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LYSAGHT v. NEW JERSEY

November 16, 1993

DENNIS LYSAGHT, MICHAEL BERARDI and NATIONAL ASSOCIATION OF TELECOMPUTER OPERATORS, Plaintiffs
v.
STATE OF NEW JERSEY, FREDERICK P. DEVESA, in his capacity as Acting Attorney General of the State of New Jersey, Defendants.



The opinion of the court was delivered by: HAROLD A. ACKERMAN

 ACKERMAN, District Judge

 This matter comes before the court upon the application of plaintiffs Dennis Lysaght, Michael Berardi, and the National Association of Telecomputer Operators for a preliminary injunction enjoining the State of New Jersey and the Acting Attorney General from enforcing Senate Bill No. 511.

 I. Standard for Preliminary Injunction

 Rule 65 of the Federal Rules of Civil Procedure authorizes a district court to issue a preliminary injunction when the moving party demonstrates (1) a reasonable probability of success on the merits; and (2) that he or she will be irreparably injured by denial of such relief. In deciding whether to grant the injunction, the court must also consider (3) whether granting preliminary relief will result in even greater harm to the defendant; and (4) whether granting preliminary relief will be in the public interest. See Ecri v. McGraw-Hill, Inc., 809 F.2d 223, 226 (3d Cir. 1987); SI Handling Systems, Inc. v. Heisley, 753 F.2d 1244, 1255 (3d Cir. 1985); In re Arthur Treacher's Franchisee Litigation, 689 F.2d 1137, 1143 (3d Cir. 1982). The burden of proof is on the movant. Ecri, 809 F.2d at 226.

 An evidentiary hearing, while often necessary, is not required. Rather, "[a] preliminary injunction may issue on the basis of affidavits and other written evidence, without a hearing, if the evidence submitted by both sides does not leave unresolved any relevant factual issue." Williams v. Curtiss-Wright Corp., 681 F.2d 161, 163 (3d Cir. 1982). As the Second Circuit has held, the purpose for an evidentiary hearing is "to ensure that relief follows only after consideration of all facts and arguments deemed important by the parties." Drywall Tapers and Pointers of Greater New York, Local 1974 v. Operative Plasterers' and Cement Masons' Int'l Ass'n of United States and Canada, 537 F.2d 669, 674 (2d Cir. 1976).

 In this case, the parties have stipulated that an evidentiary hearing is unnecessary. Thus, I will decide this matter based on the submitted record and the arguments presented to the court by counsel.

 The following constitutes my findings of fact and conclusions of law pursuant to Rule 52(a).

 II. Findings of Fact

 The plaintiffs in this matter are two individuals and a trade association of telecomputer operators. The individual plaintiffs are self-employed independent contractors who perform telemarketing services. In the course of their business, each of these plaintiffs utilize an automatic dialing announcing device ("ADAD") to solicit business.

 An ADAD is one of two general types of telemarketing computers currently in use. An ADAD automatically dials a telephone number and plays a prerecorded or synthesized message. if a person answers the telephone. The other type, called a predictive dialer, also automatically dials a telephone number. This type of machine, however, has the ability to transfer the call to a live person once the phone is answered.

 Historically, ADADs have experienced several problems which have caused them to be unpopular with the general public. For example, some ADADs have been unable to differentiate a telephone answering machine from a live person, thus causing the ADAD to leave a long message on the answering machine. Many ADADs have also failed to recognize the "click" of the recipient hanging up the telephone, thus tying up the recipient's telephone line for a significant length of time. Plaintiffs have submitted evidence demonstrating that technological advances have largely eliminated these and other problems.

 On December 20, 1991, President Bush signed the Telephone Consumers Protection Act of 1991, 47 U.S.C. § 227 (the "TCPA"), into law. This legislation, inspired by the aforementioned problems and complaints received by the Federal Communications Commission, prohibits use of an artificial or prerecorded voice to deliver commercial messages without the prior express consent of the called party. Only one federal court has considered the constitutionality of the TCPA. After issuing a preliminary injunction, Moser v. FCC, 811 F. Supp. 541 (D. Or. 1992), the District of Oregon held, on a motion for summary judgment, that the TCPA violates the First Amendment of the United States Constitution. Moser v. FCC, 826 F. Supp. 360 (D. Or. 1993).

  The overwhelming majority of states also regulate the use of automatic telephone dialing machines in some fashion. Only one statute, Minnesota's, has faced judicial review. In State of Minnesota v. Casino Marketing Group, Inc., 491 N.W.2d 882 (Minn. 1992), cert. denied, 123 L. Ed. 2d 269, 113 S. Ct. 1648 (1993), the Minnesota Supreme Court held that Minnesota's statute, which is virtually identical to the TCPA, does not violate the First Amendment.

 In August 1993, the New Jersey Legislature passed a statute which is similar to the TCPA and the Minnesota statute. Senate Bill 511, supplementing Chapter 17 of Title 48 (the "Act"), prohibits delivery of a prerecorded commercial advertisement, unless a live operator obtains the consent of the called party. The Act does not require consent for delivery of noncommercial messages. As a consequence, the Act prohibits the use of ADADs for delivery of commercial messages because ADADs are unable to obtain the consent of the call recipient before playing a recorded message. The Act provides in pertinent part:

 
2. A caller shall not use a telephone or telephone line to contact a subscriber to deliver a recorded message for the purpose of delivering commercial advertisement to the subscriber, unless the recorded message is introduced by an operator who shall obtain the subscriber's consent before playing the recorded message, or unless a prior or current business relationship exists between the caller and the subscriber.
 
3. The use of automated dialing, push button, or tone activated devices which operate sequentially or are otherwise unable to avoid contacting subscribers who have not consented to the playing of the recorded message as provided in section 2. of this act is prima facie evidence of an intention to violate this act. *fn1"

 The Act provides for a penalty of not less than $ 300 and not more than $ 800. *fn2"

 Plaintiffs now seek a preliminary injunction to enjoin enforcement of the Act during the pendency of this litigation. The plaintiffs make two arguments in challenging the Act. They argue that it violates the right to free speech protected by the First Amendment, as applied to New Jersey under the Fourteenth Amendment, and that it is preempted by the TCPA.

 III. Conclusions of Law

 A. Likelihood of Success on ...


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