Destination Ventures, Ltd. v. FCC

• Citation: 844 F. Supp. 632
• Decision Date: 20 January 1994
• Docket Number: Civ. No. 93-737-AS.
• Parties: DESTINATION VENTURES, LTD., an Oregon corporation; Lutz Paralegal Services, Inc., a New York corporation; Porter Capital Corporation, a Delaware corporation; National Faxlist, a New Jersey sole proprietorship; and James R. Lock, dba Lock Travel Service, Plaintiffs, v. FEDERAL COMMUNICATIONS COMMISSION, a federal agency, and James H. Quello, in his capacity as Chairman of the Federal Communications Commission, Defendants.
• Court: U.S. District Court — District of Oregon

844 F. Supp. 632

DESTINATION VENTURES, LTD., an Oregon corporation; Lutz Paralegal Services, Inc., a New York corporation; Porter Capital Corporation, a Delaware corporation; National Faxlist, a New Jersey sole proprietorship; and James R. Lock, dba Lock Travel Service, Plaintiffs, v. FEDERAL COMMUNICATIONS COMMISSION, a federal agency, and James H. Quello, in his capacity as Chairman of the Federal Communications Commission, Defendants.

Civ. No. 93-737-AS.

United States District Court, D. Oregon.

January 20, 1994.

Charles F. Hinkle and Julianne Ross Davis, Stoel Rives Boley Jones & Grey, Portland, OR, for plaintiffs.

Jack C. Wong, U.S. Attys. Office, Portland, OR, Frank W. Hunger, Asst. Atty. Gen., Theodore C. Hirt, and Pamela J. Eppli, U.S. Dept. of Justice, Civ. Div. Fed. Prog. Branch, Washington, DC, for defendants.

OPINION AND ORDER

FRYE, District Judge:

The matter before the court is the objections of the plaintiffs to the Findings and Recommendation filed on December 14, 1993 by the Honorable Donald C. Ashmanskas, United States Magistrate Judge.

The plaintiffs filed this action seeking to enjoin the defendants, the Federal Communications Commission (FCC) and James H. Quello, from enforcing 47 U.S.C. § 227(b)(1)(C), which is a part of the Telephone Consumer Protection Act of 1991, and which provides, in pertinent part:

(b) Restrictions on the use of automated telephone equipment

(1) Prohibitions

It shall be unlawful for any person within the United States —

....

(C) to use any telephone facsimile machine, computer, or other device to send an unsolicited advertisement to a telephone facsimile machine.

47 U.S.C. § 227(b)(1)(C).

The term "unsolicited advertisement" is defined as "any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person's prior express invitation or permission." 47 U.S.C. § 227(a)(4).

The plaintiffs moved the court for an order of summary judgment on the grounds that the language of 47 U.S.C. § 227 violates their free speech and equal protection rights. The defendants moved to dismiss this action.

Magistrate Judge Ashmanskas concluded that the statute, a content-based restriction on commercial speech, met the constitutional requirement that it directly advances a substantial governmental interest in a manner that is no more extensive than necessary to serve that interest. Magistrate Judge Ashmanskas has recommended to this court that, in light of the conclusion of the court that the statute is constitutionally valid, the plaintiffs' motion for summary judgment be denied and the defendants' motion to dismiss be granted.

The plaintiffs object to the Findings and Recommendation of Magistrate Judge Ashmanskas on the grounds that Magistrate Judge Ashmanskas erred in finding that the statute directly advanced a substantial governmental interest and erred in finding that there is a reasonable fit between the legitimate interests advanced and the means chosen to serve those interests.

Pursuant to 28 U.S.C. § 636(b)(1), the court has made a de novo determination of the entire matter presented. The court adopts the Findings and Recommendation of Magistrate Judge Ashmanskas filed December 14, 1993 as its own opinion. The defendants' motion to dismiss (# 11) is GRANTED, and the plaintiffs' motion for summary judgment (# 16) is DENIED.

IT IS SO ORDERED.

FINDINGS AND RECOMMENDATION

ASHMANSKAS, United States Magistrate Judge:

Plaintiffs include small businesses that have relied upon the availability of facsimile ("fax") advertising to promote their various enterprises, and a businessman who wants to continue receiving unsolicited faxes. They filed their complaint in June 1993, seeking to enjoin the Federal Communications Commission ("FCC") from enforcing 47 U.S.C. § 227(b)(1)(C), part of the Telephone Consumer Protection Act of 1991 ("TCPA").

The TCPA amended the Communication Act of 1934 and provides in pertinent part:

(b)(1) PROHIBITIONS — It shall be unlawful for any person within the United States —

* * * * * *

(C) to use any telephone facsimile machine, computer, or other devise to send an unsolicited advertisement to a telephone facsimile machine. ...

47 U.S.C. § 227(b)(1)(C) (1991).

"Unsolicited advertisement" is defined as "any material advertising the commercial availability or quality of any property, goods or services which is transmitted to any person without that person's prior express invitation or permission." 47 U.S.C. § 227(a)(4).

