Nat'l Fed'n of The Blind of Tex. Inc. v. Abbott
| Decision Date | 15 July 2011 |
| Docket Number | No. 10–10236.,10–10236. |
| Citation | 647 F.3d 202 |
| Parties | NATIONAL FEDERATION OF THE BLIND OF TEXAS, INC., a Texas Nonprofit Corporation; Institute for Disability Access, Inc., also known as Adapt of Texas, Inc., Plaintiffs–Appelleesv.Greg ABBOTT, as he is Attorney General of the State of Texas, Defendant–Appellant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Gen. (argued), Austin, TX, for Defendant–Appellant.Appeal from the United States District Court for the Northern District of Texas.Before BARKSDALE, CLEMENT, and PRADO, Circuit Judges.EDITH BROWN CLEMENT, Circuit Judge:
The National Federation of the Blind of Texas, Inc., and the Institute for Disability Access, Inc., (“the Charities”) brought a constitutional challenge to a Texas statute regulating the practices of for-profit entities engaged in charitable solicitation. The district court held certain portions of the statutory scheme unconstitutional as violative of the First and Fourteenth Amendments. In his capacity as the Attorney General of the State of Texas, Greg Abbott (“Texas”) appeals certain portions of that decision. For the following reasons, we AFFIRM in part, REVERSE in part, and VACATE in part the district court's decision.
I. FACTS AND PROCEEDINGSA. Texas Business and Commerce Code §§ 17.921–17.926
In response to a perceived problem of deceptive trade practices by for-profit entities engaged in charitable solicitation, in 2009 Texas enacted a statutory scheme (“the Act”) entitled “[a]n Act relating to regulating the collection or solicitation of donated goods subsequently sold by for-profit entities or individuals.” See Tex. Bus. & Com.Code Ann. §§ 17.921–17.926. The Act requires “for-profit entities” 1 to make certain disclosures when collecting donated clothing or household goods through “public donations receptacles” 2 ( § 17.922), when making telephone or door-to-door solicitations ( § 17.923), and when making mail solicitations ( § 17.924).
The required disclosures are dependent on the relationship between the for-profit entity and the affiliated charitable organization. The “(b) provisions” govern instances where “none of the proceeds from the sale of the donated items will be given to a charitable organization,” and the disclosure must state “DONATIONS ARE NOT FOR CHARITABLE ORGANIZATIONS AND WILL BE SOLD FOR PROFIT.” Id. at §§ 17.922(b), 17.923(b), 17.924(b). The “(c) provisions” apply when “any of the proceeds from the sale of the donated items will be given to a charitable organization,” and the disclosure must state “DONATIONS TO (NAME OF FOR–PROFIT ENTITY OR INDIVIDUAL) WILL BE SOLD FOR PROFIT AND ____ PERCENT (INSERT PERCENTAGE) OF ALL PROCEEDS WILL BE DONATED TO (NAME OF CHARITABLE ORGANIZATION).” 3 Id. at §§ 17.922(c), 17.923(c), 17.924(c). Finally, the “(d) provisions” cover scenarios where “the for-profit entity or individual pays to a charitable organization a flat fee that is not contingent on the proceeds generated from the sale of the donated items and the for-profit entity or individual retains a percentage of the proceeds from the sale” and require the following disclosure: 4 Id. at §§ 17.922(d), 17.923(d), 17.924(d). The (c) and (d) provisions each contain three components: (1) the “identification requirement,” which requires the disclosure of contact information; 5 (2) the “sold for profit” disclosure requirement; and (3) the “fee arrangement” disclosure requirement. The Act provides for civil penalties for persons who violate its terms. Id. at § 17.926.
B. Procedural History and the Decision Below
The Charities are Texas nonprofit corporations that retain professional resellers to operate public receptacles intended for use as collection points for clothing and household goods donated by the public and to make solicitations of donations. The for-profit professional resellers pay a flat fee to the Charities based on the volume of donations collected. The Charities filed a complaint alleging that the Act violates the First and Fourteenth Amendments of the United States Constitution because it (1) is a content-based restriction of protected speech; (2) violates equal protection; (3) is underinclusive; (4) is overly broad; and (5) is a prior restraint of protected speech. They also alleged that the Act violated Article I, Section 8 of the Texas Constitution. The Charities also sought emergency injunctive relief against the application of the Act. The parties filed a joint stipulation of facts and filed cross-motions for summary judgment.
