State of Maryland v. Universal Elections, Incorporated ( 2013 )

Filed: August 28, 2013
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1791
(1:10-cv-03183-CCB)
STATE OF MARYLAND, Office of the Attorney General,
Plaintiff - Appellee,
UNITED STATES OF AMERICA,
Intervenor/Plaintiff – Appellee,
v.
UNIVERSAL ELECTIONS, INCORPORATED; JULIUS HENSON,
Defendants – Appellants,
and
RHONDA RUSSELL,
Defendant.
O R D E R
Upon the Motion to Publish Opinion filed by the
Intervenor/Plaintiff – Appellee the United States of America,
and the responses in support of publication,
IT IS ORDERED that the Motion to Publish is granted.
The Court amends its opinion filed July 29, 2013, as
follows:
On the cover sheet, section 1 -- the status is changed from
“UNPUBLISHED” to “PUBLISHED.”
On the cover sheet, section 6 -- the status line is changed
to read “Affirmed by published opinion.” The following sentence
is added: “Judge Norton wrote the opinion, in which Judge King
and Judge Agee joined.”
On page 2 -– the reference to the use of unpublished
opinions as precedent is deleted.
On page 3 -– the heading “PER CURIAM” is deleted and is
replaced with “NORTON, District Judge.”
For the Court – By Direction
/s/ Patricia S. Connor
Clerk
2
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1791
STATE OF MARYLAND, Office of the Attorney General,
Plaintiff - Appellee,
UNITED STATES OF AMERICA,
Intervenor/Plaintiff – Appellee,
v.
UNIVERSAL ELECTIONS, INCORPORATED; JULIUS HENSON,
Defendants – Appellants,
and
RHONDA RUSSELL,
Defendant.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Catherine C. Blake, District Judge.
(1:10-cv-03183-CCB)
Argued: May 15, 2013 Decided: July 29, 2013
Before KING and AGEE, Circuit Judges, and David C. NORTON,
United States District Judge for the District of South Carolina,
sitting by designation.
Affirmed by published opinion. Judge Norton wrote the opinion,
in which Judge King and Judge Agee joined.
ARGUED: Edward Smith, Jr., LAW OFFICE OF EDWARD SMITH, JR.,
Baltimore, Maryland, for Appellants. William D. Gruhn, OFFICE
OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland; Mark
R. Freeman, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellees. ON BRIEF: Douglas F. Gansler, Attorney
General, Philip D. Ziperman, Assistant Attorney General, OFFICE
OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland, for
Appellee State of Maryland. Rod J. Rosenstein, United States
Attorney, Stuart F. Delery, Acting Assistant Attorney General,
Mark B. Stern, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for the United States.
2
NORTON, District Judge:
Political consultant Julius Henson and his company,
Universal Elections, Inc., appeal the district court’s grant of
summary judgment to the State of Maryland (“the State”) on its
claim that Henson and Universal Elections violated the Telephone
Consumer Protection Act, 47 U.S.C. § 227 (2010) (“the TCPA” or
“the Act”). For the reasons set forth below, we affirm the
district court’s decision in all respects.
I.
Though the district court ably summarized the facts in its
summary judgment order, we briefly restate them here. Three
months before the 2010 Maryland gubernatorial election, the
political campaign of Republican candidate Robert L. Ehrlich,
Jr. hired Henson and Universal Elections to assist with the
campaign’s efforts. J.A. 487. 1
On Election Day, November 2, 2010, Henson and Universal
Elections employee Rhonda Russell composed and prepared a pre-
recorded telephone call, also known as a “robocall,” as part of
their work for the Ehrlich campaign. Id. That pre-recorded
telephone call (“the election night robocall”) stated, in its
entirety:
1
Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.
3
Hello. I’m calling to let everyone know that Governor
O’Malley and President Obama have been successful.
Our goals have been met. The polls were correct and
we took it back. We’re okay. Relax. Everything is
fine. The only thing left is to watch it on TV
tonight. Congratulations and thank you.
J.A. 487-88. The election night robocall neither identified the
Ehrlich campaign as the sponsor of the message nor included the
campaign’s phone number. J.A. 488.
