American Future Systems v. PENNSYLVANIA, ETC., Civ. No. 81-0171.

• Citation: 522 F. Supp. 544
• Decision Date: 13 October 1981
• Docket Number: Civ. No. 81-0171.
• Parties: AMERICAN FUTURE SYSTEMS, INC., et al., Plaintiffs, v. The PENNSYLVANIA STATE UNIVERSITY, et al., Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

522 F. Supp. 544

AMERICAN FUTURE SYSTEMS, INC., et al., Plaintiffs, v. The PENNSYLVANIA STATE UNIVERSITY, et al., Defendants.

Civ. No. 81-0171.

United States District Court, M. D. Pennsylvania.

September 16, 1981.

Judgment Corrected September 17, 1981.

As Amended October 13, 1981.

COPYRIGHT MATERIAL OMITTED

Henry T. Reath, George E. Pierce, Jr., Duane, Morris & Heckscher, Philadelphia, Pa., for plaintiffs.

Delbert J. McQuaide, R. Mark Faulkner, McQuaide, Blasko, Schwartz, Fleming & Faulkner, State College, Pa., for defendants.

OPINION

MUIR, District Judge.

Plaintiffs filed this action alleging violations of their constitutional rights and of rights granted by Pennsylvania law on February 5, 1981. Jurisdiction is alleged to arise under 28 U.S.C. §§ 1331 and 1343 and the doctrine of pendent jurisdiction. Also on February 5, 1981, Plaintiffs filed a motion for a preliminary injunction which was denied by this Court in American Future Systems v. Pennsylvania State University, 510 F.Supp. 983 (M.D.Pa.1981). On July 17, 1981, Defendants filed a motion for summary judgment and supporting brief. On August 24, 1981, Plaintiffs responded, and on August 31, 1981, Defendants filed a reply. For the reasons set forth below, Defendants' motion for summary judgment will be granted.

This case is the second one before the Court involving policies of Pennsylvania State University (Penn State) relating to commercial activities in its dormitories. In the first lawsuit, judgment was granted in favor of Penn State upholding its regulations against an attack that they violated American Future Systems' (AFS) First Amendment rights. American Future Systems, Inc. v. Pennsylvania State University, 464 F.Supp. 1252 (M.D.Pa.1979), aff'd 618 F.2d 252 (3d Cir. 1980) ("American Future Systems I").

AFS is a corporation whose principal business is the sale of cookware, china, crystal, and silverware through demonstrations of its merchandise at colleges throughout the United States. AFS seeks by this action to be permitted to present sales demonstrations at the invitation of individual students in the common areas and dormitory rooms within the residence halls of Penn State, to disseminate commercial information to groups of students through sales demonstrations at the invitation of individual host students in their individual dormitory rooms, and to consummate sales to individual students in the student hosts' rooms and residence halls of Penn State. Plaintiffs Wingert and Brubaker are Penn State students who formerly resided in Penn State residence halls. Wingert withdrew as a student at Penn State in February 1981 and is no longer enrolled. Brubaker, while still enrolled as a student, no longer resides in a Penn State residence hall. Wingert and Brubaker seek relief permitting them to invite AFS to common areas and their individual dormitory rooms and residence halls, to conduct in their rooms and in common areas of residence halls, sales demonstrations to groups of invited students and to invite AFS to their dormitory rooms for purposes of consummating sales of goods to other students following the demonstrations. Plaintiffs DelValle, Varsics, Habacher and Spiller are current Penn State students who do not reside in residence halls. DelValle, Varsics, Habacher and Spiller seek an order permitting them to attend and participate in AFS group demonstrations in common areas and dormitory rooms and to consummate sales from AFS in those rooms.

As this Court already held in its denial of Plaintiffs' motion for a preliminary injunction, the policy of Penn State during the time that American Future Systems I was litigated and now is that (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 dormitory room; (5) AFS is not permitted to consummate sales in 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; (7) AFS is not permitted to consummate commercial transactions in the common areas of residence halls. American Future Systems v. Pennsylvania State University, 510 F.Supp. 983, 985 (M.D.Pa.1981). It is Plaintiffs' position that under the ruling of the Court of Appeals in American Future Systems I they are entitled to the relief sought in this action. Defendants are of the view that their policies relating to commercial activities in Penn State's dormitories are consistent with the Court of Appeals' opinion in American Future Systems I, and that Plaintiffs are not entitled to relief.

Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions in the record, together with the affidavits, if any, show 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. Rule 56(c) of the Federal Rules of Civil Procedure. Because the bases for granting summary judgment are somewhat different as to Plaintiff AFS, to Plaintiffs Wingert and Brubaker, and to Plaintiffs DelValle, Varsics, Habacher and Spiller, AFS and each group of individual Plaintiffs will be discussed separately.

I. AFS.

AFS's primary contention is that the decision of the Court of Appeals in American Future Systems I granted AFS certain rights that Penn State has abridged. To the contrary, the Court of Appeals' opinion contains no declaration of AFS's rights, and in that opinion the Court concluded that Penn State's policies governing commercial activity was wholly consistent with AFS's First and Fourteenth amendment rights. The Court of Appeals recognized that a total suppression of AFS's commercial speech would probably violate AFS's constitutional rights. American Future Systems I, 618 F.2d at 258. In holding that Penn State's distinction between non-commercial and commercial speech was valid, the Court of Appeals noted that Penn State had only restricted, rather than suppressed, speech. "AFS sales representatives are allowed into the residence halls to present demonstrations to groups of students, but they cannot consummate sales at these gatherings. Even that restriction is removed if the sales representative is invited to the hall by an individual student who decides to purchase the merchandise marketed by AFS." 618 F.2d at 258. There is a dispute as to whether the Court of Appeals' decision in American Future Systems I actually vests in AFS the right to set up group demonstrations of its products in the Penn State residence halls. However, inasmuch as Penn State policies permit such group demonstrations, this Court need not reach that question. The issues now before the Court are (1) whether Penn State may limit AFS to presentations in common areas, as opposed to private rooms, and may limit AFS's actual solicitation to private rooms and not permit such solicitation in common areas; and (2) whether AFS's proposed presentation does in fact constitute solicitation, in whole or in part.

Penn State's policy governing commercial activity in its residence halls has remained unchanged since AFS made its initial attempts to conduct demonstrations of its products in 1977. Specifically, in effect at the time of the American Future Systems I litigation was Penn State's policy that AFS could present demonstrations, but not solicitations of sales in the common areas of residence halls, and that AFS is free to consummate commercial transactions (i. e. solicitation) in student's rooms, but not in common areas. See American Future Systems I, 464 F.Supp. 1252, 1258 (¶ 59); American Future Systems v. Pennsylvania State University, 510 F.Supp. 983, 985 (M.D. Pa.1981). The record shows that AFS was aware of this policy at the time that it filed the American Future Systems I action. See American Future Systems I, 464 F.Supp. at 1258 (¶ 59). AFS's attempt to relitigate the constitutionality of Penn State's policies regarding commercial activities in dormitories is barred by the doctrine of res judicata.

The doctrine provides that a party who has suffered an adverse judgment may not, in subsequent litigation against the same party, seek to relitigate any issue that was or could have been determined in the first action. See Montana v. United States, 440 U.S. 147, 153-54, 99 S.Ct. 970, 973-74, 59 L.Ed.2d 210 (1979). The purpose of this doctrine is to ensure finality in the adjudication of disputes and to provide a conclusive resolution not only of matters that were actually considered but also of all of those which could have been considered. Cramer v. General Telephone & Electronics Corp., 582 F.2d 259, 266 (3d Cir. 1978), cert. denied, 439 U.S. 1129, 99 S.Ct. 1048, 59 L.Ed.2d 90 (1979).

In order for res judicata to apply, three elements must be present: (1) there must be an identity of parties; (2) there must be in existence a valid, final judgment on the merits by a Court of competent jurisdiction; and (3) the second action must concern the same subject matter or cause of action as the prior suit. Sworob v. Harris, 451 F.Supp. 96, 99-100 (E.D.Pa.) aff'd 578 F.2d 1376 (3d Cir. 1978) (memorandum). There can be no dispute as to the first two requirements. Here, AFS and the same Penn State defendants have been involved in both actions. Further, there is a final, valid judgment upholding Penn State's policy governing commercial activities in dormitories. As to the third requirement, the second action may be said to involve the same cause of action if liability is sought to be imposed on a different theory but based on the same "liability creating conduct" of the Defendant which gave rise to the first action. Coggins...