5th Cir. Finds TCPA and Truth-in-Caller ID Act Pre-Empt State Law “Anti-Spoofing” Legislation — Because the TCIA Was Meant to Protect Non-Harmful Spoofing

In Teltech Systems, Inc. v. Bryant, — F.3d —-, 2012 WL 6097949 (5th Cir. 2012), the Court of Appeals for the 5th Circuit held that the Truth-in-Caller ID Act pre-empted state-law ‘anti-spoofing’ legislation.

“Spoofing” is misrepresenting the originating telephone caller’s identification (caller 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 Consumer Protection), MISS.CODE ANN. § 77–3–809(2), Defendants contend the Act is to pre-vent 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 identification system with the intent to deceive, defraud or mislead the recipient of a call [and a] person may not place a call knowing that false information was entered into the telephone caller identification system with the intent to deceive, defraud or mislead the recipient of the call. MISS.CODE ANN. § 77–3–805 (emphasis added). ASA violators commit a misdemeanor, and are subject to a fine and imprisonment. MISS.CODE ANN. § 77–3–809(1). Later that year, the Telephone Consumer Protec-tion 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 any person within the United States, in connection with any telecommunications service or [Internet protocol]-enabled voice service, to cause any caller identification 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. § 227(e)(5). Jointly, TCIA and TCPA provide a private right of action, grant enforcement powers in both federal and state governments, 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 other 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 is president), and Michigan-based Wonderland Rentals, Inc. (Plaintiffs), provide nationwide third-party spoofing services to individuals and entities. Teltech offers its customers the SpoofCard, which operates like a long-distance calling card and gives its holder the ability to manipulate the caller ID displayed to the called party. Wonderland uses spoofing to conduct “mystery shopping”, by which Wonderland representatives, posing as customers, interact with its clients’ customer-service departments to conduct quality control and gauge performance.

The Court of Appeals found state-law anti-spoofing legislation pre-empted.

 TCIA’s “text, structure, and [legislative] history”, as discussed supra, persuades us that ASA similarly upsets Congress’ considered regulatory choices. Id. The constrained language of 47 U.S.C. § 227(e)(1) is compelling evidence of Congress’ intent to protect non-harmful 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 portion 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-drafted language and legislative history, and in spite of the presumption against preemption that attaches to a State’s exercise of its police power, there is an inherent federal objective in TCIA to protect non-harmful spoofing. ASA’s proscription of non-harmful spoofing—spoofing done without “intent to defraud, cause harm, or wrongfully obtain anything of value”—frustrates this federal objective and is, therefore, con-flict-preempted.