Federal Trade Commission v. Mainstream Marketing Services, Inc.

345 F.3d 850, 2003 U.S. App. LEXIS 20366
Court of Appeals for the Tenth Circuit·Decided October 7, 2003·No. 03-1429·Published·Cited by 21 cases

Opinion

345 F.3d 850

FEDERAL TRADE COMMISSION; Timothy J. Muris, Chairman of the Federal Trade Commission, in his official capacity; Sheila F. Anthony, Commissioner, Federal Trade Commission, in his official capacity; Mozelle W. Thompson, Commissioner, Federal Trade Commission, in his official capacity; Orson Swindle, Commissioner, Federal Trade Commission, in his official capacity; Thomas B. Leary, Commissioner, Federal Trade Commission, in his official capacity; and J. Howard Beales III, Director, Bureau of Consumer Protection, in his official capacity, Petitioners,
v.
MAINSTREAM MARKETING SERVICES, INC., a Colorado corporation; TMG Marketing, Inc., a Colorado corporation; American Teleservices Association, Respondents.

No. 03-1429.

United States Court of Appeals, Tenth Circuit.

Filed October 7, 2003.

Sean R. Gallagher, Marianne N. Hallinan, HOgan & Hartson, Denver, CO, Robert Corn-Revere, Ronald G. London, Davis Wright Tremaine, Washington, DC, for plaintiffs-appellees.

John D. Graubert, Lawrence DeMille-Wagman. William E. Kovacic, John F. Daly, federal Trade Commission, Washington, DC, for defendants-appellants.

Mark B. Stern, Alisa B. Klein, U.S. Department of Justice, Civil Division, Appellate Staff, Washington, DC, for Intervenor.

Andrew Patrick McCallin, State of Colorado Department of Law, Denver, CO, for Amici Curiae.

Before SEYMOUR, EBEL, and HENRY, Circuit Judges.

ORDER

PER CURIAM.

The Federal Trade Commission (Petitioner) ("FTC") challenges an order of the United States District Court for the District of Colorado permanently enjoining the FTC from implementing provisions in its amended Telemarketing Sales Rule creating a national do-not-call list. The Rule created a federal registry of telephone numbers of consumers who have indicated that they do not wish to receive unsolicited telephone calls from commercial telemarketers, and it prohibits those telemarketers from making sales calls to consumers on the list.1 The Federal Communications Commission (FCC), in coordination with the FTC, has also ordered the establishment of a national do-not-call list. The only issue to be decided at this time is the FTC's request for a stay of the district court's order pending this Court's decision on the merits.

I. Standard for Granting Stay

The FTC's request for a stay is governed by Federal Rules of Appellate Procedure 8 and 18. To obtain a stay under these rules, the FTC must address the following factors: (1) the likelihood of success on appeal; (2) the threat of irreparable harm if the stay or injunction is not granted; (3) the absence of harm to opposing parties if the stay or injunction is granted; and (4) any risk of harm to the public interest. Homans v. City of Albuquerque, 264 F.3d 1240, 1243 (10th Cir.2001); 10th Cir. R. 8.1.

As an initial matter, the district court suggested that an additional inquiry overlays this Court's analysis of whether to grant a stay of the district court's order pending appeal. Specifically, it cited decisions from this Court setting out the following types of preliminary injunctions as "disfavored": (1) one that disturbs the status quo; (2) one that affords the movant substantially all the relief the movant may recover at the conclusion of a full trial on the merits; and (3) one that is mandatory as opposed to prohibitory. Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d 1234, 1247 n. 4 (10th Cir.2001); SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1098-99 (10th Cir.1991). The concerns arising from the first two types of "disfavored" injunctions are relevant only in a merits review of a preliminary injunction issued by a district court, typically on an incomplete record. Those concerns do not, however, constrain our decision whether to stay a lower court's permanent injunction issued after consideration of a complete record.2 The concern about mandatory injunctions is not a factor in this case because a decision to stay the district court's permanent injunction does not constitute a judicial mandate requiring any of the litigants to take any action. Such a stay order would suspend an injunction, not impose one. Therefore, we do not apply the heightened scrutiny required for "disfavored" preliminary injunctions.

With respect to the four stay factors,3 where the moving party has established that the three "harm" factors tip decidedly in its favor, the "probability of success" requirement is somewhat relaxed. Prairie Band, 253 F.3d at 1246; Continental Oil Co. v. Frontier Ref. Co., 338 F.2d 780, 781-82 (10th Cir.1964). Under those circumstances, probability of success is demonstrated when the petitioner seeking the stay has raised "questions going to the merits so serious, substantial, difficult, and doubtful as to make the issue ripe for litigation and deserving of more deliberate investigation." Prairie Band, 253 F.3d at 1246-47 (internal quotations omitted).

We conclude that, on balance, the three "harm" factors alone do not support a relaxed review of the probability of success factor. With respect to the second and fourth factors — which are necessarily conflated because the FTC's asserted injury is exclusively one involving the public interest — we conclude that the public does have strong privacy and expectation interests that weigh in favor of granting this stay pending review of the merits. Yet the third factor — injury to opposing parties if the stay is granted — weighs against granting the stay because Respondents will likely suffer harm if the FTC's do-not-call regulation comes into effect and is later determined to be unconstitutional, even though their injury would be tempered by our granting expedited review of this case on the merits.4 Although we conclude that on balance the harm factors tip in the FTC's favor, those factors do not weigh so heavily towards the FTC as to justify a relaxed review of the final factor, likelihood of success on the merits. Therefore, we will grant a stay only if the FTC shows a substantial likelihood of success on the merits of its appeal. We turn then to that analysis.

II. Likelihood of Success on the Merits

The Supreme Court has identified a 3-step test to analyze First Amendment challenges to restrictions applied to lawful and non-misleading commercial speech.

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Federal Trade Commission v. Mainstream Marketing Services, Inc., 345 F.3d 850, 2003 U.S. App. LEXIS 20366 (10th Cir. 2003).

345 F.3d 850 (Federal Trade Commission v. Mainstream Marketing Services, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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