Independent Charities of America, Inc. v. State of Minn., 95-1107

• Decision Date: 29 April 1996
• Docket Number: No. 95-1107,95-1107
• Citation: 82 F.3d 791
• Parties: INDEPENDENT CHARITIES OF AMERICA, INC.; Local Independent Charities, Inc.; National United Service Agencies, Inc.; Environmental Federation of America, doing business as Earth Share, Appellants, v. STATE OF MINNESOTA, Wayne Simoneau, in his capacity as Minnesota Commissioner of Employee Relations, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 791

82 F.3d 791

INDEPENDENT CHARITIES OF AMERICA, INC.; Local Independent Charities, Inc.; National United Service Agencies Inc.; Environmental Federation of America, doing business as Earth Share, Appellants, v. STATE OF MINNESOTA, Wayne Simoneau, in his capacity as Minnesota Commissioner of Employee Relations, Appellees.

No. 95-1107.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 20, 1995.

Decided April 29, 1996.

Appeal from the United States District Court for the District of Minnesota, James M. Rosenbaum, Judge.

Todd Joseph Zerin, St. Paul, MN, argued for appellants.

John Steven Garry, Asst. Attorney General, St. Paul, MN, argued for appellees.

Before McMILLIAN, ROSS and BOWMAN, Circuit Judges.

McMILLIAN, Circuit Judge.

Independent Charities of America, Inc., Local Independent Charities, Inc., National United Service Agencies, Inc., and Environmental Federation of America, Inc., d/b/a Earth Share (collectively plaintiffs) appeal from a final order entered in the United States District Court ¹ for the District of Minnesota granting summary judgment in favor of the State of Minnesota and Linda Barton, in her capacity as Minnesota Commissioner of Employee Relations (collectively the State defendants)on plaintiffs' claims that certain statutory amendments limiting access to the Minnesota Employee Combined Charitable Campaign (Campaign) violate the First Amendment, federal equal protection and substantive due process, and the Commerce Clause. Independent Charities of America, Inc. v. Minnesota, No. 4-94-CV-483 (D.Minn. Dec. 16, 1994). For reversal, plaintiffs argue that the district court erred in holding that (1) the exclusion of non-local fundraisers from the Campaign did not violate plaintiffs' First Amendment right to free speech; (2) the exclusion of non-local fundraisers from the Campaign did not violate their rights to equal protection and due process; and (3) the State of Minnesota was a "market participant" so as to exempt the challenged amendments from scrutiny under the Commerce Clause. For the reasons discussed below, we affirm the order of the district court.

I. Background

The Campaign is an annual fund raising drive whereby a state employee may elect to have a contribution deducted from his or her paycheck and paid to a registered combined charitable organization. See Minn.Stat. § 309.501(1)(e) (1994). The Campaign is conducted in the state workplace during working hours. According to Minn.Stat. § 309.501(3), only charitable federations which have been recognized by the Campaign as Registered Combined Charitable Organizations (RCCOs) are eligible to participate in the Campaign. A charitable federation seeking to participate in the Campaign on behalf of its member charities must meet the statutory criteria for RCCOs set forth in Minn.Stat. § 309.501(1). ²

In 1993, the Minnesota Legislature amended § 309.501 to provide more restrictive criteria for participation in the Campaign by RCCOs and their individual member charities. These amendments rendered plaintiffs ineligible for participation in the 1994-95 Campaign. ³ Three aspects of the 1993 amendments are challenged by plaintiffs. First, the Legislature amended Minn.Stat. § 309.501(1) to require participating RCCOs to be "governed by a local, independent, voluntary board of directors which represents the broad interests of the public and 90 percent of the directors of the governing board live or work in the community or surrounding area." Act of May 14, 1993, ch. 192, § 86, 1993 Minn. Laws 711, 767; Jt.App. 71. Because plaintiffs did not have local boards of directors, they did not qualify as RCCOs under the 1993 amendments. Second, the Legislature established a local presence requirement for the RCCOs' member charities. As amended in 1993, § 309.501(1)(b)(6) required that individual member charities, or "affiliated agencies," ⁴ be "incorporated in Minnesota or headquartered in the service area in which the state employee combined charitable campaign takes place." Id. As a result of this provision, some affiliated agencies became unable to participate in the 1994-95 Campaign. Finally, the Legislature added a local spending requirement to § 309.501(1), requiring that each affiliated agency must provide "all or substantially all of its health, welfare, social, or other human services, in the community and surrounding area in which the state employee combined charitable campaign takes place." Id. Some of plaintiffs' affiliated agencies were excluded from the Campaign under this requirement.

