaign.

Although the Robocall Statute prohibits unsolicited automated calls that fall into these categories, the statute further provides in subsection (2) that "[t]his section does not prohibit the use of an automated telephone system or device if the permission of the called party is obtained by a live operator before the recorded message is delivered."² Id. Those who violate the Robocall Statute are subject to up to a $ 2,500 fine. Id.

Victory Processing is a limited liability company formed under the laws of Michigan and headquartered in Michigan. Victory Processing offers its clients political consulting and data gathering services throughout the United States. To communicate political messages and collect public opinion data on a variety of issues, Victory Processing primarily uses automated telephone calls, or "robocalls."

Victory Processing seeks to communicate political messages and conduct public opinion polling for clients through automated telephone calls to Montana voters without using a live voice. After consulting with legal counsel, however, Victory Processing refrained from engaging in these activities in Montana because such activities would violate the Robocall Statute. Victory Processing, however, desires to use robocalls to engage in political speech in Montana in the future.

Alleging that Montana's Robocall Statute has limited its ability to communicate with Montana voters and chilled its speech, Victory Processing filed this suit under 42 U.S.C. § 1983 against Tim Fox in his official capacity as the Attorney General of Montana (hereinafter referred to as "Montana"). In its complaint, Victory Processing alleges that subsection (1)(e) of Montana's Robocall Statute violates the First Amendment, facially and as-applied,³ as an invalid content-based restriction on speech. Victory Processing seeks declaratory and injunctive relief.

On cross-motions for summary judgment, the district court granted summary judgment to Montana. See Victory Processing, LLC v. Fox , 307 F. Supp. 3d 1109, 1121 (D. Mont. 2018). The district court expressed concern that Victory Processing had provided "only a thin basis for standing," noting that Victory Processing had not provided many details about the campaigns it sought to undertake in Montana, citing client confidentiality. Id. at 1113. Nonetheless, the district court concluded that constitutional standing existed and proceeded to the merits of the cross-motions for summary judgment. Id. at 1113–14. Concluding that the Robocall Statute was content-based, the district court applied strict scrutiny. Id. at 1116–17, 1119 ("There can be no doubt that Montana's robocall statute is content-based."). The district court held that Montana had a compelling interest in regulating automated telephone calls to "protect[ ] the well-being, tranquility, and privacy of the home," and that the Robocall Statute was narrowly tailored to serve this interest. Id. at 1114, 1120–21. Accordingly, the district court concluded that Montana Code section 45-8-216(1)(e) survived strict scrutiny. Id. at 1121. Victory Processing timely appealed.⁴

II.

We first address Montana's contention that Victory Processing lacks standing to challenge the state's Robocall Statute. Montana contends that the Robocall Statute affects the speech of Victory Processing's clients, but that Victory Processing has not demonstrated standing to sue on behalf of these third parties. We must decide this jurisdictional question before we can reach the merits.⁵

Article III of the Constitution limits federal jurisdiction to cases and controversies. U.S. Const. art. III, § 2, cl. 1. "One of the essential elements of a legal case or controversy is that the plaintiff have standing to sue." Trump v. Hawaii , ––– U.S. ––––, 138 S. Ct. 2392, 2416, 201 L.Ed.2d 775 (2018). A plaintiff must establish the "irreducible minimum" of standing: an "injury in fact" that is "fairly traceable" to the defendant's actions and "likely ... [to] be redressed by a favorable decision." Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal quotation marks and alterations omitted). Additionally, a plaintiff's claim must be "sufficiently individualized to ensure effective judicial review." See Get Outdoors II, LLC v. City of San Diego , 506 F.3d 886, 891 (9th Cir. 2007) ; see also Warth v. Seldin , 422 U.S. 490, 509, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) (holding that litigants generally cannot "assert[ ] the rights or legal interests of others in order to obtain relief from injury to themselves").

Montana's dispute with Victory Processing's standing is based on the premise that Victory Processing's First Amendment claim rests on the rights of its clients, rather than its own. This premise misreads Victory Processing's allegations and ignores its ability to assert standing on its own behalf. See RK Ventures, Inc. v. City of Seattle , 307 F.3d 1045, 1057 n.7 (9th Cir. 2002) ("That [a plaintiff] is a corporation has no bearing on its standing to assert violations of the first and fourteenth amendments under 42 U.S.C. § 1983." (internal quotation marks and citation omitted)). As an integral part of its operations, Victory Processing engages in political consulting and public opinion polling primarily through the use of automated telephone calls. Some of this information gathering is for Victory Processing's own use while some is for the benefit of paying clients. Because of the restriction on political robocalls,...