Eighth Circuit upholds North Dakota do-not-call law.

North Dakota's "do not call" law restricting telephone solicitations does not violate the free speech rights of charitable organizations, the Eighth Circuit has ruled. The court reversed a federal district court decision that invalidated certain provisions in the statute as content-based restrictions on speech. Two nonprofit organizations, North Dakota chapters of the Fraternal Order of Police and Veterans of Foreign Wars, had challenged the law's constitutionality. (Fraternal Order of Police v. Stenehjem, 431 F.3d 591 (8th Cir. 2005).)

The law prohibits phone solicitation of residents who register with the state's do-not-call list. Charitable organizations are exempt if the caller is an employee or volunteer but not if the caller is an outside solicitor hired by the charity.

"Seeking to balance the interest of callers against the privacy rights of subscribers, the legislature distinguished between in-house and professional charitable solicitors," Judge Roger Wollman wrote for the 2-1 majority. "We are reluctant to second-guess the North Dakota legislature's judgment that professional charitable solicitors intrude more regularly on residents' privacy than volunteers or employees."

The law's purpose is to provide residents a way "to significantly reduce or eliminate intrusive, offensive, and unwanted telephone solicitations," said North Dakota Solicitor General Douglas Bahr. "Permitting charities to use volunteers or employees, but not paid solicitors, to make solicitation calls significantly reduces the number of invasive calls."

Charities argue that they depend on solicitation for their funding and should be allowed to make calls using their own personnel as well as outside professionals they hire. More than 150 nonprofit organizations that oppose the restrictions--and 15 states that support the law filed amici briefs in the case.

The Eighth Circuit held that the statute is narrowly tailored, significantly furthers the state's interest in protecting residential privacy, does not substantially limit charitable solicitations, and is not unconstitutionally overbroad. The court determined that the law is content-neutral because the message delivered by a charity employee is the same as the message delivered by a professional caller on the charity's behalf.

Errol Copilevitz, a Kansas City, Missouri, lawyer representing the nonprofits, disagreed. Calling the law content-neutral "defies logic," he said. "The only distinction is based upon who signs the paycheck of the caller. If the caller receives a paycheck from the charity, then none of this law applies. If the caller receives the paycheck from a professional agency, then the law does apply. This is so even though the phone rings the same way, at the same time, with the same message."

People who sign up on the do-not-call list are not trying to avoid calls from charities, Copilevitz said. "In North Dakota, persons who wish to avoid calls from credit card companies also put themselves out of reach of charitable organizations, some of which they have supported in the past," he said.

Copilevitz added that charities hire outside fund-raisers because it is more cost-effective than making the calls in-house. As such, the law "unconstitutionally discriminates against smaller organizations" that cannot afford to make the calls on their own, he said.

However, North Dakota Attorney General Wayne Stenehjem said in a press release that the law aims to prevent telemarketing companies from taking advantage of charities. "Some of these charities get hooked into unconscionable contracts with telemarketing companies that charge upwards of 85 percent of the money they collect from generous donors," he said.

Copilevitz said that through some of its exemptions, the law favors commercial companies over nonprofit organizations. For example, one exemption allows "commercial sellers to make calls to persons on the do-not-call list, so long as a sales transaction does not take place over the telephone," he said. "How is that call more valuable to society than a call from the Red Cross?"

Bahr said the North Dakota law has succeeded in protecting residential privacy. More than 252,000 telephone subscribers had joined the list as of early January.

The Eighth Circuit decision comes as do-not-call violations have attracted public attention. In December, DirecTV agreed to settle charges that it violated the federal version of the law; the settlement amounted to the largest civil penalty the Federal Trade Commission has ever announced in a case enforcing a consumer protection law.

More than 110 million phone numbers have been registered with the federal do-not-call list, and about 25 states have their own lists, several of which include stronger consumer protections than the federal law, the Wall Street Journal reported. (Christopher Conkey, Record Fine Levied for Telemarketing, Wall St. J., Dec. 14, 2005, at Dl.)

The federal do-not-call law is less restrictive of charities than North Dakota's law is. It prohibits charitable solicitation calls only if the person specifically asks to be placed on the organization's in-house list, Bahr said.

Copilevitz said the federal approach is more sensible because "all a person has to do is answer the telephone and ask the charity or its professional representative to place them on the organization's do-not-call list."

However, Bahr said that such in-house lists often are ineffective. "Not only do many organizations ignore requests, but the organization-specific approach requires the resident to wait until invasive calls are made to ask to be put on the list," he said.

Copilevitz noted that a case challenging a similar law in Indiana is pending before the Seventh Circuit, and the charity plaintiffs in a Fourth Circuit case petitioned the Supreme Court for certiorari in January.

Most states with do-not-call laws exempt charities. Because of the Eighth Circuit decision, states "may feel more confident in removing that exemption if they feel the need to do so," Bahr said. "States that have laws similar to North Dakota's law can feel more confident in the constitutionality of their laws."