Plaintiffs ask that the FCC be enjoined from enforcing this section, and request summary judgment on grounds that the statutory language violates their free speech and equal protection rights. The defendant moves to dismiss plaintiffs' action. For the reasons that follow, plaintiffs' motions should be denied, and defendant's motion to dismiss should be granted.

Legal Standards

A motion to dismiss under Fed. R.Civ.P. 12(b)(6) will only be granted if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Gibson v. United States, 781 F.2d 1334, 1337 (9th Cir. 1986), cert. denied, 479 U.S. 1054, 107 S.Ct. 928, 93 L.Ed.2d 979 (1987). The review is limited to the complaint, and all allegations of material fact are taken as true and viewed in the light most favorable to the non-moving party. Cassettari v. Nevada County, Cal., 824 F.2d 735, 737 (9th Cir.1987).

Fed.R.Civ.P. 56(c) authorizes summary judgment if no genuine issue exists regarding any material fact and the moving party is entitled to judgment as a matter of law. The moving party must show an absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Once the moving party shows the absence of an issue of material fact, the nonmoving party must go beyond the pleadings and designate specific facts showing a genuine issue for trial. Id. at 324, 106 S.Ct. at 2553. On a motion for summary judgment, all reasonable doubt as to the existence of a genuine issue of fact should be resolved against the moving party. Hector v. Wiens, 533 F.2d 429, 432 (9th Cir.1976).

The parties agree that the restriction upon unsolicited fax advertisements is content-based, and that, as a restriction on commercial speech, the statute would pass constitutional muster if it directly advances a substantial governmental interest in a manner that is no more extensive than necessary to serve that interest. Central Hudson Gas & Electric Corp. v. Public Service Com., 447 U.S. 557, 564-66, 100 S.Ct. 2343, 2350-51, 65 L.Ed.2d 341 (1980).

More recently, the Supreme Court has said that restrictions on commercial speech must: (1) implement a substantial governmental interest; (2) directly advance that interest; and (3) be narrowly tailored to achieve the desired objective. See Board of Trustees v. Fox, 492 U.S. 469, 109 S.Ct. 3028, 106 L.Ed.2d 388 (1989).

Analysis

The court must first determine whether the restrictions upon unsolicited fax advertising are constitutional under the Central Hudson and Fox tests.

Substantial government interest

A governmental body has an "obligation to demonstrate that it is regulating speech in order to address what is in fact a serious problem." Edenfield v. Fane, ___ U.S. ___, ___, 113 S.Ct. 1792, 1803, 123 L.Ed.2d 543 (1993). The obligation of justifying a restriction upon commercial speech

is not satisfied by mere speculation or conjecture; rather a governmental body seeking to sustain a restriction on commercial speech must demonstrate that the harms it recites are real and that its restriction will in fact alleviate them to a material degree.

Id. at ___, 113 S.Ct. at 1800.

Plaintiffs contend that Congress has failed to show that its interest concerning unsolicited advertisement faxes is substantial. Plaintiffs refer to the absence of any "longstanding historical concern over the receipt of unsolicited fax messages," or any statement of "substantial interest" within the statute. Memorandum in support of Plaintiff's motion for summary judgment at 16.

While there is relatively little in the way of a historical record regarding a specific congressional concern for unsolicited fax advertising, that may have more to do with the unprecedented medium of the facsimile rather than any lack of a substantial interest in the exploitation of that medium. Congressional efforts to protect consumers from harm (economic and otherwise) and its interest in the relationship between advertiser and consumer is well-established and not disputed by the parties.

Commercial speech ... is "linked inextricably" with the commercial arrangement that it proposes, Friedman v. Rogers, 440 U.S. 1, 10, n. 9 99 S.Ct. 887, 894, n. 9, 59 L.Ed.2d 100 (1979), so the State's interest in regulating the underlying transaction may give it a concomitant interest in the expression itself.

Edenfield, ___ U.S. at ___, 113 S.Ct. at 1798 (fraudulent or deceptive advertising may be banned without further justification); See also Metromedia, Inc. v. San Diego, 453 U.S. 490, 507, 101 S.Ct. 2882, 2892, 69 L.Ed.2d 800 (1981) (plurality opinion) (city has a substantial interest in regulating advertisements out of a concern for aesthetics and traffic safety); United States v. Edge Broadcasting Co., ___ U.S. ___, 113 S.Ct. 2696, 125 L.Ed.2d 345 (1993) and Posadas de Puerto Rico Associates v. Tourism Co. of Puerto Rico, 478 U.S. 328, 106 S.Ct. 2968, 92 L.Ed.2d 266 (1986) (the government may legislate the advertising of gambling out of a concern for the effect of such advertising); Ohralik v. Ohio State Bar Asso., 436 U.S. 447, 462, 98 S.Ct. 1912, 1921, 56 L.Ed.2d 444 (1978) (protection of the public from solicitations pressed with such frequency or vehemence as to be harassing is a legitimate and important state interest); 15 U.S.C. § 1335 (congressional ban on the advertisement of cigarettes).

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