Sentinel Communications Co. v. Watts

Decision Date26 July 1991
Docket NumberNo. 90-3601,90-3601
Citation936 F.2d 1189
Parties19 Media L. Rep. 1097 SENTINEL COMMUNICATIONS COMPANY, a Delaware Corporation, Plaintiff-Appellant, v. Ben G. WATTS, Individually as the Secretary of the Department of Transportation of the State of Florida, Leonard R. Mellon, Individually as the Director for the Department of Highway Safety and Motor Vehicles of the State of Florida, Betty Castor, in her capacity as Commissioner of Education of Florida Department of Education, Carl McCoy, in his official capacity as the Director of Division of Blind Services of the State of Florida, and T. Jack Bassett, in his official capacity as the Chief of the Bureau of Business Enterprises for the Florida Division of Blind Services, Defendants-Appellees.
CourtU.S. Court of Appeals — Eleventh Circuit

Lawrence J. Phalin, David C. Willis, Mateer, Harbert & Bates, P.A., Orlando, Fla., for plaintiff-appellant.

Walter M. Meginniss, Dept. of Legal Affairs, Tallahassee, Fla., for defendants-appellees.

Appeal from the United States District Court for the Middle District of Florida.

Before FAY and EDMONDSON, Circuit Judges, and GARZA *, Senior Circuit Judge.

FAY, Circuit Judge:

Plaintiff-appellant, a newspaper publisher, appeals a district court order denying its claims for declaratory and injunctive relief in connection with several Florida state agencies' manner of regulating the placement of its coin-operated newsracks at interstate rest areas. Because we agree that several aspects of Florida's unwritten "scheme" for regulating these devices are constitutionally suspect, we REVERSE the district court's order, and REMAND the case for further proceedings consistent with this opinion.

I.

The facts of this case are undisputed by the parties. Plaintiff-appellant Sentinel Communications Company ("Sentinel"), is the publisher of The Orlando Sentinel, a daily newspaper of general circulation. In February 1987, Sentinel installed coin-operated newsracks in two public rest areas along Interstate 4 near Orlando, Florida. Soon thereafter, representatives of the Florida Department of Transportation ("DOT") removed the newsracks from the rest areas. The DOT officials left notes explaining that the DOT planned to remodel the rest areas and to build gift shops that would be staffed by the Division of Blind Services ("DBS") of the Florida Department of Education ("DOE"). In August 1988, when it appeared that the DOT's remodelling process would not be accomplished in the near future, Sentinel again placed newsracks in the rest areas. Once again, the newsracks were removed by DOT officials. 1

In March 1989, Sentinel was advised by the DOT that the DBS had been granted authority to regulate distributors of newspapers in public rest areas. Because Sentinel sought to distribute its newspaper via coin-operated newsracks (which are considered to be vending machines), it was required to apply to T. Jack Bassett, Chief of the Bureau of Business Enterprises for DBS, for permission to install them.

As the district court found, the Florida DBS derives its regulatory authority from state and federal law. As part of the Surface Transportation Assistance Act, Congress allows each state, pursuant to 23 U.S.C. Sec. 111(b) (1988), to place vending machines in rest areas along the Interstate System. Section 111(b) instructs the states to grant priority to vending machines operated by the state licensing authority designated under the Randolph-Sheppard Act, 20 U.S.C. Sec. 107 et seq. (1988), which, in Florida, is the DBS. See Fla.Stat. Secs. 413.011, 413.051 (1989). The Florida DOE, which administers the DBS, is under contract with the DOT. Pursuant to this agreement, the DOT has delegated to the DBS the authority to install vending machines in interstate highway rest areas, and to determine what may be sold in these machines. In December 1988, the agreement between the DOT and the DOE concerning vending machines in public rest areas was amended specifically to include newspapers as a commodity that may be sold in rest areas.

Accordingly, as instructed, Sentinel's Director of Circulation, Arthur Farber, contacted Jack Bassett regarding placement of Sentinel's newsracks at the two rest areas. Bassett informed Farber that other publishers were selling their newspapers in rest areas pursuant to contracts negotiated between the DBS and the newspaper organizations. Bassett stated that Sentinel could obtain a similar contract and install its newsracks if it agreed to pay a five cent administrative fee for each newspaper sold. When Farber objected that such an arrangement would infringe upon Sentinel's first amendment right to distribute newspapers, Bassett responded that Sentinel would not be permitted to distribute papers in public rest areas if it refused to pay the fee.

