National Coalition of Prayer, Inc. v. Carter

• Decision Date: 28 July 2006
• Docket Number: No. 05-3995.,05-3995.
• Citation: 455 F.3d 783
• Parties: NATIONAL COALITION OF PRAYER, INC., the Kentucky-Indiana Chapter of Paralyzed Veterans of America, Indiana Troopers Association, Inc., and Indiana Association of Chiefs of Police Foundation, Plaintiffs-Appellants, v. Steve CARTER, in his official capacity as Attorney General of the State of Indiana, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 783

455 F.3d 783

NATIONAL COALITION OF PRAYER, INC., the Kentucky-Indiana Chapter of Paralyzed Veterans of America, Indiana Troopers Association, Inc., and Indiana Association of Chiefs of Police Foundation, Plaintiffs-Appellants, v. Steve CARTER, in his official capacity as Attorney General of the State of Indiana, Defendant-Appellee.

No. 05-3995.

United States Court of Appeals, Seventh Circuit.

Argued May 3, 2006.

Decided July 28, 2006.

Errol Copilevitz (argued), Kansas City, MO, for Plaintiffs-Appellants.

Thomas M. Fisher (argued), Office of the Attorney General, Indianapolis, IN, for Defendant-Appellee.

Before FLAUM, Chief Judge, and EVANS and WILLIAMS, Circuit Judges.

FLAUM, Chief Judge.

Plaintiffs are charities that Indiana's Telephone Privacy Act ("the Act") precludes from fundraising through professional telemarketers. They claim that the Act violates their First Amendment right to freedom of speech because it is contentbased, underbroad, and a prior restraint on speech. The district court granted summary judgment to the State, and Plaintiffs now appeal. For the following reasons, we affirm the decision of the district court.

I. Background

In May 2001, Indiana's governor signed into law the Indiana Telephone Privacy Act, codified at Indiana Code § 24-4.7. The Act creates a statewide do-not-call list and allows Indiana residential telephone customers to add themselves to this list. Once citizens affirmatively place their telephone numbers on the list, "telephone solicitors" cannot legally call the numbers for a "telephone sales call." The Act defines a "telephone solicitor" as "an individual, a firm, an organization, a partnership, an association, or a corporation . . . doing business in Indiana." Ind.Code § 24-4.7-2-10. A "telephone sales call" is any call made to "solicit[ ]" a "sale of consumer goods or services" or a "charitable contribution," or to "obtain[ ] information that will or may be used for the direct solicitation of a sale of consumer goods or services or an extension of credit for such purposes." Ind.Code § 24-4.7-2-9.

The Act exempts certain calls from its purview. Most relevant to this case, the Act permits "telephone call[s] made on behalf of a charitable organization that is exempt from federal income taxation under Section 501 of the Internal Revenue Code, but only if . . . [t]he telephone call is made by a volunteer or an employee of the charitable organization[, and] the telephone solicitor who makes the telephone call immediately discloses . . . [his or her] true first and last name [and t]he name, address, and telephone number of the charitable organization." Ind.Code § 24-4.7-1-1(3). The Act also exempts calls soliciting newspaper sales, if the calls are made by an employee of or volunteer for the newspaper company. Ind.Code § 24-4.7-1-1(6). Finally, the Act permits a licensed real estate agent or insurance agent to personally call registered numbers under specified circumstances. Ind. Code § 24-4.7-1-1(4)-(5). The Indiana Attorney General has also recognized an "implicit exclusion" for calls soliciting political contributions.

The State asserts that the Act was prompted by citizen complaints about telemarketers' increasing intrusions on residential privacy. According to one witness in a state court trial concerning the Act, during a single four-hour shift over the course of a month, her telemarketing company alone could make up to 16,000 telephone calls. Many Indiana residents found the calls to be an invasion of the tranquility and privacy of their homes. The State has produced several affidavits from such residents that support this observation. The legislature believed its initial response to curb unwanted calls—requiring citizens to tell each individual telemarketing firm to take their names off of the firm's call list—had proven ineffective. Accordingly, it passed the Act to give homeowners a more effective method of preventing unwanted and intrusive calls. The Act became effective on January 1, 2002, approximately seven months after the governor signed it into law. Later that month, Indiana commissioned a professional survey to study the Act's efficacy. That survey reflects that calls to numbers registered on the do-not-call list dropped from an average of 12.1 per week to an average of 1.9 per week. Nearly 98% of the residents who had registered their telephone numbers reported receiving "less" or "much less" telemarketing interruption since the Act became law. In June 2003, the surveyers concluded that the Act had been effective in reducing the volume of unwanted calls to Indiana homes. Indeed, by May 2003, about half of Indiana's residential lines had been registered on the state's do-not-call list. By late 2005, another 500,000 numbers had been added.

