### IN THE UNI TED STAT ES COURT OFAPPEALS FOR THE FIF TH CIRCU IT

No. 12-60027

TELTECH SYSTEMS, INCORPORATED; WONDERLAND RENTALS, INCORPORATED; MEIR COHEN, Plaintiffs - Appellees

v. PHIL BRYANT, in His Official Capacity as Governor of the State of Mississippi; JIM HOOD, in His Official Capacity as Attorney General of the State of Mississippi, Defendants - Appellants

Appeal from the United States District Court for the Southern District of Mississippi

Before KING, SMITH, and BARKSDALE, Circuit Judges. RHESA HAWKINS BARKSDALE, Circuit Judge: Defendants-Appella n t s Phil Bryant, Governor of Mississippi, and Jim Hood, its Attorney General (D ef e n d ants), contest a summary judgment’s holding the M i s sissippi Caller ID Anti-Spoofing Act, M I S S

. C O D E AN N
. § 77-3-805, violates the Commerce Clause, U

. S

. C O N S T
. art. I § 8, cl. 3. Also at issue is whether the Act: (1) is conflict-preempted by the Truth in Caller ID Act of 2009, 47 U.S.C. § 227(e); and (2) comports with the First Amendment. The judgment is upheld on a preemption basis. AFFIRMED. U n i te d S ta te s C o u rt o f A p p ea l s F i ft h C i rc u i t 

### F I L E D Decem ber 1 0, 2 012 Lyle W . Cayce Clerk Case: 12-60027 Document: 00512078588 Page: 1 Date Filed: 12/10/2012No. 12-60027 I. “Spoofing” is misrepresenting the originating t e lephone caller’s identificati o n (c a l l e r ID) to the call recipient. The practice has both improper and legitimate applications. In early 2010, Mississippi enacted the Caller ID Anti-Spoofing Act (ASA). Consistent with ASA violations’ being subject to penalties and remedies under Title 75, Chapter 24 (Regulation of Business for Consum e r P rotection), M I S S

. C O D E AN N
. § 77-3-809(2), Defendants contend the Act is to prevent fraudulent and criminal activity and to protect consumers. Under it,

[a] person may not enter or cause to be entered false information into a telephone caller identifica t i o n system with the intent to deceive, defraud or mislead the r e c i pient of a call [and a] person may not place a call knowing that false information was entered into the telephone caller identifi c a t ion system with the intent to deceive, defraud or mislead the recipient of the call. M I S S

. C O D E AN N
. § 7 7

- 3

- 8 05 (emphasis added). ASA violators commit a

misdem eanor , an d are subject to a fin e an d im p rison m ent. M I S S

. C O D E AN N
. § 77- 3-809(1). Later that year, the Telephone Consumer Protection Act of 1991 (TCPA) (codified at 47 U.S.C. § 227) was amended by the Truth in Caller ID Act of 2009 (TCIA) (codified entirely within 47 U.S.C. § 227(e)). TCIA provides:

It shall be unlawful for an y p e rson within the United States, in connection with an y t elecommunications service or [Internet protocol]-enabled voice service, to cause any caller ident i f i cation service to knowingly transmit misleading or inaccurate caller identification information with the intent to defraud, cause harm, or wrongfully obtain anything of value

. . . . 47 U.S.C. § 227(e)(1) (emphasis added). TCIA violators are subject to civil and criminal liability. 47 U.S.C. § 2 2 7 ( e)(5). Jointly, TCIA and TCPA provide a

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private right of action, grant enforcement powers i n both federal and state go v e r nments, grant intervenor rights to the Federal Communications Commission (FCC), and vest district courts with exclusive jurisdiction over claims under 47 U.S.C. § 227(e)(1). 47 U.S.C. § 227 (e)(6), (g)(1)-(3). ASA is more restrictive than TCIA. On the one hand, spoofing done with “intent to defraud, cause harm, or wrongfully obtain anything of value” (harmful spoofing), in violation of TCIA, is also violative of ASA. On the ot h e r hand, spoofing done without such intent, but “with the intent to deceive

