National Fed Blind v. Federal Trade Comm

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
NATIONAL FEDERATION OF THE BLIND; 
SPECIAL OLYMPICS MARYLAND,
INCORPORATED,
Plaintiffs-Appellants,
 No. 04-1378
v.
FEDERAL TRADE COMMISSION,
Defendant-Appellee.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
J. Frederick Motz, District Judge.
(CA-03-963-JFM)
Argued: December 1, 2004
Decided: August 26, 2005
Before WILKINSON, TRAXLER, and DUNCAN, Circuit Judges.
Affirmed by published opinion. Judge Wilkinson wrote the opinion,
in which Judge Traxler joined. Judge Duncan wrote a dissenting opin-
ion.
COUNSEL
ARGUED: M. Errol Copilevitz, COPILEVITZ & CANTER, L.L.C.,
Kansas City, Missouri, for Appellants. Michael Daniel Bergman,
FEDERAL TRADE COMMISSION, Washington, D.C., for Appel-
lee. ON BRIEF: William E. Raney, Kristen E. Bloemker,
2 NATIONAL FEDERATION OF THE BLIND v. FTC
COPILEVITZ & CANTER, L.L.C., Kansas City, Missouri, for
Appellants. William E. Kovacic, General Counsel, John F. Daly, Dep-
uty General Counsel for Litigation, Lawrence DeMille-Wagman,
FEDERAL TRADE COMMISSION, Washington, D.C., for Appel-
lee.
OPINION
WILKINSON, Circuit Judge:
This case presents a challenge to the Federal Trade Commission’s
regulation restricting telemarketing practices as they apply to charita-
ble fundraising. The regulation requires callers to make certain disclo-
sures, refrain from making late-night, early-morning, and "abandoned
calls" (calls followed by silence), and comply with a charity-specific
"do-not-call list." Since the FTC has no jurisdiction over non-profit
organizations, the new rule does not apply to calls made by "in house"
charity staff or volunteers. It does, however, apply to "telefunders" —
that is, professional fundraisers from for-profit companies who solicit
donations on behalf of charities. The appellants, two charities who
contract with these companies, argue that the regulation is beyond the
FTC’s authority and violates the First Amendment.
We think Congress clearly authorized the FTC to promulgate this
new rule. Because we are further convinced that it constitutes a "rea-
sonable regulation," that is "narrowly drawn" to serve a "sufficiently
strong subordinating interest that the [government] is entitled to pro-
tect," we find it to be constitutional. Sec. of State of Maryland v. Mun-
son, 467 U.S. 947, 960-961 (1984) (quotation omitted). The
regulation preserves the important right of charities to make telephone
solicitations. To strike down the rule, however, would disable the
democratic branches from taking even the most modest steps neces-
sary to protect the home environment from intrusive phone calls.
I.
In 1994, Congress passed the Telemarketing Consumer Fraud and
Abuse Prevention Act ("Telemarketing Act"). Pub. L. No. 103-297,
NATIONAL FEDERATION OF THE BLIND v. FTC 3
108 Stat. 1545 (codified as amended at 15 U.S.C. §§ 601 et seq.
(2000)). That legislation instructed the FTC to "prescribe rules pro-
hibiting deceptive . . . and other abusive telemarketing acts or prac-
tices." 15 U.S.C. § 6102(a)(1) (2000). Specifically, Congress directed
the FTC to forbid "unsolicited telephone calls which the reasonable
consumer would consider coercive or abusive of such consumer’s
right to privacy," to restrict "the hours of the day and night when
unsolicited telephone calls can be made," and to require that callers
disclose information about the nature and purpose of the call. Id.
§ 6102(a)(3).
Two further provisions of the 1994 Telemarketing Act are particu-
larly relevant to this case. First, Congress defined "telemarketing" to
only cover calls "conducted to induce purchases of goods or services."
Id. § 6106(4). Phone calls seeking charitable donations were thus out-
side the scope of the Telemarketing Act as it existed in 1994.
Second, Congress explained that the Telemarketing Act did noth-
ing to affect activity beyond the FTC’s jurisdiction. Id. § 6105(a). In
this regard, Congress cross-referenced the jurisdictional provisions of
the Federal Trade Commission Act ("FTCA"). The FTCA gives the
FTC jurisdiction over "persons, partnerships, or corporations," with
some exceptions not relevant here. Id. § 45(a)(2). An entity is only a
"corporation," for FTCA purposes, if it is "organized to carry on busi-
ness for its own profit or that of its members." Id. § 44. Thus, accord-
ing to the FTC’s organic statute, non-profit organizations fall outside
the scope of the agency’s jurisdiction. And, as Congress made clear,
the Telemarketing Act did nothing to change that fact. Id. § 6105(a).
In 1995, the FTC implemented Congress’ directives by promulgat-
ing the original Telemarketing Sales Rule ("TSR"). 16 C.F.R. § 310
et seq. (1995). The TSR imposed several restrictions on telemarketers
— requiring them, inter alia, to make certain disclosures, obey time
restrictions, and refrain from calling consumers who have asked not
to be called by that particular seller. Before the 1995 TSR became
effective, the FTC issued an advisory statement clarifying that the
TSR did not regulate professional telemarketers calling on behalf of
non-profit organizations (these professionals are often referred to as
"telefunders"). The agency justified this decision by explaining that
4 NATIONAL FEDERATION OF THE BLIND v. FTC
soliciting donations did not qualify as "telemarketing" under the Tele-
marketing Act.
Following new congressional instructions, however, the FTC’s
position towards telefunders has changed. In October 2001, Congress
enacted the USA PATRIOT Act, which contained a section (section
1011) entitled "Crimes Against Charitable Americans." Pub. L. No.
107-56, 115 Stat. 396 (2001).
This section amended the Telemarketing Act in three significant
ways. First, Congress inserted the phrase "fraudulent charitable solici-
tations" in its general description of what "deceptive telemarketing
acts or practices" the FTC should regulate. 15 U.S.C.A. § 6102(a)(2)
(West Supp. 2004). Second, Congress added a new subsection specifi-
cally directing the FTC to include:
a requirement that any person engaged in telemarketing for
the solicitation of charitable contributions, donations, or
gifts of money or any other thing of value, shall promptly
and clearly disclose to the person receiving the call that the
purpose of the call is to solicit charitable contributions,
donations, or gifts, and make such other disclosures as the
Commission considers appropriate. . . .
Id. § 6102(a)(3)(D). And third, Congress altered the Act’s definition
of "telemarketing" to include a reference to charitable solicitations.1
Id. § 6106(4).
One crucial part of the Telemarketing Act, however, remained
unchanged by the PATRIOT Act. The PATRIOT Act did not purport
to alter the FTC’s jurisdiction, which is still governed by the jurisdic-
tional provisions in the FTCA. As explained above, those provisions
do not cover non-profit organizations. The PATRIOT Act, therefore,
expanded what "acts and practices" could be regulated by the FTC
1
"Telemarketing" is now defined in the Act to be "a plan, program, or
campaign which is conducted to induce purchases of goods or services,
or a charitable contribution, donation, or gift of money or any other thing
of value, by use of one or more telephones and which involves more than
one interstate telephone call." Id.
NATIONAL FEDERATION OF THE BLIND v. FTC 5
under the Telemarketing Act, but it did not change what type of entity
was subject to the FTC’s control.
In January 2002, the FTC issued a notice of proposed rulemaking
to adjust the TSR after the changes Congress had made to the Tele-
marketing Act. It received approximately 64,000 comments, some
calling for more regulation and some asking for less. It then con-
ducted a three-day public forum. In reviewing the feedback it
received, the FTC concluded that "consumers are disturbed by
unwanted calls regardless of whether the caller is seeking to make a
sale or to ask for a charitable contribution." 68 Fed. Reg. 4637.
On January 29, 2003, the FTC promulgated a new TSR. 68 Fed.
Reg. 4580 (Jan. 29, 2003) (codified at 16 C.F.R. § 310 (2005)).
Attempting to formulate this new rule in accordance with Congress’
directions, the FTC faced a quandary. Congress had not altered the
jurisdictional provisions in the Telemarketing Act, thus leaving the
FTC without jurisdiction over non-profit organizations. But, at the
same time, Congress did amend the definition of "telemarketing" to
cover charitable solicitations. To reconcile those two congressional
mandates, the agency articulated the distinction which is now being
challenged. It stated:
Reading the amendments to the Telemarketing Act effectu-
ated by § 1011 of the USA PATRIOT Act together with the
unchanged sections of the Telemarketing Act compels the
conclusion that for-profit entities that solicit charitable
donations now must comply with the TSR, although the
Rule’s applicability to charitable organizations themselves is
unaffected.
Id. at 4585. Thus, professional telefunders calling on behalf of chari-
ties are subject to the new TSR, while "in house" callers from the
charities themselves are not. It is this distinction that lies at the heart
of the instant dispute.
The new TSR imposed several new restrictions on telemarketers
generally, but only some of those restrictions apply to telefunders.
