Patriotic Veterans, Inc. v. Indiana

• Decision Date: 21 November 2013
• Docket Number: No. 11–3265.,11–3265.
• Parties: PATRIOTIC VETERANS, INC., Plaintiff–Appellee, v. State of INDIANA, et al., Defendants–Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

736 F.3d 1041

PATRIOTIC VETERANS, INC., Plaintiff–Appellee,
v.
State of INDIANA, et al., Defendants–Appellants.

No. 11–3265.

United States Court of Appeals,
Seventh Circuit.

Argued Jan. 20, 2012.
Decided Nov. 21, 2013.

[736 F.3d 1043]

Mark J. Crandley, Barnes & Thornburg LLP, Indianapolis, IN, Allison R. Hayward, Alexandria, VA, for Plaintiff–Appellee.

Thomas M. Fisher, Office of the Attorney General, Indianapolis, IN, for Defendants–Appellants.

Before FLAUM, and ROVNER, Circuit Judges and CASTILLO, District Judge.^*

ROVNER, Circuit Judge.

Legislators in the State of Indiana believe that the bulk of its citizens find automated telephone messages to be an annoyance, and one worthy of government protection. These types of telephone calls are made by an automatic dialing-announcing device that (according to Indiana's definition) selects and dials telephone numbers and disseminates a prerecorded or synthesized voice message to the telephone number called. SeeInd.Code § 24–5–14–1. In common parlance these calls are often referred to as “robocalls.”

This hunch about robocalls is backed by empirical data. From January 1, 2002, until September 30, 2010, the Attorney General of Indiana fielded 27,577 valid complaints under the State's Telephone and Privacy Act and Autodialer Law. ¹ Between

[736 F.3d 1044]

January 1, 2009 and September 30, 2010, more than half of the 8,799 valid Telephone Privacy Act complaints made to the Attorney General of Indiana reported the use of autodialers. Id. Similarly, the Federal Trade Commission fields over 200,000 complaints about automated marketing or “autodialer” calls every month.² In 2012, the Federal Trade Commission offered a $50,000 reward to any person who could come up with a solution to stopping these unwanted calls. Robocall Challenge, 77 Fed.Reg. 64802–01 (Oct. 23, 2012).

Indiana's attempt to protect its citizens from these phone calls resulted in the enactment of the state's Automated Dialing Machine Statute, which bans these autodialed calls unless the receiver has consented to the calls in some manner before the automated message is delivered. Ind.Code § 24–5–14–1 through § 24–5–14–13. There are some very limited exemptions—for example, school districts may send messages to students and parents, and employers may send messages to employees—but there is no exception for political calls. Ind.Code § 24–5–14–5(a). The Attorney General of Indiana may enforce the Autodialer Law by imposing various penalties including, among others, injunctions against future violations, suspension of business certificates, the voiding of contracts, and fines. Ind.Code §§ 24–5–0.5–4(c), 24–5–0.5–4(g).

The heart of Indiana's statute reads as follows:

(b) A caller may not use or connect to a telephone line an automatic dialing-announcing device unless:

(1) the subscriber has knowingly or voluntarily requested, consented to, permitted, or authorized receipt of the message; or

(2) the message is immediately preceded by a live operator who obtains the subscriber's consent before the message is delivered.

Ind.Code § 24–5–14–5.

But for the Indiana statute, the appellant, Patriotic Veterans, Inc., would make calls in Indiana.³ Patriotic Veterans, Inc. is a not-for-profit Illinois corporation whose purpose is to inform voters of the positions taken by the candidates and office holders on issues of interest to veterans. In disseminating this information, Patriotic Veterans uses automatically dialed phone calls that deliver a political message related to a particular candidate or issue. For example, Patriotic Veterans' website states that “in 2010, Patriotic Veterans, in partnership with singing idol Pat Boone sponsored nearly 1.9 million calls to veterans and seniors across the U.S. about cuts in Medicare as a result of the passage of Obamacare.” http:// www. gravideo. com/ patriotic veterans/ what. html (last visited June 1, 2013). The service Patriotic Veterans uses to disseminate its message is capable of delivering as many as 100,000 messages in a three hour period. Patriotic Veterans maintains that it cannot afford to hire operators to make the phone calls

[736 F.3d 1045]

without the use of an automatic dialer and a recorded message, as the cost of doing so is eight times higher than using an automatic dialing service. The group also maintains that live operators cannot make calls fast enough when time is of the essence—such as on the eve of an election.

Consequently, Patriotic Veterans filed a complaint against the State of Indiana and Attorney General Greg Zoeller seeking a declaration that the Indiana law is invalid as it violates the First Amendment, at least as it applies to political messages, and is also preempted by the Federal Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227.

