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Live prank phone calls have long been a staple of Atlanta’s “Morning X” radio show on WNNX FM-99.7, known as 99X. But two prerecorded telemarketing calls from 99X radio personalities Jimmy Baron and Leslie Fram left plaintiffs chuckling all the way to the Georgia Court of Appeals. Two plaintiffs — one a lawyer — sued over the calls’ legality under a federal telemarketing law. Last week, one plaintiff, Troutman Sanders associate Ryan A. Schneider, lost his appeal when the court upheld the trial court’s decision that because Schneider was a “station subscriber,” the call to him was not a violation of federal law. Federal law prohibits prerecorded cold calling to people who have no business relationship with the caller. But plaintiff Mathew G. Garver’s case was remanded to the trial judge. The appeals court determined that the lower court judge erred in finding that she didn’t have jurisdiction to rule on the constitutionality of the federal law governing telemarketing, as 99X had requested. The phone calls, which took place in 1999, told the plaintiffs about a Delta SkyMiles giveaway the station was offering to listeners. Both calls listed when the offer would be extended to listeners and gave a 99X phone number to call for more information. Baron’s call to Schneider began, “Hello. Hey, you there? Hello, pick up. Hey, it’s Jimmy from 99X calling. Yeah, I just wanted to know if I could borrow your car. Oh, I also needed to tell you about the 50,000 Delta SkyMiles we’re giving away on 99X.” In the March 14 appeals court decision, Baron’s call to Schneider was found not to violate the federal Telephone Consumer Protection Act, 47 U.S.C. 227. That’s because Schneider was a 99X “Freeloader.” Freeloaders are 99X listeners who voluntarily join a program that offers discounts for restaurants and entertainment venues. As a Freeloader, Schneider had a previous business relationship to the station, so he should have expected to receive such a phone call, the court said. In the decision written by Judge Charles B. Mikell Jr., with agreement from Presiding Judge Gary B. Andrews and Judge Herbert E. Phipps, the three-judge panel found that the federal law did not prohibit telemarketing calls to those who already have a business relationship with a company. Schneider v. Susquehanna Radio Corp., No. A02A1654 and No. A02A1655 (Ct. App. Ga. March 14, 2003). Susquehanna owns and operates 99X. They were represented by Sean R. Smith of Dow, Lohnes & Albertson in Atlanta and Scott D. Dailard of Dow Lohnes in Washington. Schneider and Garver were represented by Atlanta lawyers Ned Blumenthal of Weissman, Nowack, Curry & Wilco, Michael K. Jablonski and Marc B. Hershovitz; and University of Georgia law professor C. Ronald Ellington. The plaintiffs brought separate cases to the trial court, but the appeals court judges combined the cases for their decision. Schneider argued that because he gave his business phone number to 99X, not his home number, he should not have been called at home. But the appeals court ruled that he already consented to receive solicitations from 99X and had not asked to be put on their “no-call list.” “It is apparent that Congress did not intend to impose liability upon a telemarketer for calling an established customer at a number other than the one furnished by the customer,” Mikell wrote. “Moreover, Schneider could have terminated his participation in the discount program or requested that he be placed on a ‘do-not-call’ list had he wished to avoid calls at home.” OPENING THE ‘FLOODGATES’ Hershovitz called the appellate court’s decision in the 99X case “clearly erroneous” and said the Schneider decision now authorizes “predatory telemarketing.” “It’s open season on everybody’s home answering machine,” he said. Buy one with a lot of memory, he warned, “because the floodgates will open.” Hershovitz said the problem with the Schneider decision is that 99X admitted that it was “randomly cold calling” people and had not used its “Freeloader” database when calling Schneider’s home. That is clearly against the law, Hershovitz said. He said the appeals court failed in not considering that information in its decision. But Mikell wrote: “It is undisputed that Schneider provided personal information to 99X and availed himself of the privileges of Freeloader membership. He cannot now contend that he did not expect to be called.” The court dismissed Schneider’s claims against the station, affirming Fulton County State Court Judge Susan B. Forsling’s ruling. The second plaintiff, Garver, was not a Freeloader. He received a call similar to Schneider’s, but Garver’s was from director of programming and “Morning X” personality Fram. Her message was more straightforward, mentioning only the SkyMiles