First Circuit Permits Challenge to Massachusetts Prior Restraint on Billboards

billboardIn recognition of Free Speech Week, the WLF Legal Pulse celebrates what may be the First Amendment’s greatest virtue: it protects speech that may be unpopular due to the nature of the speaker or the medium within which it is spoken. We do so by applauding an October 20 U.S. Court of Appeals for the First Circuit ruling that addressed a prior restraint on a method of communication that some disfavor—billboards—and that predominantly carries messages some consider unworthy of full constitutional protection—advertisements.

Unbridled regulatory authority. Section 302 of the Massachusetts Code of Regulations requires all outdoor advertisers to obtain both an operating license and a permit for each specific sign. The regulation vests the Director of the Office of Outdoor Advertising (“Director”) with broad discretion to grant, withhold, or revoke licenses and permits for billboards. Section 302 enumerates several factors that the Director “may” consider, including “health, safety, and general welfare” and “not [being] in harmony with the surrounding area.” The regulation, however, states the listed factors are non-exclusive and that the Director’s authority is “[w]ithout limitation.”

Van Wagner Communications, which lobbied against the 2012 amendments to Section 302, filed a facial challenge to the regulation in federal court, arguing that it imposed an unconstitutional prior restraint on the company’s speech. The U.S. District Court for the District of Massachusetts held that because the Director had approved Van Wagner’s license and all 70 of its permit requests over two years, the company suffered no injury and thus lacked standing to sue. Continue reading

High Court Should Not “DIG” Dart Cherokee Basin Case

supreme courtDart Cherokee Basin Operating Co. v. Owens, which raises right-of-removal issues under the Class Action Fairness Act (CAFA), is among the more important civil justice cases being heard by the Supreme Court this term. Legal commentators are virtually unanimous in concluding that the trial court adopted an overly restrictive standard governing removal of cases from state to federal court. Yet, as Columbia Law Professor Ronald Mann noted in a recent column for ScotusBlog, questioning during the October 7 oral argument revealed that the Court may be reluctant to decide the case at all. Every question posed to counsel for Petitioner focused on “vehicle” issues, not on the merits of his CAFA arguments. Several justices even suggested that the case might be dismissed as improvidently granted—which would be a terrible mistake.

On closer examination, the procedural posture issues that troubled the Court at oral argument turn out to be insubstantial; they should not dissuade the Court from addressing the Question Presented by the petition. Moreover, as explained in Washington Legal Foundation’s amicus brief, it is critical that the Court retain jurisdiction in this case to unwind the judicially created doctrine that motivated the mistake below in the first place. Dart Cherokee provides the Court an ideal opportunity to end the rule of construction whereby federal courts continue to narrowly construe federal removal statutes against the party seeking removal, contrary to Supreme Court precedent and despite the utter lack of any textual basis for doing so. Continue reading

Jurisdiction Still on Target for Supreme Court “Dart” Case

supreme courtAlthough the Supreme Court is scheduled to hear oral arguments on October 7 in a case addressing the scope of removal jurisdiction under the Class Action Fairness Act (CAFA)—Dart Cherokee Basin Operating Co. v. Owens—Public Citizen has urged the Court to dismiss the case as improvidently granted based on what it views as procedural roadblocks to reaching the merits. Last Friday, Columbia Law Professor Ronald Mann’s column for SCOTUSblog spotlighted Public Citizen’s amicus argument and stated, “[M]y sense is that the jurisdictional question [raised by Public Citizen] will seem a lot more contestable to the Justices than the issue on the merits,” adding that the Court might even consider dismissing the petition. Mann is probably correct that the Court is likely to be unimpressed by the lower courts’ merits decision—that a removal petition is deficient unless accompanied by documentary evidence supporting the petition’s allegations that the prerequisites for removal have been met. But the Court is likely to be equally unimpressed by Public Citizen’s “jurisdictional” argument, which has not been raised by the parties at any stage of these proceedings.

Public Citizen bases its argument on the fact that the Tenth Circuit did not directly address the district court’s decision to remand a case removed from state court by the Petitioners under CAFA. CAFA permits defendants in class actions to appeal remand decisions, but they first must petition the appeals court for an order accepting the appeal. In this case, the Tenth Circuit (by an equally divided 4-4 vote) denied the defendants’ petition for permission to appeal. Public Citizen contends that the only issue properly before the Supreme Court is whether the Tenth Circuit abused its discretion in denying permission for an appeal, not whether the district court erred in remanding the case.

That contention is without merit. First, the issue raised by Public Citizen cannot even remotely be deemed “jurisdictional” in nature. The Supreme Court has appellate jurisdiction over any case that has come before a federal appeals court, whether “before or after rendition of judgment or decree.” 28 U.S.C. § 1254(1). Supreme Court jurisdiction does not depend on whether the appeals court has rendered a judgment on the merits of the trial court’s determination. Because this appeal came before the Tenth Circuit, the Supreme Court has jurisdiction to review it. Continue reading

Second Circuit Overturns Law that Compelled Businesses to Advertise their Competitors’ Services

2nd CircuitOn September 4, with Safelite Group, Inc. v. Jepsen, the U.S. Court of Appeals for the Second Circuit made an important contribution to the jurisprudence of compelled speech (an area of growing disharmony in the federal courts, as we’ve noted recently). The court unanimously struck down a Connecticut law that permitted certain businesses to promote their auto-glass repair services only if they mentioned the similar services of their competitors.

