TENTH CIRCUIT UPHOLDS FCC-FTC "DO NOT CALL" LIST.

A three judge panel of the Tenth U.S. Circuit Court of Appeals has unanimously upheld the "Do Not Call" list as constitutional and found the Federal Communications Commission's established business relationship exception to the list is not arbitrary or capricious.

Although the Feb. 17 ruling addresses telephone calls rather than facsimile messages, it is expected to guide the FCC as it reconsiders its "Do Not Fax" rule.

The FCC published a "Do Not Fax" rule in the Federal Register on July 25, but there was such an outcry from insurers and others about how onerous, costly and anti-competitive the rule was that the commission agreed Aug. 18 to stay implementation.

The rule would make it unlawful for anyone to send a fax that could be considered an unsolicited advertisement to a facsimile machine without the prior written permission of the recipient.

Although the Feb. 17 ruling is not expected to have a direct impact on the reconsideration of that rule, FCC attorneys said they thought the language on the commission's approach to avoiding an arbitrary and capricious rule would be used as a guide for how to implement a rule that did not violate the Administrative Procedure Act.

FCC Chairman Michael K. Powell called the ruling "a triumph for American consumers."

"The National Do-Not-Call Registry is one of the most popular and successful consumer initiatives undertaken by the federal government and, along with the vast majority of our citizens, I commend the court for removing the shadow of judicial uncertainty," he said.

The court consolidated four cases involving challenges to the FCC's and Federal Trade Commission's registry which allows individuals to register their phone numbers on a national list and prohibits most commercial telemarketers from calling those numbers.

Each of the cases challenged the list on grounds the First Amendment prevents the government from establishing an opt-in telemarketing regulation that provides a mechanism for consumers to restrict commercial sales calls but does not provide a similar mechanism to limit charitable or political calls.

The court found the list was constitutional because it restricts "only core commercial speech" and "targets speech that invades the privacy of the home, a personal sanctuary that enjoys a unique status in our constitutional jurisprudence."

In addition, the court found the list is "an opt-in program that puts the choice of whether or not to restrict commercial calls entirely in the hands of consumers" and does not materially further "the government's interests in combating the danger of abusive telemarketing and preventing the invasion of consumer privacy, blocking a significant number of the calls that cause these problems."

The court also considered whether it was arbitrary and capricious for the FCC to approve the "established business relationship" exception for commercial callers.

The plaintiffs had argued the FCC had not given appropriate consideration to the anti-competitive effect the exception could have on telecommunications markets.

The court found the FCC had sufficiently addressed the plaintiffs' concerns by asking for comments on the anti-competitive effect the exception might have and had "considered several proposed ways in which an anti-competitive effect could be mitigated, rejecting each of them."

The court concluded it was not empowered to substitute its judgment for that of the FCC under the arbitrary and capricious standard of review.