Henson dictated the contents of the election night robocall
to Russell and directed Russell to omit an authority line that
would have identified the Ehrlich campaign as the source of the
message. J.A. 488. Russell recorded the message and uploaded
it, along with two lists containing the phone numbers for
Maryland Democratic voters, to the website of a Pennsylvania-
based automatic dialing service called Robodial.org, LLC. Id.After sending test messages to Henson and to Ehrlich staffers,
Russell authorized Robodial.org to deliver the election night
robocall to the phone numbers included on the uploaded lists.
Id. Robodial.org sent the election night robocall to more than
112,000 Maryland Democratic voters through an account maintained
by Universal Elections. J.A. 487-88.
Of the roughly 112,000 calls that were placed, 69,497
voters received the entire message. J.A. 488. Another 16,976
recipients received part of the message. Id. The remaining
calls failed or went unanswered. Id.4
On November 10, 2010, the State filed a civil lawsuit
against Henson, Russell, and Universal Elections for violations
of the TCPA. J.A. 10. Specifically, the State alleged that the
defendants had violated the Act by failing to identify the
Ehrlich campaign as the sponsor of the election night robocall.
J.A. 14.
On December 15, 2010, Henson, Russell, and Universal
Elections moved to dismiss the State’s complaint. J.A. 16;
Supp. App. 1-15. In a supplemental motion to dismiss filed on
December 28, 2010, they argued that the TCPA and its
implementing regulations were unconstitutional. Supp. App. 45-
51. After defendants asserted a First Amendment defense in
their supplemental motion to dismiss, the United States
intervened in this case to defend the constitutionality of the
TCPA. J.A. 43-45. On May 25, 2011, the district court denied
defendants’ motion to dismiss, holding that the TCPA is a
content-neutral speech regulation that survives intermediate
constitutional scrutiny, and finding defendants’ other arguments
unavailing. J.A. 96-108.
On May 11, 2011, shortly before the district court denied
defendants’ motion to dismiss, Henson, Russell, and Universal
Elections moved to stay the proceedings pending the resolution
of related state criminal investigations. J.A. 92-93. The
district court determined that the motion to stay would not
5
affect its ruling on the motion to dismiss, and addressed the
motion to stay after denying the motion to dismiss. J.A. 95,
148. On July 7, 2011, the court denied the motion to stay,
noting that:
Other than unfounded attacks on the motives of the
Attorney General, the defendants have not explained
why a blanket stay of this action is warranted by the
existence of a partially parallel criminal indictment
brought by the State Prosecutor. . . . The motion to
stay as filed is overbroad and is Denied.
J.A. 148 (emphasis and capitalization in original).
On March 15, 2012, the State moved for summary judgment.
Supp. App. 52-75. Defendants did not oppose the State’s motion
for summary judgment, and the district court granted the
unopposed motion on May 29, 2012. J.A. 487-94. The court
explained that the record unambiguously supported a finding that
defendants had violated the TCPA:
Universal Elections, by and through both Russell and
Henson, drafted and sent a message that failed to
include the disclosure information required by [the
TCPA]. As Russell’s testimony makes clear, both she
and Henson were directly and personally involved in
the creation of the offending message. . . . [T]he
documentary evidence in the record and the deposition
testimony of Russell and Ehrlich staffers establish
without any doubt that Henson discussed plans to
suppress the votes of African-American Democrats,
recorded the plan in the strategy memo sent to the
Ehrlich campaign, and ultimately dictated and
authorized the offending message. Thus, both Henson
and Russell, in addition to Universal Elections, may
be held jointly and severally liable for any damages
this court may award under the TCPA.
6
J.A. 490. The district court entered judgment on behalf of the
State in the amount of $10,000 against Russell, and in the
amount of $1,000,000 against Henson and Universal Elections.
Henson and Universal Elections timely filed a notice of
appeal on June 22, 2012. We have jurisdiction under 28 U.S.C.
§ 1291.
II.
We review de novo the constitutionality of a federal
statute and its implementing regulations, United States v. Sun,
278 F.3d 302, 308-09 (4th Cir. 2002); the denial of a motion to
dismiss, Brockington v. Boykins, 637 F.3d 503, 505 (4th Cir.