Five such provisions are being challenged here:
6 NATIONAL FEDERATION OF THE BLIND v. FTC
(1) prohibitions on placing calls before 8:00 a.m. or after
9:00 p.m., 16 C.F.R. § 310.4(c);
(2) prohibitions on "abandoned calls" (a call is abandoned
when a person at home answers the phone and is not con-
nected to a telemarketer within two seconds), 16 C.F.R.
§ 310.4(b)(1)(iv);
(3) a requirement that callers promptly explain that they are
seeking donations, and identify the charity on behalf of
which the request is being made, 16 C.F.R. § 310.4(e);
(4) a requirement that telemarketers transmit their name and
phone number to caller identification services ("caller ID"),
16 C.F.R. § 310.4(a)(7); and
(5) an obligation that telemarketers refrain from calling a
person who has previously asked not to be called by a spe-
cific charity, 16 C.F.R. § 310.4(b)(1)(iii)(A).
Similar to this last restriction, the TSR also included a national do-
not-call registry (one that is not entity-specific) which telemarketers
are required to respect. However, the rule does not require that tele-
funders adhere to the national do-not-call list — instead requiring
only their adherence to a more modest charity-specific list. 16 C.F.R.
§ 310.6(a).
Appellants National Federation of the Blind and Special Olympics
Maryland, Inc. ("the charities") are nonprofit organizations that qual-
ify for tax-exempt status under section 501(c)(3) of the Internal Reve-
nue Code. Both charities require donations to carry out their
important work. To solicit donations, these charities rely on profes-
sional telefunders. Because the telefunders are restricted by the new
TSR, the charities say that their fund-raising efforts have been
adversely affected.
The two charities filed suit against the FTC in the United States
District Court for the District of Maryland. They challenged the
amended TSR on the grounds that the rule exceeded the statutory
NATIONAL FEDERATION OF THE BLIND v. FTC 7
authority of the FTC and, in the alternative, violated the First and
Fourteenth Amendments to the Constitution.
Both parties filed cross-motions for summary judgment, and on
February 24, 2004, the district court entered judgment for the FTC.
Nat’l Fed. of the Blind v. FTC, 303 F. Supp. 2d 707 (D. Md. 2004).
The charities now appeal. We review these questions of law de novo.
United States v. Deaton, 332 F.3d 698, 703-04 (4th Cir. 2003).
II.
The charities first claim that the new TSR is beyond the FTC’s stat-
utory authority. Plaintiffs contend that when Congress amended the
Telemarketing Act in 2001 it only intended for the FTC to regulate
fraudulent charitable solicitations, not calls made in the normal course
of charitable fundraising. According to the charities, since time
restrictions and prohibitions on abandoned calls, for instance, are not
rules aimed at preventing fraud, they are beyond the agency’s statu-
tory mandate.
When an agency’s construction of a statute is challenged, we turn
to the familiar framework set forth in Chevron USA, Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984). Chevron
instructs that we first review the statute to see if the intent of Con-
gress is clear. If Congress has not answered the question at hand, then
we defer to the agency’s interpretation of the statute, so long as it is
a reasonable one. Id. See also Sigma-Tau Pharm. Inc. v. Schwetz, 288
F.3d 141, 144 (4th Cir. 2002).
Here, we need not go past the first step. For it is appropriate to
"apply canons of statutory construction at step one of the Chevron
inquiry." E.E.O.C. v. Seafarers Int’l Union, 394 F.3d 197, 203 (4th
Cir. 2005). And a traditional canon of statutory interpretation leads us
to conclude that Congress has answered the current question. It is
well-established that:
Congress is presumed to enact legislation with knowledge of
the law. The upshot of this canon of statutory interpretation
is that absent a clear manifestation of contrary intent, a
8 NATIONAL FEDERATION OF THE BLIND v. FTC
newly-enacted or revised statute is presumed to be harmoni-
ous with existing law.
In re Witt, 113 F.3d 508, 513 (4th Cir. 1997) (internal citations and
quotations omitted). See also United States v. Langley, 62 F.3d 602,
605 (4th Cir. 1995).
As the district court noted, the 1994 Telemarketing Act instructed
the FTC to regulate telemarketers both to prevent fraud and to protect
the privacy of the home. Not surprisingly, the original TSR addressed
both concerns — promulgating regulations which included time
restrictions (to protect privacy) and disclosure requirements (to pre-
vent fraud).
Congress amended the Telemarketing Act in 2001 to include chari-
table solicitations, but it did not enact a full-scale overhaul of the stat-
ute and suddenly render abusive or intrusive calls beyond the FTC’s
purview. Thus, when Congress altered the Act’s definition of "tele-
marketing" to encompass calls soliciting charitable donations, it
surely knew that it was making those calls subject to the same restric-
tions that other telemarketing calls were subject to under the original
version of the Act. If Congress had intended the opposite result, it
would have said so. See North Haven Bd. of Educ. v. Bell, 456 U.S.
512, 535 (1982) ("Where an agency’s statutory construction has been
fully brought to the attention of the public and the Congress, and the
latter has not sought to alter that interpretation although it has
amended the statute in other respects, then presumably the legislative
intent has been correctly discerned.") (internal quotation omitted).
The charities point to the fact that when Section 1101 of the
PATRIOT Act was passed, Senator Mitch McConnell expressed the
hope that it would target fraudulent charities who were preying on
sympathetic Americans following the attacks of September 11, 2001.
See 104 Cong. Rec. S10059, 10065 (Oct. 2, 2001). While this is true,
it does not change the plain text of the statute. The PATRIOT Act
expanded the definition of "telemarketing" to include "a charitable
contribution, donation, or gift of money or any other thing of value."
15 U.S.C.A. § 6106(4) (West Supp. 2004). This is a general reference
to charitable solicitations. Nothing in the definition suggests that only
NATIONAL FEDERATION OF THE BLIND v. FTC 9
fraudulent charitable calls are proper subjects for regulation, or that
abusive or intrusive solicitations are exempt from regulation.
In addition, the charities point to the amendment that changes the
preamble to the Telemarketing Act. Currently the general directive to
the FTC reads:
The Commission shall include in such rules respecting
deceptive telemarketing acts or practices a definition of
deceptive telemarketing acts or practices which shall include
fraudulent charitable solicitations, and which may include
acts or practices of entities or individuals that assist or facili-
tate deceptive telemarketing.
Id. § 6102(a)(2) (emphasis added to indicate the new language). This
language is not exhaustive; it merely explains that the FTC "shall
include," among others, regulations to target fraudulent charitable
solicitations. Any confusion regarding the scope of this directive is
clarified by the more technical section of the Act which defines the
relevant terms. The definition of "telemarketing," as explained above,
was amended to include calls for "charitable contribution[s]" gener-
ally, and does not limit the Act’s coverage to only those calls which
are likely to be fraudulent. Id. § 6106(4).
We therefore conclude that Congress intended for all conduct now
encompassed under the broadened definition of "telemarketing" to be
subject to FTC regulations passed for the purpose of preventing fraud
and protecting the home. The FTC enacted the TSR pursuant to these
directions, and we find it was well within its statutory authority to do
so.
III.
We thus turn to the plaintiffs’ claim that the TSR violates the First
Amendment. Three Supreme Court cases address First Amendment
challenges to regulations on professional charitable fundraising. See
Village of Schaumburg v. Citizens for a Better Env’t, 444 U.S. 620
(1980); Sec. of State of Maryland v. Joseph Munson Co., 467 U.S.
947 (1984); Riley v. Nat’l Fed. of the Blind, 487 U.S. 781 (1988).
10 NATIONAL FEDERATION OF THE BLIND v. FTC
From this trilogy we learn that "charitable solicitations" have "not
been dealt with as purely commercial speech." Riley, 487 U.S. at 788.
This is so because they "involve a variety of speech interests that are
within the protection of the First Amendment." Id. (quotation omit-
ted). We also know, however, that the protection accorded to charita-
ble solicitations is not absolute. For "[s]oliciting financial support is
undoubtedly subject to reasonable regulation" so long as the regula-
tion is "undertaken with due regard for the reality that solicitation is
characteristically intertwined with informative and perhaps persuasive
speech." Schaumburg, 444 U.S. at 632.
Thus a balance must be struck. A regulation will be sustained if (1)
it "serves a sufficiently strong, subordinating interest that the [govern-
ment] is entitled to protect" and (2) it is "narrowly drawn . . . to serve
the interest without unnecessarily interfering with First Amendment
freedoms." Munson, 467 U.S. at 960-61 (quoting Schaumburg, 444
U.S. at 636-37). We hold that the FTC’s new rule meets these two
requirements.2
IV.