That federal law, the TCPA, represents Congress's attempts to address similar concerns about the deleterious effects of telemarketing and telephone solicitations, particularly automated calls. SeeS.Rep. No. 102–178, reprinted in 1991 U.S.C.C.A.N.1968. The TCPA regulates various telemarketing behaviors and includes, among other things, regulations on the uses of autodialers. It prohibits calls to a residential telephone line using an artificial or prerecorded voice without the recipient's prior express consent, “unless the call is initiated for emergency purposes or is exempted by rule or order by the [Federal Communications] Commission under paragraph 2(B).” 47 U.S.C. § 227(b)(1)(B). Under paragraph 2(B), the FCC is authorized to exempt calls that are not made for a commercial purpose, 47 U.S.C. § 227(b)(2)(B)(i), and the FCC has used its authority to exempt non-commercial calls in the following manner:

(a) No person or entity may ...

(3) Initiate any telephone call to any residential line using an artificial or prerecorded voice to deliver a message without the prior express written consent of the called party, unless the call; ... (ii) Is not made for a commercial purpose.

47 C.F.R. § 64.1200(a)(3)(ii)(2005).

In passing the TCPA, Congress particularly noted that over forty states had enacted legislation limiting the use of autodialers, but that “[m]any states have expressed a desire for Federal legislation to regulate interstate telemarketing calls to supplement their restrictions on intrastate calls.” SeeS.Rep. No. 102–178, at 2–3, reprinted in 1991 U.S.C.C.A.N.1968, 1970. In reaching this conclusion, the Congressional statement assumed that the states did not have jurisdiction over interstate calls—an assumption we will explore further below.

Both parties moved for summary judgment—an appropriate adjudicative procedure where the parties agree that none of the relevant facts are in dispute and the resolution hinges solely on an issue of law. SeeFed.R.Civ.P. 56; Berry v. Chicago Transit Auth., 618 F.3d 688, 691 (7th Cir.2010). In this case, those issues of law include first, whether the Indiana statute is preempted by federal law, and second, whether the statute violates the First Amendment of the United States Constitution.

The district court found that the TCPA preempted Indiana's statute as it applies to the interstate use of autodialers and granted Patriotic Veterans' request for an injunction against the enforcement of the regulation with regard to political messages. Patriotic Veterans, Inc. v. Indiana, 821 F.Supp.2d 1074, 1079 (S.D.Ind.2011). Because it found that the statute was preempted, the district court properly declined to rule on the First Amendment question. Upon a motion from the state, this court stayed the district court's injunction pending appeal. See supra, note 3. We review the district court's summary judgment decision pertaining

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to preemption de novo. Ramos v. City of Chicago, 716 F.3d 1013, 1014 (7th Cir.2013).

In keeping with our mandate to address statutory issues before constitutional ones ( see Jean v. Nelson, 472 U.S. 846, 854, 105 S.Ct. 2992, 86 L.Ed.2d 664 (1985); Ameritech Corp. v. McCann, 403 F.3d 908, 911 (7th Cir.2005)), we look first at the issue of preemption. In determining whether a federal statute preempts state law we begin, as we always must, with the intent of Congress. Wyeth v. Levine, 555 U.S. 555, 565, 129 S.Ct. 1187, 173 L.Ed.2d 51 (2009). We ascertain the intent of Congress, however, through a lens that presumes that the state law has not been preempted. Id. We do this because, given the historic police powers of the states, a court must assume that Congress did not intend to supersede those powers unless the language of the statute expresses a clear and manifest purpose otherwise. Id. at 565, 129 S.Ct. 1187.Altria Group v. Good, 555 U.S. 70, 77, 129 S.Ct. 538, 172 L.Ed.2d 398 (2008); Arizona v. U.S., ––– U.S. ––––, 132 S.Ct. 2492, 2501, 183 L.Ed.2d 351 (2012); Gregory v. Ashcroft, 501 U.S. 452, 460–461, 111 S.Ct. 2395, 115 L.Ed.2d 410 (1991). Thus, when the text of a preemption clause is susceptible of more than one plausible reading, courts ordinarily “accept the reading that disfavors pre-emption.” Altria Group, 555 U.S. at 77, 129 S.Ct. 538. In this case, it is clear that the states historically have held the power to police harassing telephone calls. See, e.g.720 ILCS 5/26.5–2; Ind.Code § 35–45–2–2; Wisconsin Stat. § 947.012(1)(a). Likewise, states and localities historically have policed activities that violate the peaceful enjoyment of the home. See Frisby v. Schultz, 487 U.S. 474, 484–485, 108 S.Ct. 2495, 101 L.Ed.2d 420 (1988); Watchtower Bible and Tract Soc'y of New York, Inc. v. Vill. of Stratton, 536 U.S. 150, 162–163, 122 S.Ct. 2080, 153 L.Ed.2d 205 (2002); FCC v. Pacifica Found., 438 U.S. 726, 748–749, 98 S.Ct. 3026, 57 L.Ed.2d 1073 (1978)

Thus, given our directive to look at the intent of Congress with a presumption of non-preemption, the first place to look for Congress's intent is in the TCPA's preemption clause (also called a savings clause) which states in relevant part:

(f) Effect on State law

(1) State law not preempted

......