In 1994, the Legislature again amended Minn.Stat. § 309.501. First, it amended section (1)(b)(4) to establish an alternative to the 1993 requirement that a RCCO had to be governed by a local board of directors. The 1994 amendment provided that "if the charitable agencies are solely educational institutions which meet the requirements of paragraph (c), [a RCCO may be governed] by a national board of directors that has a local advisory board composed of members who live or work in the community or surrounding area." Act of Apr. 28, 1994, ch. 535, § 1, 1994 Minn. Laws 769, 770; Jt.App. B30, 31. Second, the Legislature added a provision to Minn.Stat. § 309.501(1)(b) stating that "[r]egistered combined charitable organization" includes a charitable organization organized by Minnesota state employees and their exclusive representatives for the purpose of providing grants to nonprofit agencies providing Minnesota residents with food or shelter if the charitable organization meets the requirements of clauses (1), (4), and (5). Id.

The 1993 amendments had the practical effect of excluding from participation in the 1994-95 Campaign six organizations which had previously qualified as RCCOs, including the United Negro College Fund (UNCF), Open Your Heart to the Hungry and Homeless (OYH) ⁵, and plaintiffs. Under the 1994 amendments, UNCF and OYH became eligible once again to participate in the Campaign.

Plaintiffs, four federated charities who solicit contributions on behalf of a slate of individual member charities, are incorporated outside of Minnesota and solicit contributions in state and municipal public employee campaigns throughout the United States. Plaintiffs' applications to the 1994-95 Campaign were rejected due to non-compliance with the statutory eligibility requirements. On June 22, 1994, plaintiffs instituted the present action in the United States District Court for the District of Minnesota, challenging the constitutionality of the 1993 and 1994 amendments to Minn.Stat. § 309.501. The amended complaint alleged that the challenged amendments violate the First Amendment, federal equal protection and substantive due process, and the Commerce Clause. Plaintiffs sought a declaratory judgment and a permanent injunction against application of the 1993 and 1994 amendments. In addition, after filing their complaint, plaintiffs moved for a preliminary injunction allowing their participation in the 1994-95 Campaign pending final resolution of the present case. On July 29, 1994, the magistrate judge issued a Report and Recommendation that plaintiffs' motion for a preliminary injunction be denied. The district court, adopting the magistrate judge's Report and Recommendation, denied the preliminary injunction. On subsequent cross-motions for summary judgment, the district court granted summary judgment in favor of the State defendants. This timely appeal followed.

II. Discussion

We review a grant of summary judgment de novo. The question before the district court, and this court on appeal, is whether the record, when viewed in the light most favorable to the non-moving party, shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); see, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986); Get Away Club, Inc. v. Coleman, 969 F.2d 664, 666 (8th Cir.1992); St. Paul Fire & Marine Insurance Co. v. FDIC, 968 F.2d 695, 699 (8th Cir.1992). Where the unresolved issues are primarily legal, rather than factual, summary judgment is particularly appropriate. Crain v. Board of Police Comm'rs, 920 F.2d 1402, 1405-06 (8th Cir.1990).

A. First Amendment Challenge

We begin by addressing plaintiffs' argument that the 1993 statutory amendments restricting the eligibility criteria for participation in the Campaign violate their First Amendment right to freedom of speech. The Supreme Court has recognized since Village of Schaumburg v. Citizens for a Better Environment, 444 U.S. 620, 100 S.Ct. 826, 63 L.Ed.2d 73 (1980) (Schaumburg ), that charitable solicitations "are so intertwined with speech that they are entitled to the protections of the First Amendment." See id. at 632, 100 S.Ct. at 833-34 (municipal ordinance prohibiting public solicitation of contributions by charitable organizations which did not use at least seventy-five percent of its receipts for "charitable purposes" was unconstitutionally overbroad under the First Amendment); see also Secretary of State v. Joseph H. Munson Co., 467 U.S. 947, 959, 104 S.Ct. 2839, 2848, 81 L.Ed.2d 786 (1984) (Munson ) (Maryland statute prohibiting charitable organizations, in connection with any fund raising activity, from paying expenses of more than twenty-five percent of the amount raised was unconstitutional limitation on protected First Amendment solicitation activity).

Schaumburg and Munson, however, involved regulations affecting door-to-door or on-street solicitation. In Cornelius v. NAACP Legal Defense & Educ. Fund, 473 U.S. 788, 797-99, 105 S.Ct. 3439, 3446-47, 87 L.Ed.2d 567 (1985) (Cornelius ), the Supreme Court recognized a constitutionally significant distinction between such public forms of charitable solicitation and the type involved in a fund...