The FTC has identified two government interests that the TSR was
designed to advance — the prevention of fraud and the protection of
privacy in the home. Our initial task is to ask whether these interests
qualify as "sufficiently strong, subordinating interest[s] that the [gov-
ernment] is entitled to protect." Munson, 467 U.S. at 960-61 (quoting
It is unclear whether this standard amounts to "strict scrutiny" (as the
charities allege) or to the less stringent "intermediate scrutiny" (as the
FTC urges). The district court believed it was applying intermediate
scrutiny since the present regulations were reminiscent of ones upheld as
time, place, and manner restrictions. See Nat’l Fed. of the Blind of
Arkansas v. Pryor, 258 F.3d 851, 855 (8th Cir. 2001) ("The Munson /
Village of Schaumburg standard and the time-place-and-manner standard
are obviously very similar."); Am. Target Adver., Inc. v. Giani, 199 F.3d
1241, 1247 (10th Cir. 2000) (holding that content-neutral regulations of
charitable solicitations are subject to "an intermediate level of scrutiny").
Regardless of the label, the substance of the test is clear. And the TSR
passes it because it is "narrowly drawn" to serve a "sufficiently strong
subordinating interest." Munson, 467 U.S. at 960-61 (quotation omitted).
NATIONAL FEDERATION OF THE BLIND v. FTC 11
Schaumburg, 444 U.S. at 636). For the following reasons, we con-
clude they do.
A.
First, we address the FTC’s desire to protect consumers from fraud.
At least one of the challenged regulations — the requirement that
solicitors promptly disclose the nature and purpose of their call —
aims to prevent fraud.
Our evaluation of this proffered government interest is not difficult.
For although the Court in Schaumburg, Munson, and Riley ultimately
concluded that the specific restrictions in each case were not narrowly
tailored to prevent fraud, it was beyond dispute in all three cases that
"[t]he interest in protecting charities (and the public) from fraud is, of
course, a sufficiently substantial interest to justify a narrowly tailored
regulation." Riley, 487 U.S. at 792. See also Munson, 467 U.S. at 961;
Schaumburg, 444 U.S. at 836.
B.
The FTC defends its other regulations on the basis of an interest
that the Court in Schaumburg, Munson, and Riley did not address —
namely, an interest in safeguarding residential privacy.3 See Illinois,
ex rel. Madigan v. Telemarketing Assocs., Inc., 538 U.S. 600, 619-20
(2003) (characterizing laws invalidated in Schaumburg, Munson, and
Riley as ones involving fraud prevention). The goal behind the time
restraints, for example, is not to prevent fraud, but to allow family life
to proceed undisturbed by phone calls in the evening and early morn-
ing hours.
It is hard to argue, as plaintiffs must, that the protection of residen-
tial privacy does not qualify as a "sufficiently strong subordinating
interest that the [government] is entitled to protect." Munson, 467
3
Although preventing "undue annoyance" was mentioned as a potential
state interest in the Schaumburg case, 444 U.S. at 636, the Court subse-
quently explained that the "primary interest" proffered in Schaumburg
was actually an interest "in preventing fraud." Munson, 467 U.S. at 961.
See also Riley, 487 U.S. at 788.
12 NATIONAL FEDERATION OF THE BLIND v. FTC
U.S. at 960-61 (quotation omitted). For the Supreme Court has
explained that "‘[t]he State’s interest in protecting the well-being,
tranquility, and privacy of the home is certainly of the highest order
in a free and civilized society.’" Frisby v. Schultz, 487 U.S. 474, 484
(1988) (quoting Carey v. Brown, 447 U.S. 455, 471 (1980)).
Indeed, the Court’s First Amendment jurisprudence has long "rec-
ognized 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.’" Id. (quoting Carey,
447 U.S. at 471). From this principle, it follows that:
One important aspect of residential privacy is protection of
the unwilling listener. Although in many locations, we
expect individuals simply to avoid speech they do not want
to hear, the home is different.
. . . [A] special benefit of the privacy all citizens enjoy
within their own walls, which the State may legislate to pro-
tect, is an ability to avoid intrusions. Thus, we have repeat-
edly held that individuals are not required to welcome
unwanted speech into their own homes and that the govern-
ment may protect this freedom.
Id. (internal citations omitted). See also Hill v. Colorado, 530 U.S.
703, 716-17 (2000); FCC v. Pacifica Found., 438 U.S. 726, 748
(1978); Rowan v. U.S. Post Office Dep’t, 397 U.S. 728, 738 (1970)
("That we are often captives outside the sanctuary of the home and
subject to objectionable speech and other sound does not mean we
must be captives everywhere.")
The significance that the Court places on residential privacy should
not be surprising. Protecting the sanctity of the family environment
is important enough to actually serve as the basis for a constitutional
right in many different contexts. See, e.g., Kyllo v. United States, 533
U.S. 27, 31 (2001) (right to be secure from warrantless search in
one’s home); Stanley v. Georgia, 394 U.S. 557, 565 (1969)(right to
read material of choice in one’s home).
NATIONAL FEDERATION OF THE BLIND v. FTC 13
Admittedly, these cases guard against intrusions by a state agent,
as opposed to the private interruptions in the present case. But if pro-
tecting the home is something that serves as the basis for a constitu-
tional right, then it surely must also serve as a substantial government
interest that the democratic process is entitled to protect. Or, put dif-
ferently, if the state is constrained from breaching the sanctity of the
home environment, then the state is allowed to protect what it cannot
casually breach. A contrary conclusion would turn the Constitution
into a house divided — a document at war within itself. See Burson
v. Freeman, 504 U.S. 191, 198 (1992) (a proffered government inter-
est in regulating speech is more compelling when the interest itself is
the basis of a constitutional right).
In short, the judicial branch and the democratic branches of our
government are hardly compelled to work at cross-purposes. And the
democratic process is not compelled to leave families prey to
unwanted solicitations and hang-ups at all hours and against their
wishes. We are thus convinced that the FTC’s second proffered justi-
fication for the TSR constitutes a "sufficiently strong subordinating
interest that the [government] is entitled to protect." Munson, 467
U.S. at 960-61 (quotation omitted).4
V.
Our next inquiry is whether the challenged provisions of the TSR
are "narrowly drawn . . . to serve the interest[s] without unnecessarily
interfering with First Amendment freedoms." Munson, 467 U.S. at
4
Like the district court, we find no merit to plaintiffs’ argument that
the FTC cannot assert an interest in protecting residential privacy
because people do not generally feel imposed on by charitable solicita-
tions. The agency explicitly rejected this possibility, relying on the fact
that it received relatively few answers in response to a survey question
asking whether charitable fundraisers and commercial telemarketers
should be treated differently. 68 Fed. Reg. at 4637 n.685. We think the
agency’s interpretation of the record is a reasonable one. As the district
court explained, "[i]ndeed, if more people distinguished charitable and
commercial calls with respect to the privacy intrusion involved, they pre-
sumably would have responded to the question." Nat’l Fed. of Blind, 303
F. Supp. 2d at 720 n.11.
14 NATIONAL FEDERATION OF THE BLIND v. FTC
961 (quotation omitted). Because these regulations are modest restric-
tions on speech — particularly compared to the ones invalidated in
Schaumburg, Munson, and Riley — and because they are not imper-
missibly "underinclusive," we find that they satisfy the requirement
that they be narrowly tailored.
A.
The charities argue that the five provisions of the TSR challenged
here are substantial burdens on speech. The FTC claims them to be
only minor restrictions that actually permit a significant amount of
speech to occur. We shall take up the provisions in turn.
First, we address the prohibition of "abandoned calls." 16 C.F.R.
§ 310.4(b)(1)(iv). A call "is ‘abandoned’ under this section if a person
answers it and the telemarketer does not connect the call to a sales
representative within two seconds of the person’s completed greet-
ing." Id. To label this restriction a restraint of speech at all is a gener-
ous characterization. For "abandoned calls," by definition, involve no
speech — they leave the recipient of the call frustrated by silence on
the other end of the line. A perfectly reasonable person can find
silence or repeated silences at the other end of a phone unnerving.
Particularly if one is elderly or lives alone, such silences can stoke
fears and be unsettling. We think this restriction on speech (if one can
call it that) is modest at best and is surely narrowly tailored to protect
"the sanctity of the home." Frisby, 487 U.S. at 484 (quotation omit-
ted).
Second, the charities challenge the time restriction provision of the
TSR which prohibits solicitors from placing calls before 8:00 a.m. or
after 9:00 p.m. See 16 C.F.R. § 310.4(c). We note that this rule leaves
a significant amount of time — 13 hours a day — when calls are per-
mitted. In fact, the window for permissible calling includes the dinner
hour, a time when families are quite likely to be home. At bottom,
what the plaintiffs seek is a constitutional right for telefunders to call
a potential donor even in the wee hours of the morning. Merely to
state such a proposition is to acknowledge its untenability.