The district court granted in part and denied in part the dispositive motions and entered final judgment. It found that the plaintiffs lacked standing to challenge the (b) provisions because they “have not hired nor do they intend to hire professional resellers who would pay them nothing.” Nat'l Fed'n of the Blind of Tex., Inc. v. Abbott, 682 F.Supp.2d 700, 707 (N.D.Tex.2010). Because the Charities “do retain professional resellers who pay [them] a flat fee by volume,” the district court found that the Charities had standing to challenge the (d) provisions. Id. Finally, the court found that the Charities “have not hired nor do they intend to hire professional resellers who would ... pay them a percentage of the proceeds for the resell of the donated items.” Id. But the court also found that it “cannot sever the flat fee provision from the percentage disclosure requirement, as it would create a large hole in the regulatory structure,” id. at 708, and extended standing to the Charities to challenge the (c) provisions on that basis.
Turning to the disclosure requirements, the district court held that the identification requirement was constitutional. It held that the fee arrangement disclosure requirement was unconstitutional under the First Amendment because that requirement, although it “serves a compelling state interest, protecting charities and the public from fraud,” is “not a narrowly tailored requirement.” Id. at 711–13. The district court held that the sold-for-profit disclosure requirement survived constitutional scrutiny under the First Amendment, but was unconstitutional under the Equal Protection Clause, reasoning that the sold-for-profit disclosure requirement unconstitutionally “discriminate[s] against charitable organizations who hire professional resellers to solicit and sell donations in favor of charitable organizations who conduct the solicitation and resale in-house.” Id. at 714–15. The court determined that although the Act did not contain a severability clause, Texas law allowed it to sever the language it found unconstitutional from the statutory scheme. Id. at 707 () (citing Tex. Gov't Code § 311.032(c)).
The district court granted in part and denied in part both Texas's and the Charities' motion for summary judgment. It also denied as moot the Charities' motions for emergency injunctive relief. That same day, in a separate order, the district court entered final judgment
in favor of [the Charities] insofar as the Court finds the statute at issue unconstitutional with respect to the requirements that professional resellers disclose: (1) the fact that donated goods will be sold “for profit;” (2) the percentage of the proceeds that will go to a charitable organization, if applicable; and (3) the flat fee that will be paid to a charitable organization for the use of its name, if applicable. Judgment is entered in all other respects in favor of [Texas].
C. Texas's Appeal to this Court
The Charities did not appeal; their lack of standing to challenge the (b) provisions and the district court's holding that the identification requirements are constitutional are not at issue. Texas timely appealed, but only as to certain portions of the district court's decision. It does not appeal the district court's decision holding that the Charities have standing to challenge the (d) provisions. It also does not challenge the portion of the decision holding that the fee arrangement disclosure requirement is unconstitutional as applied to telephone and door-to-door solicitations (§ 17.923) and to mail solicitations (§ 17.924). Texas appeals only the portions of the district court's order (1) extending standing to the Charities to challenge the (c) provisions; (2) holding that the fee arrangement disclosure requirement is unconstitutional under the First Amendment as applied to public donations receptacles; and (3) holding that the sold-for-profit disclosure requirement is unconstitutional under the Fourteenth Amendment as to telephone or door-to-door solicitations, mail solicitations, and public donations receptacles.
II. DISCUSSIONA. Standard of Review
“We review the district court's decision to grant a motion for summary judgment de novo.” Pub. Citizen, Inc. v. La. Atty. Disciplinary Bd., 632 F.3d 212, 217 (5th Cir.2011). “Summary judgment is appropriate ‘if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’ ” Id. (quoting Fed.R.Civ.P. 56(a)).
The court reviews questions of jurisdiction, and specifically standing, de novo. Arguello v....
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