916 F.2d 777 (2nd Cir. 1990), 1044, Simon & Schuster, Inc. v. Fischetti

Docket Nº:1044, Docket 89-9192.
Citation:916 F.2d 777
Party Name:SIMON & SCHUSTER, INC., Plaintiff-Appellant, v. Gennaro FISCHETTI, George L. Grobe, Jr., Diane McGrath, and Angelo Petromelis, Individually and in Their Capacities as Members of the New York State Crime Victims Board, Defendants-Appellees.
Case Date:October 03, 1990
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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916 F.2d 777 (2nd Cir. 1990)

SIMON & SCHUSTER, INC., Plaintiff-Appellant,


Gennaro FISCHETTI, George L. Grobe, Jr., Diane McGrath, and

Angelo Petromelis, Individually and in Their

Capacities as Members of the New York

State Crime Victims Board,


No. 1044, Docket 89-9192.

United States Court of Appeals, Second Circuit

October 3, 1990

Argued March 22, 1990.

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Ronald S. Rauchberg (Charles S. Sims, Proskauer Rose Goetz & Mendelsohn, Mark Morril, Eric Rayman, Simon & Schuster, Inc., New York City, of counsel), for plaintiff-appellant.

Howard L. Zwickel, Asst. Atty. Gen. (Robert Abrams, Atty. Gen. of State of N.Y., Susan L. Watson, Asst. Atty. Gen., New York City, of counsel), for defendants-appellees.

Leon Friedman and Arthur Eisenberg, New York City, filed a brief for amici curiae, PEN American Center and the New York Civil Liberties Union.

R. Bruce Rich (Robin E. Silverman, Weil Gotshal & Manges, New York City, of counsel), filed a brief for amicus curiae, Ass'n of American Publishers, Inc.

Before NEWMAN, MINER and WALKER, Circuit Judges.

MINER, Circuit Judge:

Plaintiff-appellant Simon & Schuster, Inc. ("Simon & Schuster") appeals from a judgment entered in the United States District Court for the Southern District of New York (Keenan, J.) upon an order granting the motion of defendants-appellees, Members of the New York State Crime Victims Board ("Victims Board"), for summary judgment pursuant to Fed.R.Civ.P. 56 and denying its own motion for the same relief. Simon & Schuster, a leading book publisher, brought this action to challenge the constitutionality of section 632-a of the New York Executive Law. N.Y. Exec. Law Sec. 632-a (McKinney 1982 & Supp.1990). Section 632-a requires that the profits derived by a criminal from the exploitation of his or her crime be deposited as earned in an escrow account maintained by the Victims Board as a means of preserving funds for the satisfaction of civil judgments later recovered by the victims of the exploited crimes. The challenge to the statute is grounded in the first and fourteenth amendments. Simon & Schuster asserts that the statute imposes a direct restriction on speech, is therefore subject to strict scrutiny, and cannot survive the scrutiny. The Victims Board contends that the provision in question does not burden freedom of speech in any way, imposes only an incidental burden if it does and, in any event, furthers a compelling state interest in a manner narrowly tailored to do so.

In granting summary judgment to the Victims Board and denying that relief to Simon & Schuster, the district court determined that "[t]he state's interest in compensating crime victims is unrelated to the suppression of free expression and any burden on free expression is merely incidental." Simon & Schuster, Inc. v. Members of the N.Y. State Crime Victims Bd., 724 F.Supp. 170, 177 (S.D.N.Y.1989). Finding the incidental burden justified by the important interest of the state in compensating the victims of crime, the district court concluded that section 632-a "is not unconstitutional on its face nor as applied to plaintiff." Id. at 179.

We agree with Simon & Schuster that the statute in question imposes a direct, rather than an incidental, burden on speech and that it therefore must meet the requirements of the strict scrutiny test to survive the constitutional challenge. We conclude, however, that the statute meets the test and accordingly affirm the judgment, although on grounds different from those relied on by the district court.


Originally enacted in 1977 and amended three times thereafter, section 632-a of the New York Executive Law provides that each

legal entity contracting with any person or the representative or assignee of any person, accused or convicted of a crime in this state, with respect to the reenactment of such crime, by way of a movie, book, magazine article, tape recording, phonograph record, radio or television presentation, live entertainment of any kind, or from the expression of such accused or convicted person's thoughts, feelings, opinions or emotions regarding such crime, shall submit a copy of such contract to the [Crime Victims B]oard

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and pay over to the [B]oard any moneys which would otherwise, by terms of such contract, be owing to the person so accused or convicted or his representatives.