Indeed, these regulations are narrowly drawn to protect only the
most private aspects of a family’s time. After 9:00 p.m., family mem-
NATIONAL FEDERATION OF THE BLIND v. FTC 15
bers might, for example, be cleaning house for the night, bathing,
paying bills, discussing homework, planning this or that, reading,
watching TV, or simply getting ready to turn in. Before 8:00 a.m.,
they might be eating breakfast, dressing, shaving, or fixing lunch for
spouses or kids. The First Amendment does not require us to interrupt
these family moments, and the only burdens on speech imposed by
the TSR time restrictions protect just the most personal hours of a
family’s day.
Third, the charities take issue with the entity-specific "do not call
list." This regulation forbids telefunders from calling a person on
behalf of a specific charity when the recipient has previously
requested not to be called by that charity. 16 C.F.R.
§ 310.4(b)(1)(iii)(A). Telefunders are not, however, subject to the
more restrictive national "do not call list" which forbids calls to peo-
ple who have put their names on a general nation-wide opt-out regis-
try. That provision (which commercial telemarketers must obey) was
recently upheld by the Tenth Circuit in Mainstream Marketing Ser-
vices, Inc. v. FTC, 358 F.3d 1228 (10th Cir.), cert. denied, 125 S. Ct.
47 (2004). In addressing the "narrowly tailored" question, the Tenth
Circuit remarked:
[T]he national do-not-call registry is narrowly tailored
because it does not over-regulate speech; rather, it restricts
only calls that are targeted at unwilling recipients. Cf.
Frisby v. Schultz, 487 U.S. 474, 485 (1988) ("There simply
is no right to force speech into the home of an unwilling lis-
tener.") . . .
. . . The Supreme Court has repeatedly held that speech
restrictions based on private choice (i.e. an opt-in feature)
are less restrictive than laws that prohibit speech directly.
Id. at 1242.
We are persuaded by the Tenth Circuit’s reasoning in Mainstream
Marketing, and we likewise agree with the analogy it drew to Rowan
v. U.S. Post Office Dep’t, 397 U.S. 728 (1970). In Rowan, the Court
upheld a law permitting a resident to stop companies from mailing
advertisements that the resident believed to be provocative. Id. at 729-
16 NATIONAL FEDERATION OF THE BLIND v. FTC
30. The Court emphasized that this speech restraint was based on a
private actor’s choice. It explained that "Congress has erected a wall
— or more accurately permits a citizen to erect a wall — that no
advertiser may penetrate without his acquiescence. . . . The asserted
right of a mailer, we repeat, stops at the outer boundary of every per-
son’s domain." Id. at 738.
The parallels between the law at issue in Rowan and the do-not-call
list in this case are unmistakable. If consumers are constitutionally
permitted to opt out of receiving mail which can be discarded or
ignored, then surely they are permitted to opt out of receiving phone
calls that are more likely to disturb their peace. In this way, a do-not-
call list is more narrowly tailored to protecting privacy than was the
law in Rowan.
Moreover, this particular restriction seems even more reasonable
given the fact that the FTC has only subjected telefunders to a charity-
specific list. Under this procedure, a consumer cannot report to a cen-
tral authority that he wishes not to be called by any telemarketers gen-
erally; he must instead repeat his request as to each caller
individually. This charity-specific alternative to a national list is an
option that the Mainstream Marketing court called "extremely bur-
densome to consumers." 358 F.3d at 1244. In light of this, we have
no trouble finding the charity-specific restriction on speech to be a
permissibly narrow means of protecting the home environment.
Fourth, the charities challenge the TSR provision requiring tele-
funders to transmit their name and phone number to caller ID ser-
vices. 16 C.F.R. § 310.(a)(7). This minimal restriction simply allows
consumers to screen and ignore telemarketing calls that come at a bad
time. Like the do-not-call list, this provision is narrowly tailored to
protect privacy because it only "effectively block[s] . . . the calls that
cause the problems the government [seeks] to redress." Mainstream
Marketing, 358 F.3d at 1238. Just as a peep-hole in a door allows resi-
dents to pre-select whom they wish to welcome into their homes, so
caller ID information allows residents to pre-select whom they wish
to speak to on a particular evening. This rule does not stop a tele-
funder from calling, nor does it prevent a potential donor from
answering the phone when it is convenient. It merely gives families
NATIONAL FEDERATION OF THE BLIND v. FTC 17
a tool specifically designed to protect their private time, and it is thus
narrowly tailored to serve that government interest.
Fifth and finally, the charities object to the disclosure provision of
the TSR which requires telefunders to promptly explain that they are
seeking donations on behalf of a specific charity. 16 C.F.R.
§ 310.4(e). We can easily reject this challenge because the Supreme
Court has implicitly rejected it already. In Riley itself, the Court held
that "nothing in this opinion should be taken to suggest that the State
may not require a fundraiser to disclose unambiguously his or her
professional status. On the contrary, such a narrowly tailored require-
ment would withstand First Amendment scrutiny." 487 U.S. at 799
n.11. If the First Amendment permits an obligation for a telefunder
to disclose his professional status, then surely it also permits the pres-
ent modest disclosure requirement — only to state the name of the
charity and the purpose of the call.
In reviewing these rules, we have no wish to exaggerate. Not every
home is a "peaceable kingdom." And it is not the end of the world
when a family receives an abandoned call or a late night call that
interrupts its evening. But it is one more small strain that families
already stressed by twenty-first century life are forced to endure. Our
Constitution does not require that we add to family burdens by forbid-
ding even the most reasonable and minor restrictions on telemarketing
practices.
B.
Notwithstanding plaintiffs’ arguments to the contrary, these five
FTC regulations are very different from the ones at issue in Riley,
Munson, and Schaumburg. Those three cases, as the Supreme Court
has subsequently explained, considered "prophylactic statutes
designed to combat fraud by imposing prior restraints on solicitation
when fundraising fees exceeded a specified reasonable level." Madi-
gan, 538 U.S. at 612 (2003). The restrictions at issue in this case are,
quite frankly, horses of a different color.
In Schaumburg, a local community passed an ordinance requiring
every person intending to solicit charitable donations to apply for a
permit. 444 U.S. at 623-24. A permit would issue only if an applica-
18 NATIONAL FEDERATION OF THE BLIND v. FTC
tion contained "satisfactory proof that at least seventy-five percent of
the proceeds of such solicitations [would] be used directly for the
charitable purpose of the organization." Id. at 624. The Supreme
Court found the law to be unconstitutional because it could not find
"any substantial relationship between the 75-percent requirement" and
an interest in preventing fraud or protecting privacy. Id. at 638.
Clearly, the law in Schaumburg is very different from the regula-
tion in the present case. First, the TSR does not involve an application
for a license, which is a prior restraint typically disfavored in First
Amendment cases. See, e.g., Forsyth County v. Nationalist Move-
ment, 505 U.S. 123, 130-31 (1992). Moreover, while the blunt and
broad 75% rule was not narrowly tailored to either prevent fraud or
to protect privacy, the regulations here (as demonstrated above) are
carefully crafted for precisely those purposes. Four of the challenged
restrictions were designed specifically to weed out unwanted and
invasive calls. Indeed, the caller ID and do-not-call list provisions
actually place the decision of specifying just which speech is
restricted with the consumer, not with the government. Meanwhile,
the fifth requirement — the disclosure provision — seeks to prevent
fraud by requiring telefunders to be forthright about their reason for
calling.
The state statute struck down in Munson is also a far cry from the
FTC’s regulation here. In Munson, the state of Maryland passed a law
similar to the one at issue in Schaumburg, but with a slightly more
flexible twist. 467 U.S. at 950-51. The law prohibited charities from
paying professional fundraisers more than 25% of the amount they
raised, but permitted a waiver of this rule if the restriction "would
effectively prevent the charitable organization from raising contribu-
tions." Id. The Court was not persuaded that the waiver saved the reg-
ulation. It found, as in Schaumburg, that fraud could be prevented by
"measures less intrusive than a direct prohibition on solicitation." Id.
at 961.
Unlike the Schaumburg and Munson statutes, the TSR does not
impose "a direct prohibition on solicitation." Id. It does not set up a
flat percentage limitation on how much commission a professional
fundraiser can take home. Rather, it merely restrains when and how
a call can be made and it does so largely in an effort to protect con-
NATIONAL FEDERATION OF THE BLIND v. FTC 19
sumer privacy. The difference between a flat prohibition of the sort
condemned in Schaumburg and Munson and the regulations here is a
difference of kind, not simply one of degree.
Finally, plaintiffs place heavy reliance on the third case of this tril-
ogy, Riley v. Nat’l Fed. of the Blind, 487 U.S. 781 (1988). The statute
in Riley directly regulated telefunders in three different ways. First,
it prohibited the professional fundraisers from collecting "unreason-
able or excessive" fees. Those terms were defined by a three-tiered
schedule, assigning different standards depending on what percentage
commission the telefunders collected. Id. at 784-85. Second, the law
required telefunders to disclose to donors the percentage of revenue
the telefunder had retained from the charity over the past twelve
months. Id. at 786. And third, it required telefunders to obtain a
license before engaging in solicitation, while volunteer fundraisers
encountered no such hurdle. Id. at 786-87.