offer. As part of its defense strategy in the lower court, 99X asked Forsling to rule on the constitutionality of the federal telemarketing law. The judge determined she didn’t have the authority to do so. She found in Garver’s favor. But the appeals court found that Forsling erred in not considering the constitutionality of the federal telemarketing law as a free speech issue. It remanded the case to Fulton State Court. A MATTER OF FREE SPEECH The station had challenged the law, alleging that it violated 99X’s free speech rights under the U.S. and Georgia constitutions. The station also challenged “the distinctions in the [Telephone Consumer Protection Act] among commercial and noncommercial messages” as unreasonable time, place and manner restrictions, according to the opinion. The station also argued that challenging the law’s constitutionality was “an affirmative defense to liability in a private action brought under the statute,” according to the decision. In his opinion, Mikell agreed, saying that Forsling erred by saying her court lacked subject matter jurisdiction. The station also argued that because it was not seeking “declaratory relief,” the trial judge had authority to rule on the constitutional issues, the decision said. Mikell wrote, “Our state courts have frequently taken on constitutional challenges and the failure to do so is error if the challenge is properly mounted and essential to the outcome of the case.” Garver countered that review of Federal Communications Commission regulations — specifically the exemptions the FCC made allowing prerecorded calls to someone with a previous business relationship to the caller, but not to someone without that history — falls within the exclusive jurisdiction of the federal courts of appeal. Mikell, however, said that view was wrong, adding that the federal telemarketing law, not FCC regulations, was “at the heart of Susquehanna’s constitutional arguments … .” Garver’s attorney, Hershovitz, plans to appeal the case to the Georgia Supreme Court; he said he had many problems with the Garver decision. “I think they were correct in the remand, but they did it completely wrong,” Hershovitz said. The federal law provides a blanket prohibition on prerecorded calls, but it also says the FCC “may” prescribe regulations that create certain exemptions, which means the regulations are severable from the statute, he said. He continued, “99X wants to impermissibly use a potential infirmity in a regulation to invalidate a statute. The 9th Circuit says [in Moser v. FCC, 46 F.3d 970 (9th Cir., 1995)] you can’t do that; the appeals court says you can.” A ‘SHOCKING’ FOOTNOTE Hershovitz had one last criticism of the appeals court decision, which could become a major matter of debate: footnote 28. The footnote says, “Federal statutes are not usually susceptible to attack on state constitutional grounds. But the Georgia Constitution might arguably be relevant because the federal statute allows private actions only when they are not prohibited by ‘the laws … of a State … .’” Hershovitz called the footnote “shocking. … It says that a state constitution can be used to invalidate a federal act of Congress — 200 years of constitutional law is stood on its head by that proposition.” He explained that the federal law was created to fill the gaps between state telemarketing laws. Because many businesses that make prerecorded calls are located outside the states they are calling, state laws were unenforceable across state lines. The Telephone Consumer Protection Act was created in part to address the interstate commerce issues involved in telemarketing, Hershovitz said. The 99X phone calls were prerecorded and then sent out by a Florida firm, which arguably means they would not be governed by Georgia’s no-call list. But the appellate decision cited another TCPA case, Hooters of Augusta v. Nicholson, 245 Ga. App. 363 (2000), noting, “the TCPA is unusual in that it gives state courts exclusive jurisdiction over private rights of action and limits federal court jurisdiction to civil actions to enforce the TCPA brought by state attorneys general or the Federal Communications Commission.” One of 99X’s lawyers, Smith, said only, “Application of this statute to 99X’s conduct does raise serious constitutional questions, and we are pleased that the court recognized that fact.” Coincidentally, an 8th U.S. Circuit Court of Appeals decision Friday upheld the federal telecommunication marketing law, saying it does pass constitutional muster. The decision, State of Missouri v. American Blast Fax, No. 02-2705 and No. 02-2707 (8th Cir. Ct. App. March 21, 2003) overturned a district court’s ruling that the TCPA was an unconstitutional restriction on commercial speech.

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