Joe Conte Toyota, Inc. v. Louisiana Motor Vehicle Com'n

• Citation: 24 F.3d 754
• Decision Date: 05 July 1994
• Docket Number: No. 93-3288,93-3288
• Parties: , 22 Media L. Rep. 1913 JOE CONTE TOYOTA, INC., Plaintiff-Appellant, v. LOUISIANA MOTOR VEHICLE COMMISSION, et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 754

24 F.3d 754

63 USLW 2040, 22 Media L. Rep. 1913

JOE CONTE TOYOTA, INC., Plaintiff-Appellant, v. LOUISIANA MOTOR VEHICLE COMMISSION, et al., Defendants-Appellees.

No. 93-3288.

United States Court of Appeals, Fifth Circuit.

July 5, 1994.

Dane S. Ciolino, Elizabeth M. McCarron, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, LA, for appellant.

Lisa Miley Geary, Burgess E. McCranie, Jr., Campbell, McCranie, Sistrunk, Anzelmo & Hardy, P.C., Metairie, LA, for appellees.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before ALDISERT ^*, REYNALDO G. GARZA and DUHE, Circuit Judges.

ALDISERT, Circuit Judge:

This appeal by Joe Conte Toyota, Inc. from a district court judgment dismissing its suit against members of the Louisiana Motor Vehicle Commission requires us to decide whether the court correctly upheld the constitutionality of a state regulation prohibiting any automobile advertisements which contain the term "invoice" on the ground that the term is inherently misleading and, therefore, beyond First Amendment protection. We uphold the constitutionality of the regulation and we will affirm the judgment.

Jurisdiction was proper in the trial court based on 28 U.S.C. Sec. 1331. This court has jurisdiction under 28 U.S.C. Sec. 1291. Appeal was timely filed under Rule 4(a) of the Federal Rules of Appellate Procedure.

I.

Section 20 of the Rules and Regulations promulgated by the Motor Vehicle Commission prohibits the use of the term "invoice" in any advertisement for the sale of a motor vehicle. La.Rev.Stat.Ann. Sec. 32:1253(E). The regulations permit an automobile dealer to advertise the actual proposed selling price of a car or an amount above or below the "Manufacturer's Suggested Retail Price," the standardized price set by the industry for any model car with the same equipment. The asserted purpose of the regulation is to eliminate misleading advertisements.

Appellant proposed to run the following advertisement in a local newspaper offering automobiles for sale:

$49.00 OVER FACTORY INVOICE *

The advertisement copy included a disclaimer:

* Dealer invoice may not reflect actual dealer cost.

Appellant proposed an alternate disclaimer stating:

* Invoice price indicates amount dealer paid distributor for car. Due to various factory rebates, holdbacks and incentives, actual dealer cost is lower than invoice price.

Challenging Section 20 of the Rules and Regulations, Joe Conte Toyota filed a complaint in the district court seeking to enjoin the members of the Commission from abridging its right to free speech and seeking a declaratory judgment that the term "invoice," as used in the proposed advertisement, is constitutionally protected speech.

In dismissing the complaint, the district court concluded that the term "invoice" as used in this context was inherently misleading and, therefore, not entitled to First Amendment protection.

The parties agree that the proposed advertisement is commercial speech and that the Supreme Court has laid out a blueprint for determining whether certain commercial speech is entitled to First Amendment protection:

In commercial speech cases, then, a four-part analysis has developed. At the outset, we must determine whether the expression is protected by the First Amendment. For commercial speech to come within that provision, it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.

Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n of New York, 447 U.S. 557, 566, 100 S.Ct. 2343, 2351, 65 L.Ed.2d 341 (1980).

Appellant contends that the district court erred in finding the term "invoice" inherently misleading and, consequently, that it erred in not considering the remaining prongs of the commercial speech test. Had it conducted a full inquiry, Appellant argues, the court would have concluded that a wholesale ban on the term "invoice" was more extensive than necessary to serve the state's substantial interest in protecting the public.

II.