As an initial matter, we reemphasize that the North Carolina law
in Riley was not seeking to protect consumer privacy, but was rather
"[r]esponding to a study" that indicated a growing trend of large com-
missions being charged by charity telefunders. Id. at 784. The
Supreme Court was candid that an interest in keeping donors
informed about how their charitable dollars are spent "is not as
weighty as the State asserts." Id. at 798. Riley did not consider how
restraints on charitable solicitations might further domestic privacy —
a concern to which the Court has attached particular significance —
and a concern that clearly motivated the agency here. It is thus diffi-
cult to compare Riley to the present case because, since the proffered
state interests are not the same, the "narrowly tailored" analysis will
necessarily differ.
Nonetheless, we note other significant differences between the
TSR and the prohibitions in the North Carolina statute. Indeed, the
regulations in Riley were far more restrictive than the ones before us
today. The FTC has not asked the telefunders to obtain a license here,
particularly not by a licensing procedure that could permit "a delay
without limit." Id. at 802. Further, the TSR disclosure requirement —
designed only to identify quickly the nature and purpose of the call
— is much more modest than an obligation to reveal how much one
is being paid for the call. Id. at 786. Not only does the latter require-
20 NATIONAL FEDERATION OF THE BLIND v. FTC
ment compel more speech, but it also adversely affects how receptive
a listener will be to the remainder of what is said.
Finally, the TSR does not use a rough "percentage-based measure"
to determine whether a telefunder’s fee is reasonable or not. Id. at
793. Indeed, no limitation is placed on the amount of the telefunder’s
fee at all. Telefunders must comply, of course, with rules governing
the manner in which they may call potential donors. But in this
regard, they are no different from all other telmarketing companies
regulated by the FTC. And the restraints that the FTC requires — by
rationing calls rather than by prohibiting speech — are markedly dif-
ferent from the unconstitutional restraints in Riley. The Riley Court
itself noted that "more benign and narrowly tailored options are avail-
able." Id. at 800. The FTC’s new rule provides an example of just
such an option.
C.
We thus find the TSR restrictions to be modest, reasonable, and
quite different from the laws invalidated in the three main Supreme
Court cases governing this field. The plaintiffs make an additional
argument, however, for why the TSR is not "narrowly drawn" to serve
the two government interests at stake. Munson, 467 U.S. at 961. Their
argument rests on an allegedly impermissible dichotomy between the
way the FTC treats professional fundraisers and the way it treats in-
house charity callers. As we have noted, the challenged restrictions
apply to the former, but not the latter — adversely affecting those
charities that choose to out-source their fundraising work. According
to the plaintiffs, this distinction makes the TSR unconstitutionally
"underinclusive."
A law is underinclusive in this sense, and thus not narrowly tai-
lored, when it discriminates against some speakers but not others
without a legitimate "neutral justification" for doing so. See City of
Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 429-30 (1993).
Even when the government has a compelling interest for restricting
speech, it may not seek to further that interest by creating arbitrary
distinctions among speakers that bear no "reasonable fit" to the inter-
est at hand. Id. at 416-47. Thus, in Discovery Network, the govern-
ment was prevented from advancing an interest in street aesthetics by
NATIONAL FEDERATION OF THE BLIND v. FTC 21
banning only newsracks containing commercial handbills, but not
other publications. Id. at 425-26. The Court remarked that all news-
racks are "equally unattractive" and it found suspicious the fact that
the city’s selective ban only eliminated 62 of the nearly 2000 racks.
Id. at 418, 425. Put simply, as Discovery Network illustrates, a regula-
tion can violate the First Amendment by restricting too little speech,
as well as too much.
The concept of underinclusiveness needs to be approached with
some caution, however. Holding an underinclusive classification to
violate the First Amendment can chase government into overbroad
restraints of speech. Thus, a speech restriction with a limited reach is
not doomed to fail First Amendment scrutiny. See Burson, 504 U.S.
at 207 ("We do not . . . agree that the failure to regulate all speech
renders the statute fatally underinclusive.") What concerned the Court
in Discovery Network was not, as the plaintiffs would have it, simply
the fact that some speakers were restrained where others were not.
Rather, the Court invalidated the ordinance because there was "no jus-
tification for that [distinction] other than the city’s naked assertion
that commercial speech has ‘low value.’" Id. at 429.
There are other cases, by contrast, where an underinclusive speech
restriction is justified by a neutral and legitimate reason for the dis-
tinction. In Members of City Council of Los Angeles v. Taxpayers for
Vincent, for example, a city ordinance banned signposts only on pub-
lic but not private property. 466 U.S. 789, 811 (1984). Although obvi-
ously underinclusive, the distinction was neutrally justified by a
"private citizen’s interest in controlling the use of his own property."
Id.
As the district court in the present case noted, the Supreme Court
has found an underinclusive restriction of speech to be impermissible
in three circumstances: (1) where the law represents an attempt by the
government to give one side of a public debate an advantage over
another, City of Ladue v. Gilleo, 512 U.S. 43, 51 (1994); (2) where
the regulation is so broad or narrow in scope that it "undermines the
likelihood of a genuine governmental interest," F.C.C. v. League of
Women Voters of California, 468 U.S. 364, 396 (1984) (citation omit-
ted); and (3) where the underinclusiveness is so severe that it "raises
serious doubts" about whether the government is actually serving the
22 NATIONAL FEDERATION OF THE BLIND v. FTC
interests it invokes. Florida Star v. B.J.F., 491 U.S. 524, 540 (1989);
see also Discovery Network, 507 U.S. at 424-26.5
Significantly, in all three scenarios the limited scope of the regula-
tion served as a red flag to signal a governmental trespass on a funda-
mental First Amendment concern. A distinction among speakers is
thus not objectionable per se, but only because it renders implausible
the government’s claim that the regulation making this distinction is
narrowly tailored to address a certain interest. The City of Ladue
Court, for instance, was troubled by the distinction in that case
because it "diminish[ed] the credibility of the government’s rationale
for restricting speech." 512 U.S. at 51. Similarly, the Discovery Net-
work Court did not invalidate the ordinance simply because it applied
to some newsracks and not to others, but rather because the selective
application of the ban left the city relying on the notion that commer-
cial handbills were "low value," a characterization that the Court was
"unwilling" to countenance. 507 U.S. at 428. See also Metromedia,
Inc. v. City of San Diego, 453 U.S. 490, 511 (1981) (framing the
underinclusiveness question by asking whether "the city denigrates its
interest . . . and defeats its own case by permitting" some speech and
not others).
There is no mystery, however, about why the FTC has distin-
guished telefunders from in-house charity callers. Indeed, the agency
candidly explained that it drew this line because that was the only
way to reconcile the new instructions from Congress set forth in the
5
The dissent reads Riley to create yet another category, one that would
require "a compelling justification" for "regulations that distinguish
between charities." Dissenting Op. at 30. But Riley cannot bear the
weight that the dissent would place upon it. The "key deficiency" of the
North Carolina statute was not, as the dissent would have it, the fact that
"it necessarily only applied to those charities that used professional fun-
draisers." Id. at 30. Rather, the problem was that the provision could not
withstand "exacting First Amendment scrutiny" because the state’s inter-
est was insufficiently "weighty" and "the means chosen to accomplish it
[were] unduly burdensome and not narrowly tailored." Riley, 487 U.S. at
798. As we have noted, the Riley Court emphasized that imposing
requirements upon professional fundraisers does not offend the First
Amendment so long as those requirements are sufficiently narrowly tai-
lored, id. at 799 n.11, as the restrictions in this case are.
NATIONAL FEDERATION OF THE BLIND v. FTC 23
PATRIOT Act with the old, unchanged instructions from Congress
set forth in the Telemarketing Act. Thus, the agency noted that:
Reading the amendments to the Telemarketing Act effectu-
ated by § 1011 of the USA PATRIOT Act together with the
unchanged sections of the Telemarketing Act compels the
conclusion that for-profit entities that solicit charitable
donations now must comply with the TSR, although the
Rule’s applicability to charitable organizations themselves is
unaffected.
See 68 Fed. Reg. 4580, 4585 (January 29, 2003). This reconciliation
of the two statutes, as the lower court explained, is "[t]he only logical
conclusion that can be drawn from reading these two provisions
together." See Nat’l Fed. of the Blind, 303 F. Supp. 2d at 714. And
it is thus no surprise that the agency reached it.
In fact, when it announced the TSR, the FTC specifically
responded to comments it had received from charities claiming that
this interpretation of Congress’ instructions created "a double stan-
dard" — increasing costs for only those charities who choose to use
telefunders and not for those charities who do not. In response, the
FTC explained:
Again, the Commission notes that despite its broad mandate
to regulate charitable solicitations made via telemarketing,
the USA PATRIOT Act amendments did not expand the
Commission’s jurisdiction under the TSR to make direct
regulation of non-profit organizations possible.
...
. . . the jurisdictional reach of the Rule is set by statute, and
the Commission has no authority to expand the Rule beyond
those statutory limits.