The Law at Issue. The Petitioner, Safelite Group, is an insurance claims management company that owns and operates a Connecticut affiliate, Safelite Auto Glass. If auto insurance companies direct Connecticut drivers with auto-glass claims to Safelite, Safelite can recommend (but, under state law, cannot require) Safelite Auto Glass to do the repairs. When it does so, Safelite voluntarily discloses its ownership interest to the insureds. If insureds cannot or do not want to utilize a Safelite Auto Glass shop, Safelite recommends another shop that Safelite has pre-approved.

Unaffiliated Connecticut auto-glass shops took their complaints about Safelite’s “unfair” practices to the legislature, which in May 2013 adopted a law that in part prohibits insurance companies or their claims administrators from mentioning their affiliate repair shops unless they also reference a competitor.

First Amendment Challenge. Safelite sought a preliminary injunction against Connecticut’s enforcement of the law, arguing in federal district court that the compelled speech requirement abridged its First Amendment rights. The district court denied the injunction, holding that the mandate simply required disclosure of factual, uncontroversial information that does not offend the company’s First Amendment freedoms. Continue reading

High Court Presented with Opportunity to Reinforce its Compelled Speech Jurisprudence

first-amendmentA petition for writ of certiorari filed with the U.S. Supreme Court on July 17 (the respondent’s reply is still pending) may provide the justices with a timely opportunity to clarify the Court’s jurisprudence on compelled speech. The case, Anthem Prescription Management v. Beeman, involves the increasingly common practice by government of enlisting private enterprises to communicate certain messages against their will. As we have discussed here recently, the lower federal courts are fractured over the amount of First Amendment scrutiny judges should apply when businesses challenge such speech mandates.

Laws Correcting Deception. Beginning with Zauderer v. Office of Disciplinary Counsel in 1985, the Supreme Court has developed a consistent jurisprudence on compelled speech for commercial enterprises. Zauderer recognized businesses’ First Amendment rights to communicate with consumers about their products. But the Court noted that such protection is minimal for misleading or false commercial speech. It held that “an advertiser’s rights are adequately protected as long as disclosure requirements are reasonably related to the State’s interest in preventing deception of consumers.” The Court emphasized that the speech mandate must require “purely factual and uncontroversial information” and not be “unduly burdensome.”

Laws Not Targeting Deception. What if the government interest underlying a speech mandate is not correction of deception? In our opinion, the Court spoke quite clearly in Zauderer, carving out prevention of deception as a unique exception to the First Amendment’s heightened protection of commercial speech, and thus heightened scrutiny should still apply to other speech mandates. Continue reading

Actions Speak Louder Than Words: Argentina Continues to Stiff its Creditors

ArgentinaEver since its final courtroom defeat earlier this summer in its long-running battle with holdout bondholders, Argentina has attempted to portray itself as a responsible debtor that wants to pay all legitimate obligations. The Kirschner regime claims that its July 2014 default on the nation’s bond repayment obligations was forced upon it involuntarily by U.S. District Judge Thomas Griesa. Argentina asserts that it wants to act responsibly by making interest payments on its external indebtedness and would do so but for the injunction issued by “crazy old Judge Griesa” at the request of holdout bondholders (or, as Argentina refers to them, “vulture funds”). But Argentina’s recent actions don’t match its rhetoric; it continues its well-established policy of refusing to pay obligations that it has no plausible basis for contesting. Argentina has expressed a desire to repair its tarnished reputation within financial markets, but nothing in its recent conduct suggests movement in that direction.

A good case in point is Republic of Argentina v. BG Group PLC, a case decided by the U.S. Supreme Court earlier this year. That case involved claims by BG Group, a British natural gas company, that Argentina had breached a contract by taking steps designed to drive BG Group out of business. In 2007, an international arbitration panel unanimously agreed and entered a $185 million judgment in favor of BG Group. Rather than paying the judgment, Argentina sought to appeal the arbitration award within the U.S. court system. After years of protracted litigation, the Supreme Court in March 2014 upheld the arbitration award. Continue reading

D.C. Circuit’s “COOL” Decision Eases Government’s Burden in Justifying Compelled Speech

DC CircuitIf government wants to force you to say something you would not otherwise express, it must have a very good reason for doing so. This bedrock First Amendment principle applies to individuals and business enterprises alike.

In July, the U.S. Court of Appeals for the D.C. Circuit—arguably the nation’s second most important federal court—carved away at this principle and the constitutional protection it provides. Below, we discuss how that court allowed a federal agency to repeatedly change its declared reason for compelling speech and in an en banc panel opinion improperly eased government’s burden to prove a substantial governmental interest.

District Court Challenge. The compelled speech at issue in American Meat Institute (AMI) v. USDA is a country of origin label (“COOL”) recording the place of birth, residence, and slaughter of the animal from which each cut of meat taken. In the proposed rule’s Statement of Benefits and Costs, USDA asserted the mandate was justified because “certain U.S. consumers valued the designation.” AMI argued in its public comments that this interest was neither governmental nor substantial. USDA responded in the final rule with a stunning tautology: our interest is substantial and governmental because Congress empowered us to impose the COOL mandate.

When AMI sued to enjoin COOL on July 25, 2013, the agency again shifted focus, advancing a new justification that never appeared in the administrative record: “correct misleading speech and prevent consumer deception.” The federal district court bought USDA’s made-for-litigation governmental interest while denying AMI’s motion. In permitting this new justification, Judge Jackson ignored a 1947 Supreme Court precedent, SEC v. Chenery Corp. That decision holds that when judging the propriety of agency action, courts are limited to what is in the administrative record. Continue reading