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Justices To Hear Telemarketing Case

In a case with implications for nearly every family in America, the Supreme Court will consider when charity telemarketing calls go beyond irritating to fraudulent.

The justices also indicated Monday that they want to take their time in deciding whether to take a broad look at college affirmative action programs.

The court said Monday it will decide whether telemarketers can be pursued for fraud for asking for cash for a worthwhile charity, when much of the money is being kept by the telemarketer.

The case stems from a fraud action that Illinois brought against a company that raised money for Vietnam veterans.

The charity, VietNow, had an agreement with Telemarketing Associates Inc. in which the charity got 15 percent of the money and the fund-raiser kept the rest for salaries, expenses and profit.

VietNow had no problem with the arrangement, and the state's complaint was dismissed on free-speech grounds.

The Illinois Supreme Court "transformed the First Amendment into a license for unscrupulous fund-raisers to defraud the public in the name of raising money for charity," Illinois Attorney General James Ryan told the nation's high court in a filing.

State prosecutors want to prove that telemarketers intentionally misled donors.

Michael Ficaro, an attorney for the telemarketing company, said to allow the lawsuit "would place all charitable fund-raisers at the mercy (of) the attorney general's whims. Potentially any gross fee can be called too high. Potentially any contractor arrangement can be called unreasonable."

He said the company raised money for Vietnow, and educated the public about the needs of veterans.

Ryan said people were told that their donations would be used for food and shelter for hungry and homeless veterans. In reality, just 3 percent was used for that, he said.

Charity solicitors bring in more than $200 billion a year and many are handled by for-profit fund-raising companies, according to Ryan.

In a series of decisions in the 1980s, the Supreme Court repeatedly ruled against states in disputes over charitable solicitations. In 1988, the court barred states from placing strict regulations on professional, for-profit organizations that solicit contributions for charities.

Other states that asked the Supreme Court to hear this case were Alabama, Alaska, Delaware, Florida, Indiana, Kansas, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, Ohio, South Dakota, Tennessee, Utah, West Virginia, and Wyoming.

Florida Attorney General Robert Butterworth said states are getting more complaints about solicitors, including some who falsely claim to be raising money for victims of the terrorist attacks.

On affirmative action the court, without comment, refused to put a case filed on behalf of black and Hispanic students on a fast track.

Justices also are reviewing appeals from white students involving the University of Michigan's undergraduate and law school admissions policies. An announcement is expected late this year or early in 2003.

Attorneys for the minority students, noting the importance of the issue, asked to have their case considered more quickly and at the same time as the other cases. Justices declined to change the time frame.

An appeals court upheld the law school admission policy but has not yet ruled in a companion case addressing the school's undergraduate policy.

The Supreme Court is being urged to review both cases without waiting for a decision from the 6th U.S. Circuit Court of Appeals.

In other actions the justices:

  • Dismissed a lawsuit brought by Canada, which was trying to use a U.S. anti-racketeering law to sue over cigarette smuggling. Canadian leaders contended that R.J. Reynolds Tobacco Co. tried to get around taxes by smuggling tobacco into Canada through an Indian reservation.
  • Upheld Michigan's new congressional boundaries on Monday, just a day before voters pick occupants of the newly drawn seats. Democrats had challenged the plan which favors Republican candidates.
  • Agreed to decide if two cancer-stricken Vietnam veterans can reopen a challenge against chemical companies over exposure to Agent Orange. The case poses an important question for the court: when should people be allowed to bypass previous class-action settlements.
  • Refused to keep a California sheriff and his deputy from being sued for ordering the pepper-spraying of shackled anti-logging protesters. The court turned aside without comment a case that could have clarified when officers have immunity for on-the-job actions.
  • Held that a lower court was wrong to allow an immigrant who feared mistreatment in his home country to stay in the United States. The justices ruled against a young man from Guatemala who claims he fled to America after being threatened by guerrillas.
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