2011); and the grant of an unopposed motion for summary
judgment, Henry v. Purnell, 652 F.3d 524, 531 (4th Cir. 2011).
The grant or denial of a request to stay proceedings calls for
an exercise of the district court’s judgment “to balance the
various factors relevant to the expeditious and comprehensive
disposition of the causes of action on the court's docket.”
United States v. Ga. Pac. Corp., 562 F.2d 294, 296 (4th Cir.
1977). As such, we review the denial of a motion to stay under
an abuse-of-discretion standard. Id. at 297; Chase Brexton
Health Servs., Inc. v. Maryland, 411 F.3d 457, 464 (4th Cir.
2005).
7
III.
Henson and Universal Elections raise four issues on appeal. 2
Appellants assert that the district court erred by: (1) finding
that the TCPA is not unconstitutional when applied to political
robocalls; (2) denying defendants’ motion to dismiss; (3)
denying defendants’ motion to stay proceedings pending the
resolution of a related state court criminal case; and (4)
granting summary judgment in favor of the State. We address
these arguments in turn.
A.
With regard to the constitutionality of the TCPA,
appellants appear to argue that § 227(d) “violates the First
Amendment because it is a content-based burden on political
speech” that cannot withstand strict scrutiny. Appellants’ Br.
12 n.6. When evaluating whether a regulation violates the First
Amendment, “the most exacting scrutiny” is applied to
regulations “that suppress, disadvantage, or impose differential
burdens upon speech because of its content.” Turner Broad.
Sys., Inc. v. F.C.C., 512 U.S. 622, 642 (1994). “In contrast,
regulations that are unrelated to the content of speech are
subject to an intermediate level of scrutiny, because in most
cases they pose a less substantial risk of excising certain
2
Russell does not appeal the district court’s ruling.
8
ideas or viewpoints from the public dialogue.” Id. (citing
Clark v. Cmty. for Creative Non-Violence, 468 U.S. 288, 293
(1984)). “[L]aws that confer benefits or impose burdens on
speech without reference to the ideas or views expressed are in
most instances content neutral.” Id. at 643.
The TCPA and its implementing regulations require that
automated, prerecorded messages identify the entity sponsoring
the phone call and provide that entity’s telephone number. 47
U.S.C. § 227(d)(1), (3)(A); 47 C.F.R. § 64.1200(b) (2008). This
identity disclosure requirement applies regardless of the
content of the message that is relayed to the recipient.
§ 227(d)’s requirements do not place any greater restriction on
a particular group of people or form of speech, and do not
burden appellants – or entities engaging in political speech –
any more than any other person or group placing robocalls. The
district court properly determined that the TCPA is a content-
neutral law to which intermediate scrutiny must be applied.
A content-neutral law that regulates speech is valid if “it
furthers an important or substantial governmental interest . . .
[that] is unrelated to the suppression of free expression; and
if the incidental restriction on alleged First Amendment
freedoms is no greater than is essential to the furtherance of
that interest.” United States v. O’Brien, 391 U.S. 367, 377
(1968). “To satisfy this standard, a regulation need not be the
9
least speech-restrictive means of advancing the Government's
interests.” Turner, 512 U.S. at 662. Instead, the regulation
simply cannot “burden substantially more speech than is
necessary to further the government's legitimate interests.”
Id. (quoting Ward v. Rock Against Racism, 491 U.S. 781, 799
(1989)).
There are at least three important government interests
furthered by the TCPA’s identity disclosure provision:
protecting residential privacy; promoting disclosure to avoid
misleading recipients of recorded calls; and promoting effective
law enforcement. J.A. 104-107. The TCPA protects residential
privacy – a government interest articulated in the legislative
history of the Act – by enabling the recipient to contact the
caller to stop future calls. See S. Rep. No. 102-178, at 1; 47
U.S.C. § 227(d). Moreover, the Supreme Court has long
“recognized that ‘[p]reserving the sanctity of the home, the one
retreat to which men and women can repair to escape from the
tribulations of their daily pursuits, is surely an important
value.’” Frisby v. Schultz, 487 U.S. 474, 484 (1988) (quoting
Carey v. Brown, 447 U.S. 455, 471 (1980)); see also Nat’l Fed’n
for the Blind v. F.T.C., 420 F.3d 331, 339-40 (4th Cir. 2005)
(“Nat’l Fed’n for the Blind”) (finding that residential privacy
is “a substantial government interest that the democratic
process is entitled to protect”). The Act is narrowly tailored
10
to protect this interest by requiring only that callers identify
themselves and a phone number at which they can be reached. Cf.
