Broadcast Team, Inc. v. Federal Trade Commission

429 F. Supp. 2d 1292, 2006 U.S. Dist. LEXIS 22049
CourtDistrict Court, M.D. Florida
DecidedApril 14, 2006
Docket6:05CV1342 ORL 22JGG
StatusPublished
Cited by4 cases

This text of 429 F. Supp. 2d 1292 (Broadcast Team, Inc. v. Federal Trade Commission) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Broadcast Team, Inc. v. Federal Trade Commission, 429 F. Supp. 2d 1292, 2006 U.S. Dist. LEXIS 22049 (M.D. Fla. 2006).

Opinion

ORDER

CONWAY, District Judge.

I. INTRODUCTION

The Broadcast Team, Inc. (“TBT”) seeks judicial review of the “abandoned calls” component of the Federal Trade Commission’s Telemarketing Sales Rule (“TSR”). 1 The FTC interprets the abandoned calls provision as preventing for-profit “telefun-ders,” such as TBT, from utilizing prerecorded calls to solicit funds on behalf of non-profit charities. Previously, the Court denied TBT’s motion for a preliminary injunction. Now, the FTC seeks dismissal of TBT’s Complaint, on the ground that it fails to state a claim upon which relief may be granted. After carefully considering the parties’ arguments, the Court determines that the FTC’s motion is due to be granted.

II. BACKGROUND

TBT is a for-profit company which has the technological capability to generate high volumes of automated telephone calls. TBT maintains that it does not perform live telemarketing for any of its clients. Rather, the company says it merely allows its customers to “access” or “use” its computerized systems to send prerecorded messages to telephone numbers chosen by the client. TBT alleges that it and the Salvation Army entered into an arrangement under which the charity would “use” TBT’s equipment to send prerecorded messages . to solicit funds for Hurricane Katrina relief efforts. The solicitation campaign was scheduled for the week of September 6, 2005. The planned “pitch” consisted of two prerecorded scripts, one for live recipients and one for answering machines.

TBT contends a staff attorney for the FTC informed TBT that the calls which were to be made under this arrangement violate the TSR because they constitute “abandoned” calls. Additionally, the FTC threatened TBT with legal action concerning the planned campaign. 2 TBT seeks declaratory and injunctive relief concerning the FTC’s interpretation of the TSR.

*1295 On January 6, 2006, following a hearing, the Court entered an Order denying TBT’s motion for a preliminary injunction, principally because TBT failed to establish a substantial likelihood of success on the merits of its claims. See Doc. 29.

III. THE ABANDONED CALLS PROVISION

Under 16 C.F.R. § 310.4(b)(l)(iv), it is an “abusive telemarketing act or practice” for a telemarketer to “[a]bandon[] any outbound telephone call.” The regulation further states: “An outbound telephone call is ‘abandoned’ under this section if a person answers it and the telemarketer does not connect the call to a sales representative within two (2) seconds of the person’s completed greeting.” Id.

The dispute in this case arises from the FTC’s interpretation of this provision. In the FTC’s view, calls made by telefunder which are actually received by a person (as distinguished from those connected to an answering machine) are abandoned if they are not connected to a live sales representative within two seconds of the completed greeting. In other words, the FTC’s interpretation of § 310.4(b)(l)(iv) is that “sales representative” means a “live” sales representative, i.e., an actual person, and not a recording.

IV. ANALYSIS

A. Count I

In Count I of the Complaint, TBT challenges the FTC’s position that TBT is a “telemarketer” as that term is defined in the TSR. In that regard, TBT states:

The Contract between TBT and the Salvation Army calls for a message determined by the Salvation Army to be sent to persons designated by the Salvation Army at times and dates specified by the Salvation Army. These messages are therefore placed “by” the Salvation Army and are not within the jurisdiction of the FTC. The use of TBT’s equipment to send these messages does not change the fact that the Salvation Army is the speaker for statutory and constitutional purposes. TBT is not a “telemarketer” as that term is defined in the TSR as this call is conceived, initiated, executed and staffed by the Salvation Army and its staff and volunteers. No TBT employee ever directly speaks to a consumer on the telephone.

Doe. 1, ¶ 65, at 19. Consequently, says TBT, the FTC’s interpretation of the TSR is arbitrary, capricious, an abuse of discretion, and exceeds the FTC’s statutory authority. Id., ¶ 66, at 19.

Under the TSR, “Telemarketer means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor.” 16 C.F.R. § 310.2(bb). “Telemarketing means a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call.” § 310.2(cc) (emphasis added). Moreover, “[a] telemarketer initiates a telephone call by causing the called consumer’s telephone to ring.” 68 Fed.Reg. at 4643. Even though TBT may be “providing” its equipment to its customers in the very broad sense of the word, the equipment is physically located at TBT’s place of business, the equipment is operated by TBT’s personnel, and TBT is the entity which causes the consumer’s telephone to ring. 3

In its response to the motion to dismiss, TBT asserts that TBT and the Salvation Army considered their contract “to be a lease of TBT’s equipment for use by Salvation Army to place these calls.” Doc. 41-1 *1296 at 8. To support this position, TBT has attached to its response an addendum to the original agreement between' TBT and the Salvation Army. Doc. 41-2. 4 That document adds the following language to the original agreement:

15. LEASE CREATED: The parties agree that this agreement shall be a lease of TBT’s equipment and the term of the lease created shall be until such time that USER’S calling requirements are completed. The Equipment is, and shall at all times be and remain, the sole and exclusive property of TBT; and the USER shall have no right, title or interest therein or thereto except as expressly set forth in this Lease. USER shall not assign this Lease or its interest in the Equipment without the prior written consent of TBT.

Id.

In the first place, it is questionable whether this Court may properly consider this document in connection with a motion to dismiss, inasmuch as it was not attached to TBT’s Complaint. In any event, regardless of how the parties to the agreement decided to characterize the use of TBT’s equipment as between themselves, the undisputed fact remains that it is TBT which causes the consumer’s telephone to ring.

Based on the foregoing, TBT is a “telemarketer” within the meaning of the TSR. To conclude otherwise under these circumstances would be to elevate form over substance.

B.

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Cite This Page — Counsel Stack

Bluebook (online)
429 F. Supp. 2d 1292, 2006 U.S. Dist. LEXIS 22049, Counsel Stack Legal Research, https://law.counselstack.com/opinion/broadcast-team-inc-v-federal-trade-commission-flmd-2006.