N.Y.Exec.Law Sec. 632-a(1); see 1977 N.Y. Laws 823; 1978 N.Y. Laws 417; 1986 N.Y. Laws 74.

The statute directs that the Victims Board deposit the monies so received "in an escrow account for the benefit of and payable to any victim or the legal representative of any victim of crimes committed by: (i) such convicted person; or (ii) by such accused person, but only if such accused person is eventually convicted of the crime." N.Y.Exec.Law Sec. 632-a(1). To gain access to the funds, the victim must recover a money judgment in a civil action brought against the criminal within five years of the establishment of the escrow account. Id. Civil judgments obtained by crime victims rank third in the order of priority of claims that may be paid out of the escrow account. Id. Sec. 632-a(11)(c) (McKinney Supp.1990). According to the statute, the order of priority, from first to fifth, is as follows: attorney's fees granted by a court of competent jurisdiction for representation of the accused at any stage of the criminal proceedings and expenses allowed by the Victims Board for the production of monies paid into the escrow account, the total of such fees and expenses not to exceed one-fifth of the account; subrogation claims of the state for payments made to a victim, not to exceed one-half of the civil judgment obtained by a victim; victims' civil judgments; judgments of other creditors and claims of persons presenting lawful demands through the person accused or convicted of the crime, including the demands of tax authorities; and the claims of the person accused or convicted of the crime. Id. Sec. 632-a(11)(a)-(e).

This action tests the requirements imposed by the statute upon book publishers generally and Simon & Schuster in particular. It had its genesis in a decision made at the highest levels of the Simon & Schuster organization to commission a book dealing with the life and activities of a career criminal named Henry Hill. At the time that Hill came to the attention of the publisher, he was cooperating with state and federal prosecutors under the Federal Witness Protection Program. The idea of the book was to demonstrate the pedestrian activities of a low-level member of a criminal enterprise and to dispel commonly-held romantic notions about life in a crime "family." For the project, Simon & Schuster sought out Sterling Lord, a prominent literary agent, for assistance in finding an author willing to write the book in cooperation with Hill. Lord found Nicholas Pileggi, an experienced crime writer, and ultimately negotiated a book contract subscribed by Hill, Pileggi and Simon & Schuster on September 1, 1981. An earlier agreement, dated August 21, 1981, to which Hill, Pileggi and Lord were parties, provided for the division of payments to be received from the publisher. There seems to be no question that Hill would not have agreed to participate in the project without the assurance he would be paid.

Pileggi spent more than three hundred hours with Hill, who provided the author with extensive information about his life in crime. The result of their collaboration was a popular and widely-acclaimed book, originally published by Simon & Schuster in January of 1986, bearing the title Wiseguy. The book describes in detail the crimes in which Hill participated during his career as a "wiseguy" or hoodlum: bribery, assault, extortion, theft, burglary, arson, drug dealing, credit card fraud and murder. Among the more celebrated crimes in which he was involved were the theft of nearly six million dollars in cash and jewelry from the Lufthansa terminal at Kennedy airport and the bribery of Boston College basketball players. Although he served brief prison terms, Hill was prosecuted for only a few of the crimes admitted to in the book. Needless to say, there were many, many victims of the crimes committed by Henry Hill, and a great number of those victims are identified in Wiseguy. According to Simon & Schuster, more than 90,000 copies of the book in its trade edition have been sold, and more than one million copies of a soft cover edition, published in February of 1987, are in print.

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On January 31, 1986, counsel for the Victims Board wrote to Simon & Schuster: "It has come to our attention that you may have contracted with a person accused or convicted of a crime for the payment of monies to such person." Citing section 632-a of the Executive Law, the counsel called upon the publisher to provide the Victims Board with copies of "all such contracts," the dollar amounts and dates of payments to Henry Hill, and certain other information stemming from the publication of Wiseguy. By letter dated May 22, 1986, Simon & Schuster provided to the Victims Board the dates and amounts of payments made by the publisher "to the Sterling Lord Agency for the account of Mr. Hill." The total of the amounts shown was $96,250. Enclosed with the letter were copies of the August 21, 1981 and September 1, 1981 agreements, as well as copies of two agreements extending the manuscript delivery date. Simon & Schuster has suspended further payments to Hill, as requested by the Victims Board.

On June 15, 1987, the Victims Board served upon Simon & Schuster a Notice and a Proposed...

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