United States: State Court Disconnects Lawsuit Against Indiana Do-Not-Call Law

A state court in Evansville, Indiana upheld the 2001 Indiana Telephone Privacy Act. On July 5, 2002, Vanderburgh Circuit Judge Carl Heldt ruled against Steve Martin & Associates on its constitutional free speech and equal protection challenges to the law and also in its claim that the do-not-call law had been wrongly applied to its business activity. The company was prosecuted for making calls to set up at-home demonstrations of the rug shampooer it distributes. Judge Heldt held that the First Amendment did not prevent individuals from making their own decisions "to give audience to certain types of speech while avoiding others."

The court ruled that the law had not violated the plaintiff’s right to equal protection by granting exemptions to non-profits that do their calling in-house, insurance and real estate agencies and newspapers. The court wrote that charitable organization calls are exempted in part because charitable soliciting is not "pure commercial speech" and because "charities play a role in society that justifies some level of special governmental treatment." Insurance and real estate calls were exempted in part because those two businesses already are regulated by the state and their agents are licensed. Those regulations tend to limit the number and types of calls made. The judge found newspapers are allowed to make calls under the law, in part, because "the product they are selling is, historically, a principle vehicle for protected First Amendment speech."

A separate challenge to the Indiana law, filed in U.S. District Court in Indianapolis on April 10, 2002 by four non-profit organizations that use outsourced telemarketing providers and thus do not qualify for the exemption, remains pending. That challenge also raises the equal protection issue.

Why This Matters: Do-not-call laws like Indiana’s are politically popular. In Indiana over a million Indiana consumers have already asked to be placed on the do-not-call list. Such a volume shows the depth of anti-telemarketing feeling in the American heartland and a clear lack of understanding of the benefits of telemarketing. The law assumes that because a consumer is occasionally inconvenienced by a poorly placed call, all businesses that engage in telemarketing should be banned. Worse, the court in this case accepted distinctions for other industries which totally defy logic if the issue is one of inconvenience to consumers. The truth is that telemarketing is an effective method of marketing that delivers goods and services to consumers in a cost efficient manner. It allows for robust competition. Banning it because consumers are occasionally inconvenienced is a decidedly poor basis for public policy legislation. If such a motivation were valid, then we might as well ban direct mail, FSO’s, and any effort to deal directly with consumers.

This article originally appeared in ADLAW By Request, a publication of Hall Dickler Kent Goldstein & Wood LLP.