. . . or mislead the recipient of the call” (non-harmful spoofing), violates only ASA. Plaintiffs-Appellees New Jersey -based Teltech Systems, Inc. (of which plaintiff Meir Cohen i s p r e s i de nt) , an d Michi gan - b a s e d Wo n derland Rentals, Inc. (Plaintiffs), provide nationwide third-party spoofing services to individuals and entities. Teltech offers its customers the SpoofCard, which operates like a longdistance calling card and gives its holder the ability to manipulate the caller ID display e d to the called party. Wonderland uses spoofing to conduct “mystery shopping”, by which Wonderland representatives, posing as customers, interact with its clients’ customer-servic e departments to conduct quality control and gauge performance. I n di s trict court, Plaintiffs challenged ASA on three bases: (1) conflic t preemption; (2) the dormant Commerce Clause; and (3) the First Amendment. Teltech S

ys., Inc. v. Barbour , 866 F. Supp. 2d 571 (S.D. Miss. 2011). Following cross-motions for summary judgment, the district court, applying Healy v. Beer Institute, Inc. , 491 U.S. 324 (1989), h e l d ASA violated the dormant Commerce Claus e b ecause it had the “practical effect of regulating commerce occurring wholly outside [Mississippi]”. Teltech Sys. , 8 66 F. Supp. 2d at 577 (internal citation and quotation marks omitted). On the other hand, the court held no conflict preemption because: compliance with both statutes was not physically impossible; and Plai n ti f f s failed to show ASA constituted an obstacle to the

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accomplishment of a federal objective. Id. at 574-75. The First Amen d m e nt claim was not reached. Id. at 577 n.5.II. A summary judgment is reviewed de novo

. E.g. , In re Tex. Wyo. Drilling, Inc. , 647 F.3d 547, 550 (5th Cir. 2011). Summary judgment is p r o per when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law”. F E D
. R. C IV
. P

. 5 6 (a). Pursuant to the crossmotions for summary judgment, there is no genuine dispute of material fact; at hand are only questions of law, which include statutory construction. At issue are whether: TCIA preempts ASA; and ASA violates the dormant Commerce Clause and the First Amendment. In that regard, Plaintiffs press the

c h a l l enges to ASA they raised in district court. Having received a favo r ab l e judgment, and not seeking to alter or modify it, Plaintiffs were not required to cross-appeal, even though they contest the district court’s no-preemption ruling. Cf. Kelly v. Foti , 77 F.3d 819, 822 (5th Cir. 1996) (reversal of plaintiff-appellee’s summary-judgment denial an impermiss ib l e alteration or modification of judgment when plaintiff-appellee did not cross-appeal). In other words, having prevaile d in district court on their dormant Commerce Clause challenge, Plaintiffs were not required t o c r o s s -appeal to urge here the preemption and First Amendment claims they raised there, because ASA’ s i nv alidation on an alternative theory would not “enlarge the rights of the appellee or diminish the

ri gh t s o f the appellant”. Borrego Springs Bank, N.A. v. Skuna River Lumbe r, LLC, 564 F.3d 353, 356 (5th Cir. 2009). No authority need be cited for our being able to review the issues r a i s e d h e r e by Plaintiffs in the light of their having raised them in district court. It goes without saying that constitutional questions should be avoided if there are indepe ndent “ground[s] upon which the case may be disposed of”. Ashwander v. TVA , 297 U.S. 288, 347 (1936). Because we hold ASA is conflict4 Case: 12-60027 Document: 00512078588 Page: 4 Date Filed: 12/10/2012No. 12-60027

p r eempted by TCIA, we need not consider its validity under the dor m a n t Commerce Clause or First Amendment. Al o n g t hat line, the district court’s Commerce Clause holding is, of course, vacated by this opinion. “The preemptive effect of a federa l s t a t u t e i s a question of law” and is reviewed de novo . Franks Inv. Co. v. Union Pac. R.R. , 593 F.3d 404, 407 (5th Cir. 2010) (en banc). The b u r d e n o f persuasion rests on the party asserting preemption. AT