Nat’l Fed’n for the Blind, 420 F.3d at 342-43 (finding that
caller identification provision of the Federal Trade
Commission’s Telemarketing Sales Rule is a narrowly tailored,
minimal restriction that simply allows consumers to “pre-select
whom they wish to speak to on a particular evening”).
The Act also promotes disclosure to avoid misleading
recipients of prerecorded calls. The TCPA’s identity disclosure
provision obliges callers to state the name of the entity
responsible for the call. This disclosure allows the recipient
to better evaluate the content and veracity of the message. See
Riley v. Nat’l Fed’n for the Blind of N.C., 487 U.S. 781, 792
(1988) (“The interest in protecting charities (and the public)
from fraud is, of course, a sufficiently substantial interest to
justify a narrowly tailored regulation.”). The TCPA’s
requirement that robocall sponsors identify themselves is
narrowly tailored to protect citizens from fraud. Cf. Nat’l
Fed’n for the Blind, 420 F.3d at 342-43 (upholding as
constitutional a government regulation requiring telefunders to
transmit their name and phone number to caller ID services).
Finally, the TCPA’s identity disclosure provision also
promotes effective law enforcement by assisting the government
in detecting violations. See J.A. 91 (affidavit of Federal
11
Communications Commission enforcement official stating that “the
two identification requirements for prerecorded messages . . .
play a central role in allowing called parties to accurately
report the parties who are responsible for specific violations,
thereby assisting the Commission in taking enforcement action
after complaints are received”). Again, the Act’s
identification provision is narrowly tailored to accomplish the
goal of assisting law enforcement; the provision places a
minimal burden on callers to identify themselves and how they
can be contacted.
The district court correctly identified these three
important government interests, found that the Act is a content-
neutral regulation that furthers important government interests
unrelated to free expression, and held that the TCPA’s
restrictions do not burden substantially more speech than is
necessary to protect those interests. Appellants have failed to
present a comprehensible argument to the contrary. For these
reasons, we affirm the district court’s finding that the TCPA’s
identity disclosure provisions are constitutional.
B.
To argue that the district court improperly denied their
motion to dismiss, appellants reiterate the same convoluted
arguments made in their December 2011 motion to dismiss. Not
12
surprisingly, these arguments meet with the same amount of
success that they received in the district court.
Appellants assert that the complaint should have been
dismissed because it fails to allege that the election night
robocall was received by any Maryland citizen. This argument
misses the mark. The complaint alleges that “the prerecorded
voice message . . . was broadcast to the phone numbers of more
than 112,000 Maryland residents chosen by Defendants.” Compl.
¶ 15 (emphasis added). This allegation sufficiently alleges
that defendants placed the election night robocall to Maryland
citizens and that Maryland citizens received the call. The TCPA
does not require state attorneys general to identify particular
phone call recipients by name.
Appellants next contend that Congress’ failure to pass “the
Robocall Privacy Act of 2006, 2007, and 2008” shows that
Congress has chosen not to regulate political robocalls.
Appellants’ Br. 20-21. Appellants’ argument is unavailing. The
fact that Congress has not passed legislation that specifically
addressed political robocalls does not lessen in any way the
scope and applicability of the TCPA. The Act’s plain language
demonstrates that it applies to all prerecorded phone calls,
including those with a political message. See 47 U.S.C.
§ 227(d)(3) (the restrictions of § 227(d) apply to “all
artificial or prerecorded telephone messages”).
13
By referring repeatedly to Maryland agency law, appellants
also attempt to argue that Henson and Russell cannot be held
liable under the TCPA. Appellants’ Br. 21-22. However,
Maryland’s approach to the doctrine of respondeat superior does
not affect the scope of liability contemplated by the TCPA.
