American Future Systems, Inc. v. Pennsylvania State University
| Decision Date | 06 February 1985 |
| Docket Number | No. 83-3412,83-3412 |
| Citation | 752 F.2d 854 |
| Parties | , 22 Ed. Law Rep. 716 AMERICAN FUTURE SYSTEMS, INC., Steven Brubaker, Richard J. Wingert, W. Bruce Del Valle, John D. Varsics, Dennis C. Habacher, John B. Spiller, Kathy Johnson, Kevin Graves, Appellees, v. The PENNSYLVANIA STATE UNIVERSITY, Board of Trustees of the Pennsylvania State University, John W. Oswald, individually and as President of the Pennsylvania State University, M. Lee Upcraft, individually and as Director of Residential Life Programs of the Pennsylvania State University, Appellants. |
| Court | U.S. Court of Appeals — Third Circuit |
Henry T. Reath (argued), James T. Moughan, Duane, Morris & Heckscher, Philadelphia, Pa., for appellees.
Delbert J. McQuaide (argued), R. Mark Faulkner, McQuaide, Blasko, Schwartz, Fleming & Faulkner, Inc., State College, Pa., for appellants.
Carl N. Martin, II, Philadelphia, Pa., for amici curiae--Com. Ass'n of Students.
Virginia Lynn Hogben, Philadelphia, Pa., for amicus curiae--American Civil Liberties Foundation of Pa.
Before ADAMS and BECKER, Circuit Judges, and SAROKIN, District Judge *.
This appeal presents an important first amendment question concerning the power of a state university to regulate activities in student dormitories that it operates in conjunction with its educational programs. Specifically, we are confronted with a challenge to the constitutionality of a regulation enacted by Pennsylvania State University ("Penn State") prohibiting group sales demonstrations in students' dormitory rooms. The regulation has operated in this case, now before us for the third time, 1 to bar several Penn State students from attending or hosting sales demonstrations conducted by American Future Systems ("AFS"), a corporation that conducts such sales demonstrations as a means of marketing its china and cookware. After trial, the district court held that the regulation was unconstitutional and entered an order enjoining Penn State from continuing to ban AFS sales demonstrations in the dormitories. For the reasons set forth below, we hold that the regulation does not unconstitutionally infringe upon either the right of students to receive commercial information in association with other students or upon the right of AFS to disseminate such commercial information. Accordingly, we reverse the judgment of the district court.
The plaintiffs-appellees in this action are AFS and a number of Penn State students. 2 AFS is in the business of selling cookware, china, crystal, and silverware, primarily to college students. 3 Its primary sales device is the on-campus demonstration, which is similar to the well-known Tupperware party. An AFS representative meets with a group of students in their dormitory, gives a presentation extolling the virtues of AFS's merchandise, and attempts to make sales at the end of the presentation. The students are encouraged to sign an installment sales contract at the time they agree to make the purchase.
AFS actively recruits students to host its demonstrations. An AFS sales representative contacts a particular college student, usually a woman, and asks if she will host an on-campus demonstration. 4 The student is informed during the initial phone conversation that, if she hosts an AFS demonstration, she will receive a free vacation in Florida or Las Vegas. 5 If a student agrees to host a demonstration, she receives a packet of information containing a number of invitations for guests, which she is asked to distribute to other students, and a description of what is involved in the show.
AFS seeks to have about ten to fifteen female students at each demonstration. 6 This "target" size is evidently based on AFS's experience that ten to twenty percent of the students at a particular demonstration usually agree to purchase AFS products. If fewer than the optimal number of students are present five minutes before the demonstration is scheduled to begin, the AFS representative asks those in attendance to attempt to round up others. The representative informs them that there will be a "door prize" of a trip to Florida if at least ten women are present, 7 and tells them that a donation will be made to "Save the Children" for each person at the show. The AFS representative does not solicit attendance by knocking on doors herself unless permission to do so has been granted by college officials.
