State v. Economic Freedom Fund

959 N.E.2d 794, 2011 Ind. LEXIS 1096, 2011 WL 6848395
CourtIndiana Supreme Court
DecidedDecember 29, 2011
Docket07S00-1008-MI-411
StatusPublished
Cited by31 cases

This text of 959 N.E.2d 794 (State v. Economic Freedom Fund) is published on Counsel Stack Legal Research, covering Indiana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State v. Economic Freedom Fund, 959 N.E.2d 794, 2011 Ind. LEXIS 1096, 2011 WL 6848395 (Ind. 2011).

Opinions

DAVID, Justice.

In this case, the State seeks to enforce a particular provision of the Indiana Auto-dialer Law against an entity that uses an automated dialing device to deliver prerecorded political messages. The trial court, on cross-motions for preliminary injunction, decided that the entity had a reason[798]*798able likelihood of success on the merits of its claim that the live-operator requirement of the Autodialer Law violates the free speech clause of the Indiana Constitution.

We hold that the entity’s First Amendment claim would likely fail. We also hold there is no reasonable likelihood of success on the merits of the entity’s claim that the Autodialer Law’s live-operator requirement materially burdens its right to engage in political speech in violation of the state constitution.

Facts and Procedural History

FreeEats.com, Inc. is a provider of prerecorded telephonic messages. It uses an artificially intelligent calling (AIC) system to call residents throughout the United States on behalf of its clients, one of which is the Economic Freedom Fund (EFF). The AIC system can call 1.7 million Indiana residents in seven hours.

The system’s prerecorded messages are interactive: they conduct polls, identify political supporters, deliver political-advocacy messages, and encourage voting. These prerecorded messages delivered through automated dialing devices are sometimes referred to as “roboealls.”

In early September 2006, FreeEats used its AIC system to disseminate a political message in Indiana for the EFF. A legal battle began soon after, and over the years it has developed a complex procedural history that includes separate state and federal lawsuits.

On September 18, 2006, the State filed a complaint in state court for an injunction, civil penalties, attorneys’ fees, and costs against the EFF and ten John Does. The complaint alleged that the defendants had violated Indiana Code section 24-5-14-5(b) (2007), part of the Autodialer Law,1 in two ways: they made, or caused to be made, roboealls (1) without first obtaining the consent of the subscriber and (2) without using a live operator at the outset of the call to obtain the subscriber’s consent before the message was delivered. The same day, and in the same case, the State filed a motion for preliminary injunction.

Shortly after, on September 21, 2006, FreeEats filed a complaint in federal district court, seeking declaratory and injunc-tive relief to prohibit the State and its then Attorney General Steve Carter from enforcing the Autodialer Law. The complaint alleged that federal law preempts the Au-todialer Law; the Autodialer Law violates the Commerce Clause and the First Amendment; and the Autodialer Law violates the free speech provision, Article 1, Section 9, of the Indiana Constitution. The next day, the State amended its state-court complaint to substitute FreeEats for John Doe 1, and it also filed a motion for preliminary injunction against FreeEats in state court.

In the ongoing federal case, FreeEats filed a motion for preliminary injunction, and the State and Carter filed a motion to dismiss on abstention grounds. In October 2006, the federal district court denied both motions. FreeEats.Com, Inc. v. Indiana ex rel. Carter, No. 1:06-cv-1403-LJM-WTL, 2006 WL 3025810 (S.D.Ind. Oct. 24, 2006). FreeEats appealed.

Meanwhile, the state-court case continued. A significant amount of procedural activity took place from October 2006 until February 2008, including the State substituting Meridian Pacific2 for John Doe 2.

[799]*799In the midst of this activity, in September 2007, the Seventh Circuit ruled that the district court should have dismissed the federal case under abstention principles because the State was bringing enforcement proceedings against FreeEats in state court. FreeEats.com, Inc. v. Indiana, 502 F.3d 590, 600 (7th Cir.2007).

On February 22, 2008, FreeEats filed a motion for preliminary injunction, asking the state court to enjoin the State from enforcing the Autodialer Law against calls that disseminate political messages. FreeEats advanced the same arguments as it did in federal district court: the Autodialer Law is invalid under the First Amendment, the Commerce Clause, and Article 1, Section 9 of the Indiana Constitution, and it is also preempted by federal law. In response, the State filed its second motion for preliminary injunction against FreeEats. These motions remained pending for the next two-plus years for various reasons. Finally, in June 2010, the state court issued an order which granted in part and denied in part FreeEats’s motion for preliminary injunction and granted in part and denied in part the State’s motion for preliminary injunction.

Specifically, the trial court granted the State’s motion as it sought to enforce the Autodialer Law’s requirement that FreeEats obtain consent and granted FreeEats’s motion as it sought to enjoin the State from requiring FreeEats to hire live operators to obtain that consent. Consequently, the trial court denied FreeEats’s request to enjoin the State from enforcing the consent requirement and denied the State’s request to enjoin FreeEats from making robocalls without complying with the live-operator requirement.

The trial court ruled that it is permissible under Indiana’s free speech provision to require FreeEats to obtain consent before conveying a prerecorded political message using an automated dialing device. But it also ruled that FreeEats was likely to prevail on its claim that the live-operator requirement imposed a material burden on political speech and thus violated Article 1, Section 9 of the Indiana Constitution. In reaching this conclusion, the court found that FreeEats can obtain consent through its automated system more quickly and more cheaply than through a bank of live operators. As to FreeEats’s other claims, the trial court stated that “[t]he District Court’s analysis and conclusion that FreeEats is unlikely to prevail on the merits of its federal claims is persuasive, but the Court need not address those claims, FreeEats having met its threshold burden under the state constitution.”

The State appealed under Indiana Appellate Rule 14(A)(5), which permits parties to take an interlocutory appeal as a matter of right of an order granting or denying a motion for preliminary injunction. FreeEats did not file an appeal. The State then requested, without opposition, that this Court grant immediate transfer under Indiana Appellate Rule 56(A) and expedited consideration under Indiana Appellate Rule 21(B). This Court granted the State’s request for immediate transfer but denied its request for expedited consideration. The parties have agreed to a stay of the preliminary injunction pending appeal.

Standard of Review

“It is within the sound discretion of the trial court to grant or deny a preliminary [800]*800injunction])]” Amoco Prod. Co. v. Laird, 622 N.E.2d 912, 915 (Ind.1993). Accordingly, this Court’s review is limited to whether there was a clear abuse of discretion. Id. An abuse of discretion occurs when the trial court misinterprets the law. hid. High Sch. Athletic Ass’n, Inc. v. Martin, 731 N.E.2d 1, 5 (Ind.Ct.App.2000), trans. denied.

Indiana Autodialer Law

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Cite This Page — Counsel Stack

Bluebook (online)
959 N.E.2d 794, 2011 Ind. LEXIS 1096, 2011 WL 6848395, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-economic-freedom-fund-ind-2011.