Additionally, the TCPA’s language makes clear that individuals
can be sued under the Act. § 227(d) prohibits “any person” from
violating the authority identification requirements contained in
the Act, and empowers state attorneys general to bring action
against “any person” who violates the Act. See also Balt.-Wash.
Tel. Co. v. Hot Leads Co., 584 F. Supp. 2d 736, 745 (D. Md.
2008) (finding that individuals could be held personally liable
for TCPA violations); Texas v. Am. Blastfax, Inc., 164 F. Supp.
2d 892, 898 (W.D. Tex. 2001) (same); Covington & Burling v.
Int’l Mktg. & Research, Inc., No. 01-cv-4360, 2003 WL 21384825,
at *6 (D.C. Super. Ct. Apr. 17, 2003) (same).
Appellants also contend that the election night robocall
cannot violate the TCPA because it was a single phone call
placed to multiple recipients, not multiple phone calls made to
the same recipients over time. Appellants’ Br. 22-23.
Appellants cite no authority in support of this proposition, and
the TCPA contains no requirement that multiple calls be made to
the same person. Indeed, § 227(d)(1)(A) prohibits “any
14
telephone call” that fails to comply with the Act’s technical
and procedural standards.
Appellants assert that they cannot be liable under the TCPA
because they did not actually place any of the offending phone
calls. Appellants’ Br. 23. Rather, they suggest that
Robodial.org, the autodialing company that placed all the phone
calls at appellants’ direction, must bear the responsibility for
violating the Act. Id. As with many of their other arguments,
appellants cite no authority for the proposition that only the
autodialer that places the improper calls can be held liable
under the TCPA. Such a narrow reading would undermine the
purpose of the Act and would allow the actual violators to
escape liability. In addition, the language of the Act
indicates that it is intended to apply to the individuals who
use the autodialing systems that place calls, and not just to
the autodialing services themselves. See 47 U.S.C. § 227(d)(1)
(“It shall be unlawful for any person . . . to make any
telephone call using any automatic telephone dialing system[]
that does not comply with the technical and procedural standards
prescribed under this subsection . . . or to use any . . .
automatic telephone dialing system in a manner that does not
comply with the standards.”). Robodial.org’s terms of use
reinforce this interpretation of the Act, as those terms state
15
that the “[c]ustomer is responsible for compliance with the
[TCPA].” J.A. 488.
Finally, appellants make a cursory argument that the
complaint should have been dismissed because Robodial.org was
not joined as a party under Federal Rule of Civil Procedure 19.
Appellants’ Br. 24. Federal Rule of Civil Procedure 19(a)(1)
provides:
A person who is subject to service of process and
whose joinder will not deprive the court of subject-
matter jurisdiction must be joined as a party if:
(A) in that person's absence, the court cannot accord
complete relief among existing parties; or
(B) that person claims an interest relating to the
subject of the action and is so situated that
disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the
person's ability to protect the interest; or
(ii) leave an existing party subject to a substantial
risk of incurring double, multiple, or otherwise
inconsistent obligations because of the interest.
When a person “who is required to be joined if feasible cannot
be joined, the court must determine whether, in equity and good
conscience, the action should proceed among the existing parties
or should be dismissed.” Fed. R. Civ. P. 19(b).
The State’s failure to include Robodial.org as a defendant
in this case did not affect the district court’s ability to
adjudicate the claims raised against Henson, Russell, and
Universal Elections. Robodial.org’s absence from the case
16
neither impairs its ability to protect its interest nor leaves
the existing parties “subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations because
of the interest.” Fed. R. Civ. P. 19(a)(1)(B).
In summary, appellants have failed to demonstrate that
their motion to dismiss should have been granted. Rather, the
district court properly evaluated and denied defendants’ motion
to dismiss.
C.
Appellants next suggest that the district court erred by
denying their motion to stay the proceedings pending resolution
of partially parallel criminal proceedings. This argument also
fails.
“[T]he power to stay proceedings is incidental to the
power inherent in every court to control the disposition of the
causes on its docket with economy of time and effort for itself,
for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S.