See 68 Fed. Reg. at 4586, 4587.
The dissent finds itself unable to accept the distinction between
paid solicitors and in-house volunteers. It rejects the view that tele-
24 NATIONAL FEDERATION OF THE BLIND v. FTC
funders, presumably on commission, will more aggressively pursue
residents because "[u]nlike the FTC, [the dissent] cannot accept that
one’s strongest motivations are always monetary." Dissenting Op. at
32 n.2. Whether or not one accepts the view that paid solicitors are
more likely to hound residents for money, the question before us is
not a matter of substantial evidence review of an agency decision, but
rather a question of whether we have an adequate basis in law for
finding the TSR to be unconstitutional. No such basis exists.
The distinction of which appellants complain was something the
agency was bound to make by simple application of its jurisdictional
limitations. And, what is more, drawing this sort of line is not a new
enterprise for the FTC. The agency has made distinctions in the past
— analogous to the one challenged here — with regard to telemarket-
ing done on behalf of other entities outside its jurisdiction. The intro-
duction to the TSR explains:
The Commission notes that, from the inception of the Rule,
the Commission has asserted that parties acting on behalf of
exempt organizations are not thereby exempt from the FTC
Act, and thus, for example, a nonbank company that con-
tracts with a bank to provide telemarketing services on
behalf of the bank is covered by this Rule. This reading is
consistent with the Commission’s long-standing interpreta-
tion of the scope of its authority under the FTC Act, as well
as with judicial precedent.
68 Fed. Reg. at 4586 (quotation marks omitted).
When an agency regulates to the extent of its jurisdiction it will
unavoidably leave out some speakers and some speech that is beyond
its authority to regulate. But, in such circumstances, the danger of
governmental overreaching — which cases such as Discovery Net-
work aim to prevent — is removed. Unlike in those cases, here it does
not make sense to see this unavoidable distinction as a red flag indi-
cating First Amendment problems. Any underinclusiveness that
appellants have identified is not the result of the FTC attempting to
favor one side of a public debate over another, City of Ladue, 512
U.S. at 51, or pursuing an illegitimate governmental interest, League
of Women Voters, 468 U.S. at 396, or not genuinely serving the inter-
NATIONAL FEDERATION OF THE BLIND v. FTC 25
est it purports to seek, Florida Star, 491 U.S. at 540. Rather, such
underinclusiveness results from the simple fact that the PATRIOT
Act designated "charitable solicitations" as being within the type of
behavior the FTC could regulate, but it left speech by charities outside
the agency’s jurisdiction.
The agency’s jurisdictional boundary, therefore, serves as the "neu-
tral justification" for the distinction that was missing in Discovery
Network. See 507 U.S. at 429-30. While plaintiffs complain that the
regulation also fails to cover some commercial, political, and intra-
state speech, this fact too is explained by the FTC’s assiduous atten-
tion to its own jurisdiction.
Appellants’ argument suffers from another flaw. They ask us to
hold that the FTC’s distinction, based on the clear congressional
directives governing its jurisdiction, is unconstitutional. But if we did
so, then any regulation by any federal agency that applied to only
some speakers would be imperiled. Worse still, Congress could not
remedy such defects by re-assigning jurisdiction among agencies. For
the reassignment would itself necessarily distinguish among speakers
or speech that each agency can regulate. This is so because jurisdic-
tion, by its very nature, is underinclusive. The upshot of appellant’s
position is thus a stark choice for lawmakers — either assign all regu-
lation touching on speech to one federal agency, or do not regulate at
all. We do not believe the Constitution hamstrings Congress in such
a manner.
In any event, effectively instructing Congress to reorder an agen-
cy’s jurisdiction would be an unwarranted exercise of judicial author-
ity. Agency jurisdiction often reflects traditional areas of expertise
and experience which extend well beyond this or indeed any single
problem. See Weinberger v. Bentex Pharm. Inc., 412 U.S. 645, 654
(1973) (emphasizing agency "specialization" and specific "insight
gained through experience"). Congress has a great deal on its plate,
and it is neither wise nor within our competence as judges to casually
direct the legislative branch to re-organize executive agencies.6
6
In this regard, we do not find it surprising that different agencies
might adopt different policies. The point has been made that the FCC,
26 NATIONAL FEDERATION OF THE BLIND v. FTC
Our fine dissenting colleague takes to task the FTC’s action
because it offends the all-or-nothing way in which the dissent believes
the government should operate. In the dissent’s view, government is
not entitled to messy or untidy solutions, but instead is confined to
sweeping pronouncements, bereft of the ability to make distinctions
or to strike compromises. This is a view that we cannot accept.
Indeed, we note that accepting plaintiffs’ underinclusiveness argu-
ments would strike a blow to the democratic process and our structure
of government. We have no warrant to prevent the government from
addressing a problem one step at a time. And, if we were to strike
down these regulations as underinclusive, we could well provoke leg-
islatures to pass broader regulations that would prove far more dam-
aging to free speech. We thus need not prevent the government from
confronting problems incrementally; to do so would ignore the warn-
ing that the government is not required to "make progress on every
front before it can make progress on any front." See United States v.
Edge Broad. Co., 509 U.S. 418, 434 (1993).
VI.
The same respect for the democratic process that leads us to credit
the FTC for faithfully applying its jurisdictional mandate counsels
respect for the obvious efforts the agency has taken to balance the
competing interests involved. Indeed, were we not to respect the com-
promises made by the agency, we would be depriving our legislative
and executive branches of the authority to protect residential privacy
even to the modest extent that these regulations do.
A brief review of the TSR underscores its status as a series of com-
promises. The regulations do not, for instance, prohibit telemarketing
when interpreting the Telephone Consumer Protection Act, exempted all
charitable speech from its regulation and did not distinguish telefunders
from in-house charity callers. We note that the two agencies are operat-
ing with different jurisdictional boundaries and are interpreting different
statutes. In any event, the fact that two agencies disagree with each other
is hardly remarkable. For such variance is commonplace in government.
The mere fact of agency disagreement does not suggest to us that one or
the other view is unconstitutional.
NATIONAL FEDERATION OF THE BLIND v. FTC 27
altogether — only early morning and late night calls are disallowed.
Neither do the regulations require a cumbersome and lengthy disclo-
sure of identifying information — only the name of the charity repre-
sented and the purpose of the call must be disclosed. Furthermore, the
regulations do not subject telefunders to the more restrictive national
do-not-call list — instead they must only comply with a charity-
specific registry.
Indeed, the agency’s compromises are explicitly recognized in the
TSR itself. Aware of Riley, Schaumburg, and Munson, the Commis-
sion properly noted the importance of "minimz[ing] the impact on the
First Amendment rights of charitable organizations and the telemar-
keters who solicit on their behalf." 68 Fed. Reg. at 4636. The agency
was explicitly sensitive to the fact that smaller charities tend "to
employ for-profit firms to make their calls." Id. at 4666. Because of
this, the FTC was concerned that subjecting telefunders to a national
do-not-call list would "sweep too broadly," id. at 4636, and it thus set-
tled on a "more limited approach" requiring telefunders to honor only
a charity-specific do-not-call list. Id. at 4637. This compromise, it
noted, was "likely to be of significant benefit to smaller charities," id.
at 4666, and "work[ed] better to accommodate both the right of pri-
vacy and the right of free speech." Id. at 4637.
These regulations are, in short, the product of a necessary balanc-
ing. The rights of charities and telefunders to communicate with
potential donors were weighed against the right of those donors to
enjoy residential peace. In this respect, the regulations are akin to the
numerous time, place, and manner restrictions on speech that the
Supreme Court has often upheld against First Amendment challenge.
See, e.g., Ward v. Rock Against Racism, 491 U.S. 781, 803 (1989).
Just as those restrictions balance the government’s interest in protect-
ing the community, see id. at 796, against a speaker’s right to dissem-
inate his ideas, see id. at 802 (regulation must "leave open ample
alternative channels of communication"), so do the FTC’s restrictions
on telemarketing accomplish such a reconciliation of personal and
public interests.
The dissent analogizes what took place here to a decision by Con-
gress to assign a particular agency jurisdiction over speakers with a
particular political orientation or point of view. Dissenting Op. at 34-
28 NATIONAL FEDERATION OF THE BLIND v. FTC
35 (discussing hypothetical agency jurisdiction "over one political
party"). This analogy is so far afield from the neutral character of the
jurisdictional division here as to be apples and oranges. Like time,
place, and manner restrictions, the TSR provisions do not exhibit any
disapproval of the content of the calls placed by telefunders. The TSR
applies evenhandedly to solicitations for charities of all persuasions
and beliefs. The restrictions apply to all telemarketing calls made by
entities within the FTC’s jurisdiction, regardless of the subject matter
of the call or the viewpoint expressed by the caller. "[L]aws that con-
fer benefits or impose burdens on speech without reference to the
ideas or views expressed are in most instances content neutral." Tur-
ner Broadcasting Sys., Inc. v. FCC, 512 U.S. 622, 643 (1994). And
narrowly-drawn content-neutral restraints on speech represent a per-
missible governmental response to a legitimate and substantial public
concern. See Ward, 491 U.S. at 798-99.