& T Corp. v. Pub. Util. Comm’n of Tex. , 373 F.3d 641, 645 (5th Cir. 2004). The Supremacy Clause provides that the laws of the United States “shall be the supreme Law of the Land; . . . any Thing in the Constitution or Laws of

a n y S tate to the Contrary notwithstanding”. U.S. C O N S T
. art. VI, cl. 2. T h e Suprema c y Clause mandates displacement of state law when (1) Congress intends expressly to do so; or (2) Congress intends implicitly to do so through a pervasive federal regulatory scheme, or the state law conflicts with the federal law or its purposes. English v. Gen. Elec. Co. , 496 U.S. 72, 78-79 (1990). Under any preemption theory, “Congress’ intent is the ultimate touchstone”. Elam v. Kan. City S. Ry. , 635 F.3d 796, 803 (5th Cir. 2011) (internal citations and quotations omitted). Our inquiry begins with the presumption that federal statutes do not supersede States’ historic police powers, unless Congress clearly and manifestly intended to do so. Id. at 803-04. “This [pre]sumption a p p l i e s with particular force when Congress legislates in a field traditionally occupied by state law”, but with “less force when [legislating] in a field with a history of significant federal presence”. Id. at 804 (internal citations and quotations omitted). Although interstate telecommunications has been an area of “significant federal presence”, ASA is ground e d instead in consumer protection, an area traditionally reserved to the States. E.g. , Castro v. Collecto, Inc. , 634 F.3d 779, 784-85 (5th Cir. 2011) (Federal Communications Act permits States to regulate
5 Case: 12-60027 Document: 00512078588 Page: 5 Date Filed: 12/10/2012No. 12-60027

aspects of commercial mobile services, including con s u m e r protection); Gen. Motors Corp. v. Abrams , 897 F.2d 34, 41-42 (2d Cir. 1990) (compelling evidence required to sh o w C o ngressional intent to preempt state consumer protection laws). Therefore, here the presumption remains in favor of no preemption. Castro , 634 F.3d at 784. A. At oral argument, bot h sides were directed to submit supplemental briefing for an issue raised by neither: the effect of 47 U.S.C. § 227(e)(9), which exempts TCIA from TCPA’s savings clause. Although Plaintiffs do not explicitly contend express preemption, we c o n s tru e th eir r e s p o n s e an d s up p l emental briefs as challenging ASA under both express and implied preemption. “Congress m a y indicate pre-emptive intent through a statute’s express language or through its structure and purpose.” Altria Grp., Inc. v . G o o d , 555 U.S. 70, 76 (2008) (citation omitted). Congress did not state expressly its intent for TCIA t o p r e e mpt state law. It did, however, exempt TCIA from TCPA’s savings clause. TCIA’s concluding subsection states:

Notwithsta n ding any other provision of [§ 227], subsection (f) shall not ap p l y t o [§ 227(e)] or to the regulations under [§ 227(e)]. 47 U.S.C. § 227(e)(9). Section 227(f), titled “Effect on State Law”, contains TCPA’s savings clause and states in relevant part:

[N]othing in [§ 227 ] o r in the regulations prescribed under [§ 227] shall preempt any State law that imposes more restrictive intrastate requirements or regulations on, or which prohibits – (A) the use of telephone facsimile machines or other electro n i c devices to send unsolicited advertisements; (B) the use of automatic telephone dialing systems;

6 Case: 12-60027 Document: 00512078588 Page: 6 Date Filed: 12/10/2012No. 12-60027 (C) the use of artificial or prerecorded voice messages; or (D) the making of telephone solicitations. 47 U.S.C. § 227(f)(1). As part of the o ri ginally-enacted TCPA, this subsection largely pertains to telemarketing practices. Our court has never interpreted TCPA’s savings clause, but other courts have disagreed over its preemptive effect. Compare Van Bergen v. Minnesota , 59 F.3d 1541, 1547-48 (8th Cir. 1995) (n o express preemption, but only an expression of non-preemptive effect); United States v. Dish Network, LLC, 667 F. Supp. 2d 952, 963-64 (C.D. Ill. 2009) (“the [savings clause] does not preempt state laws that

. . . impose more restrictive intrastate requirements

. . . or [ ] prohibit any . . . [interstate] conduct set fort h in subclauses (A) through (D)”); with Patriotic Veterans, Inc. v. Ind., ex rel. Zoeller , 821 F. Supp. 2d 1074, 1077 (S.D. Ind. 2011) (in providing “a universe of state laws that are not preempted, this provisi o n , b y implication, suggests that Congress intended for state laws outside of that defined universe to b e p reempted” (emphasis in original)); Chamber of Co m m erce of the United States v. Lockyer , No. 2:05-CV2257MCEKJM, 2006 WL 462482, at * 8 ( E.D. Cal. Feb. 27, 2006) (the savings clause preempts state laws restricting or prohibiting certain interstate telecommunications). The FCC has also weighed in. Mindful of States’ historic power to regulate intrastate calls, the FC C postulated Congress intended to provide a “uniform regulatory scheme” un d er which telemarketers would not be subject to inconsistent regulations. 18 F. C .C.R. 14014, 14064 (2003). The FCC conceded the extent of States’ authority under TCPA’s savings clause was ambiguous, but concluded “more restrictive state ef f o r t s to regulate interstate calling would almost certainly conflict with [its] rules” by disrupting that uniform scheme, and by imposing significant compliance costs on those subject to TCPA. Id. at 14063-