248, 254 (1936). “Because of the frequency with which civil and
regulatory laws overlap with criminal laws, American
jurisprudence contemplates the possibility of simultaneous or
virtually simultaneous parallel proceedings and the Constitution
does not mandate the stay of civil proceedings in the face of
criminal proceedings.” Ashworth v. Albers Med., Inc., 229
F.R.D. 527, 530 (S.D. W. Va. 2005). Stays generally are not
17
granted before an indictment has issued. Id. at 531 n.3 (citing
Trs. of Plumbers & Pipefitters Nat’l Pension Fund v. Transworld
Mech., Inc., 886 F. Supp. 1134, 1139 (S.D.N.Y. 1995)); State
Farm Mut. Auto. Ins. Co. v. Beckham-Easley, No. 01-cv-5530, 2002
WL 31111766, at *2 (E.D. Pa. Sept. 18, 2002) (quoting Walsh
Sec., Inc. v. Cristo Prop. Mgmt., Ltd., 7 F. Supp. 2d 523, 527
(D.N.J. 1998)); In re Par Pharm., Inc. Sec. Litig., 133 F.R.D.
12, 13 (S.D.N.Y. 1990).
The district court’s denial of defendants’ motion to stay
is in keeping with the bulk of judicial authority, which holds
that stays are generally not granted before indictments have
issued. The court’s decision to deny the motion to stay was
particularly appropriate where, as here, the motion was devoid
of any facts or legal argument. The defendants’ two-page motion
to stay the proceedings simply stated that they believed that at
least two grand juries had been convened for which Henson,
Russell, and Universal Elections were targets and that “[t]he
use of witnesses who are/may be indicted by government action
both at that federal and state level triggers substantial Fifth
Amendment issues.” J.A. 92-93. The motion to stay did not
identify any particular Fifth Amendment conflict that had
arisen, or explain how the convening of two grand juries had
jeopardized the constitutionality of the pending civil
proceedings. The district court wisely chose to delay ruling on
18
any Fifth Amendment issues until those issues had been properly
identified and fully briefed. Denial of the motion to stay was
therefore not an abuse of the court’s discretion.
D.
Finally, appellants argue that the district court erred by
granting summary judgment to the State. Defendants did not
respond to the State’s motion for summary judgment.
Nevertheless, the district court thoroughly analyzed the motion,
as it was obligated to do. Robinson v. Wix Filtration Corp.,
599 F.3d 403, 409 n.8 (4th Cir. 2010) (“[I]n considering a
motion for summary judgment, the district court ‘must review the
motion, even if unopposed, and determine from what it has before
it whether the moving party is entitled to summary judgment as a
matter of law.’”) (quoting Custer v. Pan Am. Life Ins. Co., 12
F.3d 410, 416 (4th Cir. 1993)) (emphasis in original).
Because appellants did not respond to the State’s summary
judgment motion, the following facts were uncontroverted: (1)
Henson and Russell, as political consultants employed by the
Ehrlich gubernatorial campaign, wrote and recorded the election
night robocall; (2) the call did not disclose the name or phone
number of the message’s sponsor; (3) Henson directed Russell to
omit from the message a line explaining who had authorized the
message; (4) Russell – perhaps mistakenly – also omitted the
phone number of the message’s sponsor from the message; (5)
19
through an account maintained by Universal Elections, Russell
uploaded the message, along with two lists of Maryland
Democratic voters, to the website of automatic dialing system
Robodial.org; (6) Russell then commenced the calls through
Robodial.org; (7) the election night robocall was delivered to
approximately 112,000 Democratic voters in Baltimore City and
Prince George’s County; (8) at least 69,497 call recipients
received the entire recorded message contained in the election
night robocall; and (9) at least 16,976 call recipients received
part of the message. Supp. App. 56, 59-61.
These facts clearly establish that appellants created and
distributed the election night robocall, which failed to
identify either the message’s sponsor or a phone number at which
the sponsor could be reached. This is sufficient to establish
appellants’ liability under the TCPA, and the district court did
not err in granting summary judgment in favor of the State.
IV.
For the foregoing reasons, we affirm the rulings of the
district judge in all respects.
AFFIRMED
20