On August 6, the United States Court of Appeals for the Fourth Circuit affirmed a federal district court decision invalidating South Carolina’s statute banning automated calls for commercial or political purposes.  The statute, enacted in 1991, restricted unsolicited automated calls “made for consumer, political, or other purposes.”  All qualifying automated calls were prohibited with exceptions only “based on express or implied consent of the called party.”  Violations constituted misdemeanor offenses, and carried fines from $200 to $500 or up to 30 days in prison.

Robert Cahaly, a “self-described Republican political consultant,” was arrested in 2010 for alleged violations of the South Carolina law.  Cahaly placed automated calls in six South Carolina state legislative districts on September 23, 2010, targeting Democratic incumbents prior to the November 2010 elections.  After one of the targeted incumbents complained, a state judge issued six arrest warrants for Cahaly.  Cahaly turned himself in, and after being released, filed suit challenging the state law’s constitutionality.

The district court declared the law unconstitutional due to “its underinclusiveness and its singling out of commercial and political speech” in order to protect residential privacy.  The Fourth Circuit agreed, citing the United States Supreme Court’s recent 2015 decision in Reed v. Town of Gilbert, finding that the “statute is a content-based regulation that does not survive strict scrutiny.”

Under the strict scrutiny standard, South Carolina had to prove “that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest.”  The Fourth Circuit did not agree that the law was narrowly tailored, referencing “less restrictive alternatives includ[ing] time-of-day limitations, mandatory disclosure of the caller’s identity, or do-not-call lists.”  The Court also found that the law was overly inclusive in targeting political calls, despite consumer complaints finding commercial calls to be a “far bigger problem,” as well as underinclusive for restricting two categories of automated calls but allowing “unlimited proliferation of all other types.”

The decision may call into question the constitutionality of other states’ similar laws banning telemarketing with automatic telephone dialer systems as similarly impermissible content-based restrictions, but the Fourth Circuit’s reference to commercial calls as eliciting a much larger share of complaints is noteworthy.

Troutman Sanders LLP has unique industry-leading expertise regarding regulation of automatic telephone dialer systems, with experience gained trying cases to verdict and advising Fortune 50 companies regarding compliance strategy.  We will continue to monitor regulatory and judicial interpretation in this area in order to identify and advise on potential risks.