Once the students are present, the AFS representative conducts the demonstration, which is set in the context of a discussion of the post-college lifestyle of students. The AFS representative demonstrates the "American Prestige Series" products, compares them with similar merchandise, and explains the advantages of AFS's wares. 8 Following the demonstration, the representative asks whether any of the students are interested in purchasing the products, and attempts to get those students to sign purchase agreements at the meeting. If a student agrees to buy, the representative fills out a contract that contains a code describing the student's educational institution, race or national origin, marital status, and type of residence. AFS uses this information to determine the credit terms to be extended to the student. 9
When AFS first sought to conduct its demonstrations in Penn State's dormitories in the fall of 1977, the demonstrations were prohibited by the university's general policy against commercial solicitation. 10 Nonetheless, Edward M. Satell, president of AFS, directed his sales representatives to begin booking demonstrations at Penn State. 11 A number of shows were, in fact, conducted, some being interrupted by Penn State officials who asked the AFS representative to leave. Satell asserted that the university's policy was unconstitutional in letters to Penn State officials.
In response to AFS's actions, Penn State refined its policy on commercial solicitation. The new policy restricted but did not completely prohibit AFS's demonstrations in university dormitories. The district court described the new policy in the following way:
(1) AFS may conduct group demonstrations in specified common areas of each residence hall; (2) following those demonstrations a student may invite an AFS representative to the student's room to purchase AFS goods; (3) AFS is free to solicit invitations to individual students' rooms at the group demonstrations or by telephone or mail; (4) AFS is not permitted to conduct group demonstrations in an individual student's dormitory room; (5) AFS is not permitted to consummate sales in individual dormitory rooms to a purchaser other than the occupant of the room; (6) AFS is not permitted to conduct group solicitations of sales in the common areas of residence halls; and (7) AFS is not permitted to consummate commercial transactions in the common areas of residence halls.
AFS, 553 F.Supp. at 1275; see also American Future Systems, Inc. v. Pennsylvania State University, 522 F.Supp. 544, 547 (M.D.Pa.1981); American Future Systems, Inc. v. Pennsylvania State University, 510 F.Supp. 983, 985 (M.D.Pa.1981). In addition, Penn State did not limit in any way the availability of other methods of communication between AFS and the students. AFS was free to solicit students directly by telephone and mail, and indirectly by advertising in the student newspaper and on the student radio station. 12 The company was also able to hold its demonstrations at the Nittany Lion Inn--a motel on the Penn State campus--or elsewhere in State College, Pennsylvania. 13
Dissatisfied with Penn State's interpretation of its regulations, AFS filed suit, alleging that Penn State's regulations infringed its constitutional right to free speech, and the right of students to hear that speech. The focus of AFS's challenge was on those aspects of the regulations permitting it to conduct demonstrations in the common areas of the dormitories but prohibiting it from consummating sales at the end of these presentations. The district court, after a trial, concluded that AFS could not raise the constitutional rights of the students, who were not then parties to the litigation, see supra note 2, 14 and that Penn State's regulations did not violate AFS's first amendment rights. 15 The court's decision turned on the availability of other channels for AFS to communicate product information to the students, including demonstrations that did not involve attempts to consummate immediate sales, and on the distinction between "commercial speech" and "soliciting sales." 16 The court held that Penn State's interests in protecting the privacy of dormitory residents, and in protecting students against "deceptive or potentially coercive practices," justified regulations that made it "more difficult for students to obtain the type of information about commercial products which [AFS] seeks to distribute." AFS, 464 F.Supp. at 1262.
In American Future Systems, Inc. v. Pennsylvania State University, 618 F.2d 252 (3d Cir.1980) ("AFS I "), we affirmed the district court. We concluded that the common areas of the Penn State dormitories are not "public forums" for first amendment purposes, and that "Penn State has articulated a legitimate interest"--the preservation of the educational and residential atmosphere of the dormitories--"which support[s] its ban on group sales activity in the dormitories." Id. at 257. We also held that Penn State's distinction between group political speech, which it permitted, and "group commercial speech," which it restricted, was not "arbitrary, capricious, or invidious," and thus was constitutional. Id. at 258-59.
Following our decision in AFS I, AFS requested permission from Penn State to hold demonstrations in individual students' rooms; its position, apparently, was that the constitutionality of Penn State's regulations regarding...
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