The Plaintiffs in this case are all tax-exempt charities. They wish to use telemarketers to solicit donations for their charitable causes. They claim that the Act violates their First Amendment rights, because it prohibits them from using telemarketers to call the numbers registered on the do-not-call list. On cross motions for summary judgment, the district court found in favor of the State, and Plaintiffs now appeal.

II. Discussion

A. Standing

The first issue we must address is which portions of the Act Plaintiffs have standing to challenge. Plaintiffs claim that they may challenge the entire Act, even the provisions applicable only to commercial speakers, while the State claims that Plaintiffs may challenge only provisions that could be enforced against them. Plaintiffs' arguments fall into two main categories: that the provisions aimed at commercial speakers show the "real purpose" of the Act, and that commercial speakers may not be treated more favorably than charitable speakers.

The "real purpose" line of argument is easier to dispose of. Plaintiffs' argument is essentially that the exemptions in the Act for certain commercial speakers and political fundraising directly injure the Plaintiffs because they show the "true motive behind the Act, i.e. to suppress `reviled' speakers vis a vis more favored speakers." To support this argument, the Plaintiffs cite the Supreme Court's decision in City of Cincinnati v. Discovery Network, 507 U.S. 410, 113 S.Ct. 1505, 123 L.Ed.2d 99 (1993). In that case, Cincinnati had passed a law regulating only commercial newsracks, which represented 62 of the over 1,500 newsracks on the city's streets. Discovery Network, 507 U.S. at 418, 113 S.Ct. 1505. The Court held that the exception for non-commercial handbills in the Cincinnati ordinance bore no relationship to the city's asserted interests in passing the regulation, and was so broad as to render the legislation ineffective. Id. at 424-28, 113 S.Ct. 1505. Therefore, the Court held, the ordinance was an impermissible means of addressing a legitimate public interest. Id. The Plaintiffs claim that this holding reflects that exceptions within an ordinance can show an impermissible "true reason" behind legislation, and any disfavored plaintiff can request that the Act be invalidated on that basis.

Discovery Network does not hold that exceptions to rules can reveal the "real purpose" of an act or that this "real purpose" can directly injure anyone. The case instead stands for the proposition that commercial speech cannot lightly be singled out as "less valuable" than other speech, and that restrictions on commercial speech, like restrictions on "core" First Amendment speech, must directly further a legitimate state interest. In this case, the Act's restrictions do bear a direct relationship to the state's interest in preventing unwanted phone calls. The State's research, the validity of which Plaintiffs do not contest, shows that professional telemarketing firms' calls apparently constituted the vast majority of unwanted phone calls that consumers were receiving. The Act has caused registered households to receive on average about 84% fewer unwanted calls, which amounts to approximately ten fewer unwanted calls per week. This is in stark contrast to the ordinance in Discovery Network, which regulated less than five percent of the newsracks that Cincinnati claimed were cluttering up its streets. Id. at 418, 113 S.Ct. 1505. Discovery Network does not create the new form of standing that the Plaintiffs advocate, and is factually distinguishable in any event.

Plaintiffs also claim that they must have standing to assert commercial speakers' interests, because such speakers can have standing to assert non-commercial speakers' rights in certain First Amendment challenges. See, e.g., Broadrick v. Oklahoma, 413 U.S. 601, 611, 93 S.Ct. 2908, 37 L.Ed.2d 830 (1973). The Plaintiffs claim that this case is the converse—a non-commercial speaker challenging on behalf of a commercial speaker. The Plaintiffs therefore ask us to extend the this First Amendment standing analysis to the situation before us.

Plaintiffs' argument does not reflect the logical converse of the holdings in the cases they cite, but more importantly, the argument ignores the policy reasons behind the Court's First Amendment standing doctrine. Commercial speakers have ample incentive to challenge the Act as it applies to them, unlike some speakers who might instead be "muted and [leave their] perceived grievances ... to fester." Broadrick, 413 U.S. at 612, 93 S.Ct. 2908. We therefore believe that they are the appropriate people to challenge such restrictions.¹

Plaintiffs also argue that by refusing to grant them standing in this case, we are necessarily treating commercial speakers more favorably than non-commercial speakers, which they believe is directly contrary to Supreme Court precedent. We are not persuaded by this argument. The reason that commercial speakers are allowed to assert standing for non-commercial speakers is because we presume that speech accorded greater protection will create a stronger case against regulation. See, e.g., Broadrick, ...