In cases raising First Amendment issues, we must " 'make an independent examination of the whole record.' " New York Times Co. v. Sullivan, 376 U.S. 254, 285, 84 S.Ct. 710, 728-29, 11 L.Ed.2d 686 (1964) (quoting Edwards v. South Carolina, 372 U.S. 229, 235, 83 S.Ct. 680, 683, 9 L.Ed.2d 697 (1963)). This examination includes an independent review of the trier of fact's findings in support of that judgment. See, e.g., N.A.A.C.P. v. Claiborne Hardware Co., 458 U.S. 886, 102 S.Ct. 3409, 73 L.Ed.2d 1215 (1982). Close scrutiny by a reviewing court of certain factual findings is necessary "in cases involving restrictions on the freedom of speech protected by the First Amendment particularly in those cases in which it is contended that the communication in issue is within one of the few classes of 'unprotected' speech." Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 503, 104 S.Ct. 1949, 1961, 80 L.Ed.2d 502 (1984). "Independent appellate review of such facts assures that the suppression of protected speech--particularly unpopular or controversial speech--is not insulated from close scrutiny by the straightforward application of the clearly-erroneous rule. The rule thus reflects a special solicitude for claims that the protections afforded by the First Amendment have been unduly abridged." Planned Parenthood Ass'n v. Chicago Transit Auth., 767 F.2d 1225, 1229 (7th Cir.1985).

III.

We first must ascertain what is meant by the term "misleading" as used by the Court in Central Hudson. We find initial guidance in In re R.M.J., 455 U.S. 191, 203, 102 S.Ct. 929, 937, 71 L.Ed.2d 64 (1982), a commercial speech case in which the Court recognized different gradations of misleading commercial speech and their effect on the Central Hudson analysis:

Truthful advertising related to lawful activities is entitled to the protections of the First Amendment. But when the particular content or method of the advertising suggests that it is inherently misleading or when experience has proved that in fact such advertising is subject to abuse, the States may impose appropriate restrictions. Misleading advertising may be prohibited entirely. But the States may not place an absolute prohibition on certain types of potentially misleading information ... if the information also may be presented in a way that is not deceptive.

(emphasis added).

The Court in In re R.M.J. suggested that "inherently" misleading advertising may be banned outright, but "potentially" misleading advertising may not. In attempting to understand the distinction, we derive additional guidance from a later commercial speech case, Peel v. Attorney Disciplinary Commission, 496 U.S. 91, 110 S.Ct. 2281, 110 L.Ed.2d 83 (1990).

Although there was no majority opinion in Peel, the opinions of several justices shed some light on the hierarchy of misleading commercial speech. Furthermore, the Court identified a third category of misleading commercial speech, "actually misleading." Id. (Stevens, J.).

Justice Stevens, in an opinion joined by Justice Brennan, Justice Blackmun and Justice Kennedy, suggested that commercial speech is "actually" misleading when there is evidence of deception. Id. at 106, 110 S.Ct. at 1694. Justice Marshall agreed that a statement is "actually" misleading when the record contains evidence that recipients of commercial speech "actually ha[ve] been misled by the statement." Id. at 112, 110 S.Ct. at 1697 (Marshall, J. and Brennan, J., concurring).

A statement is "inherently" misleading when, notwithstanding a lack of evidence of actual deception in the record, "the particular method by which the information is imparted to consumers is inherently conducive to deception and coercion." Id. (Marshall, J. and Brennan, J., concurring). Included is "commercial speech that is devoid of intrinsic meaning." Id. (Marshall, J. and Brennan, J., concurring). In her dissent, Justice O'Connor added that "inherently misleading" means "inherently likely to deceive the public." Id. at 121, 110 S.Ct. at 1702 (O'Connor, J., Rehnquist, C.J. and Scalia, J., dissenting). Citing In re R.M.J., Justice Marshall noted that states may prohibit actually or inherently misleading commercial speech entirely. Id. at 111, 110 S.Ct. at 1697 (Marshall, J. and Brennan, J., concurring).

From all of this we conclude that a statement is actually or inherently misleading when it deceives or is inherently likely to deceive.

IV.

Ample evidence in the record supports the conclusion that the term "invoice" as used in the proposed advertisement at a minimum is likely to deceive and is therefore inherently misleading.

Joe Conte, the principal of the corporate Appellant, testified that many consumers mistakenly believed that the difference between invoice price and the sale price constituted the dealer's profit.

Raymond Brandt, a car dealer with 10 years experience, testified that "invoice" in relation to price has no fixed meaning among car dealers and that "invoice" price varies over time and from dealer to dealer.

Arthur Tait, a car dealer since 1951, testified that "$49.00 over invoice" gives no information that the consumer can use in judging the price of a vehicle.

Even where the consumer is shown a manufacturer invoice, a sample invoice from Joe Conte Toyota shows no less than four...