Greater New Orleans Broadcasting Ass'n v. U.S.

• Decision Date: 30 November 1995
• Docket Number: No. 94-30732,94-30732
• Citation: 69 F.3d 1296
• Parties: , 24 Media L. Rep. 1146 GREATER NEW ORLEANS BROADCASTING ASSOCIATION, Et Al., Plaintiffs-Appellants, v. UNITED STATES of America and Federal Communications Commission, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1296

69 F.3d 1296

64 USLW 2362, 24 Media L. Rep. 1146

GREATER NEW ORLEANS BROADCASTING ASSOCIATION, Et Al., Plaintiffs-Appellants, v. UNITED STATES of America and Federal Communications

Commission, Defendants-Appellees.

No. 94-30732.

United States Court of Appeals, Fifth Circuit.

Nov. 30, 1995.

Ashton R. Hardy, John Michael Lamers, Hardy & Carey, Metairie, LA, for appellant.

Scott R. McIntosh, Anthony J. Steinmeyer, Lisa A. Olson, U.S. Dept. of Justice, Appellate Staff, Civil Division, Washington, DC, Eddie J. Jordan, Jr., U.S. Atty., New Orleans, LA, for U.S. and Federal Communication Commission.

Eddie J. Jordan, Jr., New Orleans, LA, Scott R. McIntosh, Anthony J. Steinmeyer, Washington, DC, Lisa A. Olson, U.S. Dept. of Justice, Appellate Staff, Civil Division, Washington Appeal from the United States District Court for the Eastern District of Louisiana.

DC, for U.S and Federal Communication Commission.

Before POLITZ, Chief Judge, and JONES and PARKER, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Greater New Orleans Broadcasters Association (GNOBA) and a group of television and radio stations in the New Orleans metropolitan area (collectively "the Broadcasters") unsuccessfully challenged in district court the constitutionality of a federal statute prohibiting the broadcast of radio and television advertisements for casino gambling. 18 U.S.C. Sec. 1304. While recognizing that the advertisements were entitled to limited protection under the First Amendment, the district court concluded that the governmental interests served by the statute were sufficient to override the First Amendment under the Supreme Court's commercial speech jurisprudence. We affirm.

BACKGROUND

GNOBA is a non-profit corporation organized for the purpose of representing its membership as a trade association in matters affecting the broadcast industry. Each member broadcaster of GNOBA is licensed to a primary place of business in Louisiana. The members want to broadcast advertisements for casino gambling activities, which are licensed and legal in Louisiana and in neighboring Mississippi, but have refrained from doing so for fear of criminal prosecution and sanctions pursuant to 18 U.S.C. Sec. 1304 and 47 C.F.R. Sec. 73.1211, the corresponding FCC regulation.

Section 1304 prohibits broadcast advertising of "any advertisement of or information concerning any lottery, gift enterprise, or similar scheme, offering prizes dependent in whole or in part upon lot or chance...." 18 U.S.C. Sec. 1304. In February 1994, the Broadcasters filed suit against the United States and the FCC seeking declaratory and injunctive relief permitting them to broadcast gambling advertisements for Louisiana and Mississippi casinos. The Broadcasters first asserted that section 1304 is inapplicable because casino gambling is not a "lottery, gift enterprise, or similar scheme" for purposes of the statute. Alternatively, the Broadcasters contended that section 1304 is an unconstitutional abridgement of their First Amendment free speech rights. The Broadcasters and the government each moved for summary judgment.

In November 1994, the district court entered summary judgment in favor of the government. Citing FCC v. American Broadcasting Co., 347 U.S. 284, 74 S.Ct. 593, 98 L.Ed. 699 (1954), the court concluded that casino advertising falls within the purview of section 1304. The court then determined that under the four-part test set forth in Central Hudson Gas & Electric Corp. v. Public Serv. Comm'n, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980), section 1304 is a permissible regulation of commercial speech. The Broadcasters now appeal from both holdings.

DISCUSSION

The Broadcasters renew their contention that section 1304 does not prohibit advertisements for casino gambling because casino games cannot be considered a "lottery, gift enterprise or similar scheme." However, this argument is foreclosed by Supreme Court precedent. In FCC v. American Broadcasting Co., 347 U.S. 284, 74 S.Ct. 593, 98 L.Ed. 699 (1954), the Court held that the three essential elements of section 1304 are 1) the distribution of prizes, 2) according to chance, 3) for a consideration. Id. at 290, 74 S.Ct. at 598. Rather than disputing that casino gambling possesses these three essential elements, the Broadcasters ignore this authority entirely.