Compromises of this sort are critical to a government of separated
powers. They permit all three branches to participate in striking a bal-
ance between individual rights on the one hand and public interests
on the other. The judicial branch identifies a constitutional right (as
in Riley), and then the executive and legislative branches reconcile
respect for that right with a measured protection of the public interest.
We should be wary of upsetting such a delicate dance in which all
three partners of government play their distinctive roles.7 Courts have
their vital part to play, but here it is best performed in conjunction
with, and not to the exclusion of, the coordinate branches of our govern-
ment.8
7
Admittedly, the FTC is often called an "independent agency" and is
not fully accountable to the executive branch. However, the FTC acted
pursuant to an explicit congressional directive, see 15 U.S.C.
§ 6102(a)(1), and it conducted hearings giving ample opportunity to
interested parties to voice concerns within this congressional rubric. See
68 Fed. Reg. 4580, 4582 (Jan. 29, 2003). It thus reflects the efforts of our
democratic branches.
8
The charities additionally claim that the TSR constitutes an impermis-
sible prior restraint of speech, and violates the Equal Protection Clause.
We find these arguments to be without merit.
First, as the district court noted, plaintiffs’ prior restraint argument "ig-
nores the long-held distinction between prior restraints and subsequent
NATIONAL FEDERATION OF THE BLIND v. FTC 29
VII.
Our Constitution does not prevent the democratic process from
affording the American family some small respite and sense of sur-
cease. We hold, therefore, that the FTC was authorized by Congress
to promulgate the TSR, and we find that the rule is consistent with
the First Amendment. Since it is "narrowly drawn" to serve the
"strong subordinating interest" of protecting residential peace, the
TSR embodies a proper compromise between the important speech
interests of charities and the equally important need to protect the
public from excessive intrusions into the home. Munson, 467 U.S. at
960-961. The district court’s judgment is accordingly
AFFIRMED.
DUNCAN, Circuit Judge, dissenting:
There are few more annoying occurrences than the disruption of
one’s sleep due to a late-night or early-morning phone call by a tele-
phone solicitor. Whether the end result is simply mild frustration (due
to an ill-timed solicitation) or actual fear (due to the phenomenon of
"abandoned calls"), the invasion of privacy that the majority identifies
due to unwanted telephone solicitations is certainly a compelling
interest that government can seek to remedy. I do not disagree with
the majority’s assessment that the regulations at issue in this case are
modest attempts by the Federal Trade Commission ("FTC") to pro-
vide some respite to the public from the barrage of such intrusions.
Were these regulations to apply equally to all charities that seek to
engage in telephone solicitations, I would concur in the majority’s
punishments." Nat’l Fed. of the Blind v. FTC, 303 F. Supp. 2d 707, 723-
24 (D. Md. 2004). Traditionally, unconstitutional prior restraints are
found in the context of judicial injunctions or a licensing scheme that
places "unbridled discretion in the hands of a government official or
agency." FW / PBS, Inc. v. City of Dallas, 493 U.S. 215, 225-26 (1990).
Here, by contrast, it is only after the speech is uttered that a violation of
the TSR can occur and sanctions can be imposed.
Second, there is no Equal Protection violation for the same reasons
there is no First Amendment violation. See Nat’l Fed. of the Blind, 303
F. Supp. 2d at 723.
30 NATIONAL FEDERATION OF THE BLIND v. FTC
decision to affirm. However, because the TSR in my view impermiss-
ibly distinguishes between the type of speech permitted based upon
the identity of the speaker without any legitimate neutral justification,
I must unfortunately, respectfully, dissent.
I.
As the majority correctly points out, a law or regulation is underin-
clusive when it restricts the speech of one group of speakers but not
that of another similarly situated group without a legitimate "neutral
justification" for the distinction. See City of Cincinnati v. Discovery
Network, Inc., 507 U.S. 410, 429-30 (1993). Even where, as here, the
government has a compelling interest in regulating a particular type
of speech, its distinctions between similarly situated actors must
reflect a "reasonable fit" between the restriction and the goal to be
achieved by the disparate treatment. Id. At 417. If the distinction
restricts speech in a way that does not achieve its stated goal, or is
made without sufficient evidentiary justification, the regulation is
constitutionally underinclusive.
In Riley v. Nat’l Fed. Of the Blind of North Carolina, Inc. 487 U.S.
781 (1988), the Supreme Court made clear that the two groups at
issue here, charities that use "telefunders" and those that keep solicita-
tion in-house, are similarly situated actors. Riley involved a North
Carolina statute requiring all professional fundraisers to disclose to
potential donors the percentage of the charitable contributions col-
lected in the previous twelve months that was actually turned over to
the charity. Id. at 784 n.2. The Supreme Court struck down the
requirement, holding that the state’s interest in informing donors
about the charity’s fundraising agreement did not outweigh the fund-
raisers’ significant speech interests. Id. at 798-99.
Most importantly for our purposes, the Court noted that the stat-
ute’s key deficiency was that it necessarily only applied to those char-
ities that used professional fundraisers. Id. at 784. The Court
recognized that in addition to the heightened scrutiny given to all reg-
ulations affecting charitable solicitations, courts should be especially
cognizant of the comparative effect regulations that distinguish
between charities based upon the professional/volunteer status of the
solicitor can have on the success of the charity itself. See id. at 799.
NATIONAL FEDERATION OF THE BLIND v. FTC 31
Because charities using professional solicitors are likely to be smaller
and less popular than those relying on in-house efforts, the statute’s
application of the financial disclosure requirements to these profes-
sional fundraisers would place them at a competitive disadvantage.
The state in Riley argued that even under this heightened scrutiny, its
regulation was justified due to the increased risk of fraud inherent in
telefunder solicitation. The Court specifically rejected this assertion,
holding that there exists "no nexus" between the percentage of funds
retained by a solicitor and the likelihood of fraud. Id. at 793. Because
regulations that distinguish between charities can affect the financial
success of one vis a vis another, such distinctions must have a com-
pelling justification. With no evidence to support the state of North
Carolina’s bald assertion of a greater likelihood of fraud, the court
held that the state could not treat these similarly situated actors differ-
ently, and the distinction could not be upheld. Id. at 798-99. It is
against this backdrop that we must review the regulation now before
us.1
The FTC asserts that it intended the amended TSR to further the
dual goals of fraud protection and consumer privacy. However, it is
unclear that either of these goals is advanced in any material way by
the TSR’s inclusion of only solicitations made by telefunders rather
than the broader category of all charitable solicitors in its speech
restrictions. The district court found sufficient the FTC’s declaration
that a professional telefunder’s financial interest in obtaining greater
contributions leads it to be more likely to engage in fraudulent behav-
ior than a non-professional solicitor. Nat’l Fed. of the Blind v. F.T.C.,
303 F. Supp. 2d 707, 721 (D. Md. 2004). However, the FTC, when
pressed at oral argument, conceded that there existed "no empirical
evidence" in the administrative record to support this assumption. In
fact, the FTC conceded that the only evidentiary support the agency
had for solely applying the TSR to telefunders was its intuitive,
"common-sense" assumption that telefunders commit fraud more fre-
quently. This is the exact assumption rejected by Riley. Further, as it
1
In its well-reasoned opinion, the majority considers Riley but does not
address its implications concerning underinclusiveness. While the regula-
tions at issue here may be more limited than in Riley, there is no indica-
tion that its holding that charities are similarly situated actors that must
be treated equally without compelling justification is any less applicable.
32 NATIONAL FEDERATION OF THE BLIND v. FTC
is not grounded on any fact that the FTC or this court has before it,
I cannot accept it as a "neutral justification" for the speech limitation
distinction.2
The same evidentiary deficiencies undercut the FTC’s conclusion
that its regulations advance the goal of protecting consumer privacy.
While it cannot be doubted that the government’s rules will prevent
some degree of consumer annoyance, the FTC again presents no evi-
dence that telefunders are more likely to be violators of consumer pri-
vacy or engage in abusive telemarketing practices than in-house
solicitors. There is no suggestion in the record that consumers are
more likely to feel that their privacy is invaded when receiving a call
from a telefunder than a volunteer or in-house employee of a charita-
ble organization. The FTC has also provided no evidence showing
that telefunders generate a majority, or even a significant percentage
of the charitable solicitation calls. It is not enough for us to accept the
agency’s rationale that the regulation is justifiable because it will help
consumers in some small way. See Discovery Network, 507 U.S. at
426 (1993)(holding that a selective ban on commercial newsracks was
not justifiable simply because it would "in some small way limit the
total number of newsracks."). In order for it to pass the underinclu-
siveness test, the FTC must show that the evidence illustrates that it
makes sense to treat these similarly situated charities differently. This
it does not do.