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64. The deference owed to this interpretation, however, remains an “academic question”. E.g. , Wat t e rs v. Wachovia Bank, N.A. , 550 U.S. 1, 20 (2007) (not deciding whether agency entitled to Ch evron -deference when stating its regulations preempt state law). At bottom, 47 U.S.C. § 227(e)(9)’s exempting TCIA from the savings clause in § 227(f) is arguably unclear, both in purpose and in effect, concerning spoofing. Because, as discussed infra , TCIA impliedly pree m p t s ASA, express preemption vel non need not be resolved. B. Preemption may be inf e r r e d , i n ter alia , “if there is an actual conflict between state and federal law”. Altria Grp. , 555 U.S. at 76-77 (internal citations omitted). A state law is conflict-preempted when it operates as a n ob s t a c l e to the accomplishment of a federal objective, Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n , 461 U.S. 190, 204 (1983), or when federal law authorizes expressly an activity prohibited by state law, Wells Fargo Bank of Tex. NA v. James , 321 F.3d 488, 491 n.3 (5th Cir. 2 003). Defendants contend ASA operates harmoniously with TCIA, imposing no obstacle to the latter’s inherent fede r a l o bjectives. Citing legislative history, they i dentify Congress’ intent to render harmful spoofing unlawful, while exempting law enforcement, intelligence agencies, and court orders from TCIA’s prohibitions. 47 U.S.C. § 227(e)(7) (“This subsection does not prohibit any lawfully authorized investigative, protectiv e , or intelligence activity of a law enforcement agency of the United States, a State, or a political subdivision of a State, or of an intelligence agency of the United States.”). This contention fails, however, t o explain how these exemptions confer authority upon States to restrict non-harmful s p o o f i n g . Moreover, it does not respond to the crux of Plaintiffs’ claim: the protection of non-harmful sp o o f i n g is a Congressionallymandated federal objective.
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Noting TCIA plainly prohibits harmful spoofing, Plaintiffs maintain Congress authorized – indeed, intended to protect – non-har m f u l spoofing. Fortifying this contention, they rely on legislative history to d e m o nstrate Congress differentiated between harmful and non-harmful spoofing: by limiting 47 U.S.C. § 227(e)(1)’s language to prohibit only the former, Congress bestowed federal-objective status upon the latter. They urge, therefore, that ASA’s prohib ition on non-harmful spoofing frustrates the accomplishment of this federal objective. To be sure, ASA’s proscript i o n o f non-harmful spoofing at least conflicts obliquely with TCIA’s prosc ri p tion of only harmful spoofing. Therefore, the di s p o s itive inquiry is whether TCIA serves a minimum regulatory f unctio n , up o n which Defendants may enact stricter anti-spoofing laws; or, whether TCIA

serves a maximum regulatory f unction, by sheltering non-harmful spoofing from additional state regulation. Of course, we look first to the text of t h e statute. Given the earlier-discussed, arguably u nclear purpose and effect of TCIA’s exemption f

r o m TCPA’s savings clause, the legislative history informs this inquiry. E.g. , Barnes ex rel. Estate of Barnes v. Koppers, Inc. , 534 F.3d 357 (5th Cir. 2008) (resorting to legislative history to clarify congressional intent where statute’s preemptive scope unclear). In a Senate report, Senator Rockefeller n o ted spoofing’s legitimate importance for domestic-violence victims, or for consumers who wish to provide

a temporary call-back number that differs from their actual telephone number. S. Rep. 111-96 (2009). Accordingly, the federal effort to curtail spoofing focused on persons intending to cause harm through fraud or criminal mischief. Id