Instead, the Broadcasters choose to attack the historical underpinnings of the statute in an attempt to demonstrate that the statute was never intended to apply to casino gambling. Apparently, the Broadcasters are laboring under the misperception that this court is free to reject statutory interpretations handed down by the Supreme Court. This we cannot do. As the Broadcasters Turning to the constitutionality of section 1304, the proposed advertisements fall within the Supreme Court's definition of commercial speech because they involve "expression related solely to the economic interests of the speaker and its audience" and do "no more than propose a commercial transaction." Virginia Pharmacy Board v. Virginia Citizens Consumer Council, 425 U.S. 748, 762, 96 S.Ct. 1817, 1825, 48 L.Ed.2d 346 (1976).

                point out, section 1304 is becoming increasingly riddled with exceptions to its broad application, see infra note 4.  That legislation has been proposed, and rejected, by Congress which would have excepted broadcast advertisements for casino gambling from section 1304's reach, 1 reaffirms the Court's broad interpretation of section 1304 in American Broadcasting.   Therefore, section 1304 is applicable and continues to ban the desired advertising.  Accord Valley Broadcasting Co. v. U.S., 820 F.Supp. 519, 524 (D.Nev.1993)
                

"[C]ommensurate with its subordinate position in the scale of First Amendment values," Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 456, 98 S.Ct. 1912, 1918, 56 L.Ed.2d 444 (1978), commercial speech is entitled to only limited protection under the First Amendment.

For commercial speech to come within [the First Amendment], it at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.

Central Hudson, 447 U.S. at 566, 100 S.Ct. at 2351. Applying the four-part Central Hudson test to the facts at hand is the crux of this case.

The first prong, whether the speech concerns lawful activity and is not misleading, is not in dispute. The government concedes that the Broadcasters seek only to broadcast truthful advertising about lawful casino gambling activities. The broadcasters have chosen to center their argument on the second prong--the nature and substantiality of the federal government's interest in prohibiting broadcast advertisements of casino gambling.

The government asserts two interests it contends are substantial. First, section 1304 serves the interest of assisting states that restrict gambling by regulating interstate activities such as broadcasting that are beyond the powers of the individual states to regulate. The second asserted governmental interest lies in discouraging public participation in commercial gambling, thereby minimizing the wide variety of social ills that have historically been associated with such activities. The district court found both of these interests to be substantial. We agree. ²

The Broadcasters assault the federal interests in a number of ways. First, the Broadcasters attempt to characterize United States v. Edge Broadcasting Co., --- U.S. ----, 113 S.Ct. 2696, 125 L.Ed.2d 345 (1993), as precluding the assertion of any substantial federal interest other than protecting state choice in gambling decisions. Edge makes no such broad claim. That case interpreted a companion provision to section 1304, which expressly permits advertising of state-run lotteries by broadcasters in states where the lotteries exist, while prohibiting it by non-lottery-state broadcasters. Edge surely determined that the governmental interest in protecting state choice in gambling decisions is substantial, a holding which applies here.

But just as surely, it did not determine the limit of a valid federal governmental interest. Edge in no way suggests that the general prohibition on casino gambling advertising was rendered doubtful by the Court's approval of a "state choice" advertising policy for state lotteries. Edge supports rather than impairs the constitutionality of section 1304.

Audaciously, the Broadcasters next challenge the federal government's interest in limiting the promotion of certain forms of gambling by means of interstate commerce. The validity as well as substantiality of the federal interest in regulating gambling's interstate manifestations, are, however, as old as the legislation prohibiting use of the federal mails for advertising state-chartered lotteries. Act of July 12, 1876, ch. 186 Sec. 2, 19 Stat. 90, upheld in Ex parte Jackson, 96 U.S. 727, 24 L.Ed. 877 (1877). See also Champion v. Ames, 188 U.S. 321, 23 S.Ct. 321, 47 L.Ed. 492 (1903) (Lottery Case ), sustaining under the commerce clause a federal law prohibiting interstate transportation of lottery tickets. Act of March 2, 1895, ch. 191, 28 Stat. 963. As recently as 1986, this court rejected the argument that changing mores, which have led more states to legalize various forms of gambling, should eliminate the federal interest in prosecuting violations of the federal law prohibiting interstate transportation of lottery paraphernalia. United States v. Stuebben, 799 F.2d 225 (5th Cir.1986). Here the vehicle of commerce is the interstate airwaves and the commerce consists of casino gambling advertisements offered by the Broadcasters. Because Congress has the power to legislate with regard to the use of organs of interstate commerce, it has...