2
The majority is correct in asserting that our review is not one for
"substantial evidence," but rather is a question as to whether we have a
substantial basis for finding the regulation unconstitutional. Majority Op.
at 24. Here we most certainly do. The lack of evidence (as opposed to
"common-sense" assumptions) providing a "neutral justification" for the
distinction between telefunders and in-house solicitors requires the find-
ing of a First Amendment violation.
Further, even if such so-called "common sense" assumptions were a
sufficient evidentiary basis for speech distinctions (and Discovery Net-
work counsels that they are not), I would not accept this one. It could just
as plausibly be argued that a solicitation conducted by someone with a
personal interest in the success of a charity (such as an employee or a
volunteer) may lead to more overreaching and thus a greater potential for
fraud. Unlike the FTC, I cannot accept that one’s strongest motivations
are always monetary.
NATIONAL FEDERATION OF THE BLIND v. FTC 33
It is certainly not the case that the First Amendment requires the
government to regulate all aspects of a problem before regulating any
part of it. United States v. Edge Broad. Co., 509 U.S. 418, 434 (1993).
We generally give the government the latitude it needs to find ways
to address problems in society in the manner in which it sees fit, and
those judgments are deserving of deference.3 However, where, as
here, no evidentiary basis has been articulated for the disparate treat-
ment of similarly situated groups, such deference is unwarranted. See
Florida Star v. B.J.F., 491 U.S. 524, 537-38 (1989). The FTC has
made no showing that the professional/non-professional distinction it
employs in the TSR furthers the goals of fraud prevention and con-
sumer privacy. It is this showing that Discovery Network’s "neutral
justification" and "reasonable fit" requirements compel. 507 U.S. at
428-30. Because these requirements are not satisfied, the TSR cannot
survive.
The majority characterizes my analysis as reflecting a belief that
government must act in an "all-or-nothing" manner. It asserts that I
believe that the government cannot undertake "messy" solutions, but
rather must only make "sweeping pronouncements." Majority Op. at
26. It is unclear to me how such broadly painted assumptions about
my beliefs concerning the role of government could be ascertained
from such a narrow dissent; in any event, nothing could be further
from the truth. Rather, I simply believe that the Supreme Court meant
what it said in Discovery Network that without a "neutral justifica-
tion," neither Congress nor executive agencies can create speech
restrictions that treat similarly-situated actors differently. 507 U.S. at
428-30. The FTC had ample opportunity during the rule-making pro-
cess to create an evidentiary record to support the distinction it has
drawn. It failed to do so, and the majority’s mischaracterization of my
views and expressions of concern for the "democratic process" and
"our structure of government" are no substitute. The government is
3
The majority’s deference borders on subservience. By suggesting that
after the judiciary finds a constitutional right, as in Riley, it is then up to
the legislative and executive branches to define the scope of that right,
the majority seems to suggest a far too limited role for the courts. How-
ever the "elaborate dance" between the governmental branches is to pro-
ceed, the judiciary cannot relinquish its role as the ultimate protector of
constitutional guarantees.
34 NATIONAL FEDERATION OF THE BLIND v. FTC
certainly able to "make distinctions or to strike compromises," Major-
ity Op. at 26, but in doing so, it must abide by the First Amendment.
Here, the FTC did not.
II.
Seeking to save the FTC from these evidentiary deficiencies, the
majority holds that the distinction the TSR draws between in-house
fundraisers and external telefunders is justified due to the agency’s
jurisdictional restraints. The FTC Act gives the agency jurisdiction
over "persons, partnerships and corporations," but no authority over
nonprofit organizations. 15 U.S.C. § 45(a)(2). The majority correctly
notes that without the jurisdiction to regulate all nonprofit organiza-
tions, the FTC has no ability to correct the underinclusiveness inher-
ent in the TSR. According to the majority, some degree of
underinclusiveness is inevitable in all agency regulation, and an agen-
cy’s jurisdictional boundaries can therefore serve as the "neutral justi-
fication" for an underinclusive distinction.
The implications of this holding are staggering. If a regulation that
places different restrictions on speech based upon the identity of the
speaker can be upheld simply by relying on the jurisdiction of the
agency as the "neutral justification" for the distinction, this court will
have created a perverse incentive for all legislative bodies. Congress
can restrict speech, even unconstitutionally, so long as it does so by
parsing jurisdiction between various agencies. If, for example, Con-
gress were to give a particular agency jurisdiction over one political
party — for instance if the Department of Homeland Security were
given jurisdiction over the Independent party in America — the
majority’s holding would allow a regulation that restricted that party’s
ability to raise funds to be upheld simply by referring to the agency’s
jurisdiction.4 Restrictions on speech that go to the heart of the First
4
The majority criticizes this analogy without providing any basis for
distinguishing it from the situation before us. The government could dis-
perse jurisdiction over political parties among various agencies without
"exhibit[ing] any disapproval of the content" of the parties’ messages.
See Majority Op. at 28. If one of such agencies were then to create a set
of restrictions that apply to all parties within its jurisdiction, and "impose
burdens on speech without reference to the ideas or views expressed,"
NATIONAL FEDERATION OF THE BLIND v. FTC 35
Amendment, those differentiating solely on the identity of the
speaker, would be given little to no scrutiny, as the legislative deci-
sion to disperse jurisdiction amongst various executive agencies
would justify the disparities. The majority would allow Congress to
do indirectly that which it cannot do directly, and that is to regulate
speech in an underinclusive manner.
The majority’s sole focus on the FTC’s jurisdiction and that agen-
cy’s inability to promulgate an even-handed regulation overlooks the
fact that Congress is well able to correct the constitutional deficiency.5
In this case it could have done so by simply expanding the FTC’s
jurisdiction to include all charitable solicitations, thus authorizing the
agency to pass a regulation that advances the goals of fraud protection
and consumer privacy materially and constitutionally. Congress could
have also simply required the Federal Communications Commission,
the agency with oversight authority over all non-telefunder charitable
solicitation, to pass a similar regulation, thus insuring that all charities
were on a level playing field in their quest to solicit funds. However
what it cannot do is hide behind jurisdictional barriers which it
erected as a shield for its unconstitutional restrictions on speech based
upon the identity of the speaker.6
the majority’s reasoning would require us to uphold the restriction. Sig-
nificantly, the majority is unable to point to any language in its opinion
which would preclude such a result. The majority’s unexplained asser-
tion that my analogy is "so far afield" from the regulation at hand as to
be "apples and oranges" reflects a conclusion rather than an analysis.
5
The majority suggests that a "correction" by Congress of an agency’s
jurisdiction would in and of itself, be underinclusive. However it posits
no basis for this proposition. If true, all Congressional grants of jurisdic-
tion that differentiate between groups would be underinclusive. The First
Amendment does not require this radical result; it simply requires some
legitimate basis for differential treatment.
6
The majority’s concern about judicial overreaching is understandable
but inapplicable here. If Congress and the executive agencies have evi-
dentiary reasons for their respective decisions to pass regulations that
have the effect of treating similar groups differently, they may well pass
constitutional muster. However when, as here, no such evidentiary basis
exists, the effect of this Congressional choice is to create an unconstitu-
tional restriction on speech. It is not overreaching to prevent this result.
36 NATIONAL FEDERATION OF THE BLIND v. FTC
III.
The Supreme Court has recognized that the ability to raise funds
is the lifeblood of a charity. Riley, 487 U.S. at 789. For very large or
very popular charities, fundraising can be conducted in-house through
employees of the charities or volunteers. The use of volunteers can
even be a selling point to potential donors, as an individual’s willing-
ness to dedicate his or her free time to a cause suggests a strong belief
in its goals. However, for small or unpopular charities, the ability to
engage in mass volunteer fundraising may be impossible, and thus the
use of professional fundraisers may hold the key to the entity’s exis-
tence.
As charities compete for the finite charitable donation dollar, those
charities that either choose to or are forced to use telefunders are
placed at a competitive disadvantage by the regulations that affect
them and not their charitable counterparts. It may very well be the
case that following the regulations laid down in the TSR would be a
good practice for all charities. Calling consumers early in the morning
or in the middle of the night appears unlikely to provide the most suc-
cessful fundraising strategy. However, whatever decisions the indi-
vidual charities make, Riley and Discovery Network compel the
conclusion that the government must apply an even hand. The FTC
has no evidence and no reason beyond jurisdictional authority justify-
ing its decision to regulate charitable solicitations differently based
upon the identity of the speaker.
The majority holds that this suffices, and that Congress can justify
unconstitutional restrictions on speech based upon the identity of the
speaker simply by delineating jurisdiction over those speakers
between various executive agencies. This argument is untenable. It
provides a jurisdictional loophole through which government can
achieve indirectly that which it cannot do directly. I do not believe
that such jurisdictional parsing can be a "neutral justification" for a
regulation that imposes different speech restrictions based upon the
identity of the speaker. I therefore respectfully dissent.