. Both chambers of Congress drafted bills addressing spoofing: containing language similar to the ASA, H.R. 1258 would have rendered unlawful spoofing done with “intent to defraud or deceive” (e m phasis added); S. 30 contained the

more narrow, as-enacted language, proscribing “the intent to defraud, cause
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harm, or wrongfully obtain anything of value”. Although both bills passed their respective chambers, the Senate did not pass H.R. 1258, while the House passed S. 30 without amendment. In passing S. 30, House members stated expressly their intent to protect non-harmful spoofing. 156 Cong. Rec. H8378-01 (2010). Congressman Stearns st a t e d : “W e drafted

. . . carefully to ensure that we only prohibit [spoofing] intending to do harm

. . . . [T] h is bill protects those legitimate [spoofing] practices”. Id. Congressman Engel echoed this intent: “[W]e d o n ’ t w a n t some legitimate reasons to use this technology to be outlawed. So it is only outlawed when the intent is to defraud, cause harm, or wrongfully obtain anything of value”. Id. Moreover, the FCC incorpo r ated this intent by reference in its impleme n t ing order. 26 F.C.C.R. 9114, 9117, 9130 (2011) (“As Congress recognized

. . . n o t a l l i n stances of [caller ID] manipulation are harmful, and

some may be beneficial

. . . . Congress intended to balance carefully the drawbacks of malicious caller ID spoofing a g a i n s t the benefits provided by legitimate caller ID spoofing”.). The measured language of 47 U.S.C. § 227(e)(1) reflects this calibration. Congress could have broadened TCIA’s proscriptive reach by inserting the term “misleading”, or words to that effect. But it did not, and because the expression of some connotes the exclusion of others (“expressio unius est exclusio alterius”), Congress apparently regarded some forms of spoofing worthy of protection from

more restrictive state regulation. E.g. , Saxon v. Ga. Ass’n of Indep. Ins. Agents, Inc. , 399 F.2d 1010, 1013 (5th Cir. 1968) (incidental powers expressly granted under certain conditions implicitly divested absent those conditions). Arizona v. Uni t e d S t a tes , 132 S. Ct. 2492 (2012), is illustrative. The Immigration Reform and Control Act of 1986, 8 U.S.C. §§ 1101, et seq. (IRCA), subjects employers who hire unauthorized aliens to criminal and civil sanctions, but im p oses no such p en alties on th e hir ed un authoriz ed alien s. 8 U .S .C

. § 1324a;
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Arizona, 132 S. C t

. a t 2 5 0 4

. An Arizona statute, the Support Our Law Enforcement and Safe Neighborhoods Act, AR I Z
. R E V
. S TAT
. AN N
. §§ 11-1051, et seq. , went furth er, making it a misdemeanor for unauthorized aliens to apply for,

or solicit, work. AR I Z
. R E V
. S TAT
. AN N
. § 1 3

- 2 928(C). Although the Arizona

s t atut e a dvanc e d the same goal as IRCA – preventing hiring unauthorized aliens

– the Court held the Arizona statute’s enforcement scheme conflicted with the federal regulatory system. Arizo n a , 132 S. Ct. at 2505

. Examining the “text, structure, and [legislative] history of IRCA”, the Court held the Arizona statute p osed an obstacle to “the careful balance struck by Congress with res p e c t t o unauthorized employment of aliens”. Id. TCIA’s “text, structure, and [l e gi slative] history”, as discussed supra , persuades us that ASA similarly upsets Congress’ considered regulatory choic es. Id. The constrained language of 47 U.S.C. § 227(e)(1) is compelling evidence of Congress’ intent to protect non- h armful spoofing. E.g. , P.R. Dep’t of Consumer Affairs v. Isla Petroleum Corp. , 485 U.S. 495, 503 (1988) (“Where

. . . federal scheme intentionally leaves a p o r t ion of the regulated field without controls, then the pre-emptive inference can be drawn – not from federal inaction alone, but from inaction joined with action”. (emphasis in original)). TCIA’s legislative history removes any lingering doubt. In the light of 47 U.S.C. § 227(e)(1)’s carefully

- dr afted language and legislative history, and in spite of the pre s u m p t i o n against preemption that attaches to a State’s exercise of its police p o w e r, there is an inherent federal objective in TCIA to protect non-harmful spoofing. ASA’s pro scription of nonharmful spoofing – spoofing done without “intent to defraud, cause harm, or

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wrongfully obtain anything of value” – frustra t e s t his federal objective and is, therefore, conflict-preempted. III. For the foregoin g r e a sons, and although on a basis different from that employed by the district court, the judgment is AFFIRMED.

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