Freeeats.com Inc v. State of Indiana

CourtCourt of Appeals for the Seventh Circuit
DecidedSeptember 12, 2007
Docket06-3900
StatusPublished

This text of Freeeats.com Inc v. State of Indiana (Freeeats.com Inc v. State of Indiana) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Freeeats.com Inc v. State of Indiana, (7th Cir. 2007).

Opinion

In the United States Court of Appeals For the Seventh Circuit ____________

No. 06-3900 FREEEATS.COM, INC., Plaintiff-Appellant, v.

STATE OF INDIANA and STEVE CARTER, Attorney General, Defendants-Appellees. ____________ Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 06 C 1403—Larry J. McKinney, Chief Judge. ____________ ARGUED APRIL 3, 2007—DECIDED SEPTEMBER 12, 2007 ____________

Before MANION, EVANS, and WILLIAMS, Circuit Judges. MANION, Circuit Judge. FreeEats.com, Inc., a provider of prerecorded telephonic messages, filed in federal district court a motion for a preliminary injunction and a declara- tory judgment seeking to prevent Indiana from enforcing its statute prohibiting the use of automatic dialing ma- chines to send prerecorded messages to Indiana tele- phone subscribers. Three days earlier, Indiana had filed an action in an Indiana state court against one of FreeEats’ clients, the Economic Freedom Fund, and numerous then- unknown prerecorded telephonic message providers, to 2 No. 06-3900

enforce the Indiana statute. Based on its first-filed state court action, Indiana moved the district court to abstain from exercising jurisdiction pursuant to the principles of Younger v. Harris, 401 U.S. 37 (1971), and to stay the case pending the resolution of its motion. The district court denied both of Indiana’s motions, as well as FreeEats’ motion for a preliminary injunction. Indiana and FreeEats cross-appealed. We reverse the district court’s denial of Indiana’s motion to dismiss pursuant to the Younger abstention doctrine, and vacate its denial of FreeEats’ motion for a preliminary injunction.

I. FreeEats is a Virginia corporation that uses prerecorded telephonic messages to poll households, identify political supporters, deliver political advocacy messages, and encourage supporters to go to the polls to vote for particu- lar candidates. It makes interstate telephone calls into all fifty states. If a FreeEats call is not answered by a live person, FreeEats will attempt to call the number again up to three times. Prior to the November 2006 elections, the Economic Freedom Fund hired FreeEats to make prerecorded tele- phone calls to Indiana residents from the FreeEats call center located in Virginia. In early September 2006, FreeEats began making calls on behalf of the Economic Freedom Fund to Indiana telephone subscribers in sup- port of various congressional candidates. On September 18, 2006, Indiana filed an action in Indiana state court1 seeking an injunction and civil penalties against the Economic

1 Indiana v. Economic Freedom Fund, No. 07C01-0609-MI-0425 (Brown County Cir. Ct. filed Sept. 18, 2006). No. 06-3900 3

Freedom Fund for violating Indiana’s Automated Dialing Machine Statute (the “ADMS”), Ind. Code § 24-5-14-5,2 which generally prohibits the use of automatic dialing machines to send prerecorded messages to Indiana tele- phone subscribers. Indiana’s complaint did not name FreeEats, but it did name several “John Does” who it claimed were responsible for making the offending tele- phone calls. Three days later, on September 21, 2006, FreeEats filed in federal district court this action against both Indiana and the Indiana Attorney General, seeking injunctive and declaratory relief to prohibit Indiana from enforcing the ADMS. Specifically, FreeEats claimed that Indiana should be enjoined from enforcing the ADMS because: (1)

2 In 1988, and prior to Congress’ passage of the Telephone Consumer Production Act (“TCPA”), 47 U.S.C. § 227, Indiana enacted its own statutory regulations pertaining to automatic dialing machines, the ADMS. The ADMS prohibits commercial telephone solicitation using automatic dialing-announcing devices to Indiana telephone subscribers, unless “the subscriber knowingly or voluntarily requested, consented to, permitted, or authorized receipt of the message,” or “the message is immedi- ately preceded by a live operator who obtains the subscriber’s consent before the message is delivered.” Ind. Code § 24-5-14- 5(b). The ADMS allows the use of automatic dialing-announcing devices in only three instances: (1) for school districts to inform students, parents, or employees; (2) for Indiana telephone subscribers with whom the caller has a current business or personal relationship; and (3) for employers advising their employees of work schedules. Ind. Code § 24-5-14-5(a). Unlike the TCPA, the ADMS does not contain a broad exclusion exempting any non-commercial calls, including calls deliver- ing political messages. 4 No. 06-3900

federal law preempts it; (2) it violates the Commerce Clause; and (3) it violates the First Amendment. The next day, Indiana moved to amend its state court complaint to name FreeEats as a defendant, and to stay the federal proceedings pending the resolution of the state case pursuant to the principles that the Supreme Court set forth in Younger v. Harris, 401 U.S. 37 (1971). On October 24, 2006, the district court denied Indiana’s and the Indiana Attorney General’s motion to stay. It also denied their motion to dismiss pursuant to the Younger abstention doctrine, upon finding that this case involves important federal issues that require urgent attention in light of the then-approaching 2006 congressional election. Additionally, the district court denied FreeEats’ motion for a preliminary injunction based on its finding that FreeEats had not shown a likelihood of success on the merits on any of its three claims. Specifically, it first found that FreeEats was unlikely to prevail on its preemption claim, because federal law, and in particular the TCPA, did not preempt the ADMS. The district court reasoned that the TCPA’s savings clause allows the states to enact stricter regulations than the TCPA’s baseline federal standards, including regulations impacting interstate calls coming into a state. Second, the district court found that FreeEats was unlikely to prevail on its Commerce Clause claim, because the ADMS does not impose a clearly excessive burden on interstate commerce in relation to the putative local benefits of protecting residential privacy.3 Third, the district court found that FreeEats was unlikely to prevail on its First Amendment claim, because the

3 On appeal, FreeEats does not challenge the district court’s findings regarding its Commerce Clause claim. No. 06-3900 5

ADMS is content neutral, it is narrowly tailored to achieve Indiana’s interest in protecting residential privacy, and it leaves open alternative channels for communication. In particular, the district court pointed out that the ADMS does not ban FreeEats from delivering its messages to Indiana residents via telephone; rather, it merely requires FreeEats to use a live operator to obtain consent before playing its prerecorded messages. The district court also noted that the ADMS does not impose any limitations on other traditional forms of political speech, such as door-to- door campaigning, bulk mailings, or posting signs. FreeEats appealed the district court’s denial of its mo- tion for a preliminary injunction, and Indiana cross- appealed the district court’s denial of it motion to dismiss pursuant to the Younger abstention doctrine. FreeEats then moved the state court to stay its proceeding pending this court’s decision.

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