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Victory Processing, LLC v. Fox

United States Court of Appeals, Ninth Circuit

September 10, 2019

Victory Processing, LLC; Dave Dishaw, Plaintiffs-Appellants,
v.
Tim Fox, in his official capacity as Attorney General for the State of Montana, Defendant-Appellee.

          Argued and Submitted March 7, 2019 Seattle, Washington

          Appeal from the United States District Court for the District of Montana D.C. No. 6:17-cv-00027-CCL Charles C. Lovell, District Judge, Presiding

          Blake E. Johnson (argued) and Katherine J. Spohn, Bruning Law Group, Lincoln, Nebraska; James E. Brown, The James Brown Law Office PLLC, Helena, Montana; for Plaintiffs-Appellants.

          Patrick M. Risken (argued), Assistant Attorney General; Timothy C. Fox, Attorney General; Office of the Attorney General, Helena, Montana; for Defendant-Appellee.

          Before: Ronald M. Gould and Richard A. Paez, Circuit Judges, and Janis Graham Jack, [*] District Judge.

         SUMMARY[**]

         Civil Rights

         The panel reversed the district court's grant of summary judgment in favor of the Attorney General of Montana and remanded in an action alleging that Montana's Robocall Statute, Montana Code section 45-8-216(1)(e), which restricts automated telephone calls promoting a political campaign or any use related to a political campaign, violates the First Amendment.

         The panel explained that regulating robocalls based on the content of their messaging presents a more severe threat to First Amendment freedoms than regulating their time, place, and manner. In particular, prohibiting political robocalls strikes at the heart of the First Amendment, as well as disproportionately disadvantages political candidates with fewer resources.

         The panel held that plaintiff had standing to challenge the Robocall Statute. The panel noted that as an integral part of its operations, plaintiff engages in political consulting and public opinion polling primarily through the use of automated telephone calls. Plaintiff alleged that it had sustained injury, the injury was traceable to the Robocall Statute, and the relief plaintiff sought would redress its own alleged injuries.

         The panel determined that because Montana's Robocall Statute was plainly content-based, strict scrutiny applied. The panel held that Montana demonstrated a compelling state interest-protecting personal privacy-in regulating automated telephone calls. The panel held, however, that the Robocall Statute was not narrowly tailored to further the state's interest in protecting privacy. The panel held that the statute was both underinclusive and overinclusive. It was underinclusive because by singling out only five topics of robocalling for regulation-including messages related to political campaigns-the Robocall Statute left consumers open to an unlimited proliferation of robocalls on other topics. The statute was overinclusive because robocalls related to political campaigns had not been shown to pose a threat to individual privacy. The panel concluded that the Robocall Statute's restriction on political messages did not survive strict scrutiny.

          OPINION

          PAEZ, CIRCUIT JUDGE.

         We must decide whether Montana Code section 45-8-216(1)(e)-which restricts automated telephone calls promoting a political campaign or any use related to a political campaign-violates the First Amendment. We hold that it does.

         Although automated telephone calls, or robocalls, fall within the First Amendment's protection, they are subject to regulation-and for good reason. In 2018, studies estimated that Americans received between 25 and 40 billion robocalls-a 45 to 60% increase from the prior year.[1] Most of these robocalls cause only harmless annoyances. Some are even useful, such as automated appointment or payment reminders. At their worst, though, robocalls provide a cheap vehicle for scammers masquerading as the Internal Revenue Service, banks, or utility providers; promising nonexistent preapproved loans or loan forgiveness; and more-aiming to finagle money and sensitive information from unsuspecting consumers. See Tara Siegel Bernard, Yes, It's Bad. Robocalls, and Their Scams, Are Surging., N.Y. Times, May 6, 2018, http://www.nytimes.com/2018/05/06/your-money/robocalls-rise-illegal.html.

         That robocalls are subject to regulation does not remove them from the First Amendment's protection, however. We have heard numerous First Amendment challenges to laws regulating robocalls. See Gomez v. Campbell-Ewald Co., 768 F.3d 871, 876-77 (9th Cir. 2014); Bland v. Fessler, 88 F.3d 729, 732-36 (9th Cir. 1996); Moser v. F.C.C., 46 F.3d 970, 973-75 (9th Cir. 1995). We have upheld statutes that regulate the method rather than the content of robocalls as reasonable time, place, and manner restrictions. See, e.g., Moser, 46 F.3d at 973-75. We have further upheld the application of state consumer protection laws to robocalls as acceptable regulation of commercial speech. See Bland, 88 F.3d at 738-39. We have not had the occasion to evaluate the constitutionality of a content-based regulation of robocalls until now.

         Regulating robocalls based on the content of their messaging presents a more severe threat to First Amendment freedoms than regulating their time, place, and manner. In particular, prohibiting political robocalls strikes at the heart of the First Amendment, CarePartners, LLC v. Lashway, 545 F.3d 867, 877 (9th Cir. 2008), as well as disproportionately disadvantages political candidates with fewer resources. As we discuss below, Montana's content-based restrictions on robocalls cannot survive strict scrutiny. We thus reverse the district court's grant of summary judgment to the defendant, Tim Fox in his official capacity as Attorney General of the State of Montana.

         I.

         In the early 1990s, the federal and state governments sought to address the widespread concern over computerized telephone calls that were tying up phone lines, even after the recipient hung up the phone, and filling up answering machines. The federal government passed the Telephone Consumer Protection Act in 1991 ("TCPA"), 42 U.S.C. § 227, while states followed with their own enactments for addressing the problems caused by robocalls. In 1991, the Montana legislature enacted Montana Code section 45-8-216 (hereinafter "Robocall Statute"), which provides in subsection (1) that:

(1) A person may not use an automated telephone system, device, or facsimile machine for the selection and dialing of telephone numbers and playing of recorded messages if a message is completed to the dialed number for the purpose of:
(a) offering goods or services for sale;
(b) conveying information on goods or services in soliciting ...

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