Despite Farber's objections, Bassett forwarded Sentinel a contract that Farber understood as "take it or leave it." The terms of the contract required Sentinel to pay an administrative fee on each newspaper sold, and to maintain a liability insurance policy for the newsracks. On May 18, 1989, Farber executed the contract and returned it to Bassett with an accompanying letter protesting the agreement. According to Farber, the letter advised Bassett of Sentinel's objection to the ability of Bassett, the DBS, the DOT and the DOE to prohibit the sale of newspapers in public rest areas. The letter also objected to the regulatory scheme promulgated by the DOT and the DOE as not constituting reasonable time, place and manner restrictions on the distribution of newspapers. The letter stated that Sentinel had signed the contract under duress in order to install its newsracks, informed Bassett that Sentinel was not waiving its first amendment rights, and indicated Sentinel's intention to pursue the matter in court. On May 24, 1989, Sentinel brought suit in federal district court.

In June of 1989, Farber had yet to hear from Bassett with regard to the executed contract. Farber called Bassett to inquire when Sentinel could begin installing its newsracks in the rest areas. According to Farber, Bassett informed him that he was very unhappy after reading Farber's letter, that he didn't feel a contract existed, and that he didn't have any desire to sign a contract in light of Sentinel's intention to sue. Bassett also later informed Farber that counsel for the DOE were suggesting contract revisions, and that Farber would hear something eventually.

Bassett forwarded a second contract to Farber on August 8, 1989, which Sentinel again executed and returned. The second contract was not signed by either Bassett or any representative of the DOE, but Bassett nevertheless permitted Sentinel to install its newsracks in the rest areas on Interstate 4 on September 12, 1989. Sentinel also installed newsracks in rest areas on Interstate 75 near Ocala. Bassett subsequently forwarded a third contract to Sentinel, which the latter executed on November 13, 1989, and returned. This contract was eventually executed on behalf of the DOE by Betty Castor, the Florida Commissioner of Education, on December 20, 1989. All of the newsracks in question have remained at the rest areas since their installation in September 1989, and according to Farber, Sentinel does not intend to put newsracks in any other rest areas.

No written rules or regulations govern Bassett in the exercise of his authority to grant or deny permission for a newspaper to install newsracks in public rest areas, nor are there procedures or standards in place that Bassett is obligated to follow when reviewing requests or applications by newspapers to install newsracks at rest areas. 2 Moreover, no written rules or regulations govern the amount that Bassett may charge for the right to distribute newspapers at the rest areas; he is free to negotiate independently the amount of the administrative fee with each newspaper with whom he deals. 3 The actual agreement executed between the DOE (on behalf of the DBS) and Sentinel contains a provision requiring Sentinel to pay a five-cent administrative fee for each newspaper sold. The fee is intended to compensate the DBS for the cost of administering the agreement and inspecting the vending machines. Bassett performed no independent cost studies before setting the fee to be charged. Instead, he conversed with transportation officials in other states who recommended a fee of five cents. In his deposition, Bassett testified that he did not know how much it had cost the DBS to administer Sentinel's contract to date, but that he believed that the costs of administration outweighed the cost of the fee. 4

The contract also requires Sentinel to provide liability insurance up to the statutory limits of the DOT's liability--$100,000 per person and $200,000 per incident. Evidently, the insurance requirement is not negotiable, and Bassett testified that he would deny permission to install newsracks for any newspaper that did not provide insurance. Although the insurance provision is present in other contracts with news organizations, Bassett does not require vendors such as Coke or Pepsi to provide insurance as a prerequisite to installing their vending machines in rest areas.

Sentinel's contract may be cancelled by either party for any reason upon thirty (30) days written notice. According to Bassett, he would cancel the contract only if sufficient reason existed, such as Sentinel's failure to comply with the contract, the DOT's closing of the rest areas in which Sentinel distributed its newspaper, or Sentinel's failure to provide continuous daily service.

Sentinel brought suit in the United States District Court for the Middle District of Florida seeking declaratory and injunctive relief 5 against defendants-appellees Watts, Mellon, Castor, McCoy and Bassett in their various official capacities with the DOT, the DOE, and the DBS. The suit challenged as unconstitutional 23 U.S.C. Sec. 111(b), to the extent that...

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